Trend

Banking on m-commerce!

Mobile payments may not be the most happening thing in the Indian market today, but the situation is certainly ripe for the m-phenomenon, writes Nivedan Prakash

M-commerce, or “mobile commerce” per se, is basically about buying and selling products and services through wireless handheld telecom devices such as mobile phones and PDAs. It is an entirely new sales and promotion channel, which is seen as the enabler for an entire range of mobile Internet services, supporting payments for telecom, information, media and entertainment services that are available anywhere, anytime.

Touted as the next-generation of e-commerce, m-commerce enables users to access the Internet without needing to find a place to plug in. It is one of the fastest growing e-business markets and will involve the development and design of a host of new applications, services, business models and technological solutions. In fact, it is seen as a complementary service option to both B2B and B2C e-commerce.

According to market reports, the term m-commerce has recently not only achieved widespread recognition but is also becoming a highly visible symbol in the contemporary language of the information technology culture that has brought significant changes in the consumer era, along with profound changes in the terminology and technology of e-commerce.

However, as content delivery over wireless devices becomes faster, more secure, and scalable, there is wide speculation that m-commerce will surpass wireline e-commerce as the method of choice for digital commerce transactions.

The industries affected by m-commerce include financial services, involving mobile banking (when customers use their handheld devices to access their accounts and pay their bills) as well as brokerage services, in which stock quotes can be displayed and trading conducted from the same handheld device; telecommunications, in which service changes, bill payment and account reviews can all be conducted from the same handheld device; service or retail, as consumers are given the ability to place and pay for orders on-the-fly; and information services, which include the delivery of financial news, sports figures and traffic updates to a single mobile device.

M-commerce in India

opine that m-commerce is at an extremely nascent stage in India due to lack of consumer awareness and suitable applications. It is a new paradigm and category. But there is more interest and user traction than a year back. There are some efforts from a few companies to create an ecosystem and platform on which profitable m-commerce can be achieved. Globally, India is being seen as the test bed for many m-commerce initiatives and will take time to reach the maturity levels of the US and EU.

M N Srinivasu, Co-founder and Director, BillDesk, said, “Currently, the segment where any form of m-commerce is happening is in the mobile content purchase and delivery, mainly the sale of ringtones, wallpapers, and games for mobile phones.”

“One trend which is clearly emerging is that a consumer is ready to pay for convenience. This is validated by the repeat usage we experience on our bill payment and ticketing services. M-commerce acceptability is rising in the non-metro areas,” added Mouli Raman, CTO and Co-founder, OnMobile.

Haridas Nair, Senior Director, M-commerce Products, Sybase, believes that this technology has significant potential in India compared to the developed world because the alternatives like credit and debit cards are limited. Secondly, the mobile consumer is already tuned to paying for value. They pay for ringtones and to download games. So a consumer is well prepared to move to the next stage to pay for non-digital goods and things like airtime via the phone.

Growth drivers for m-commerce

Over the past few years, the mobile and wireless market has been one of the fastest growing markets in India where the mobile infrastructure is comparatively much better than the fixed-line infrastructure.

“Definitely the growth of underlying infrastructure is a large reason why we are seeing interest in m-commerce. There is a critical mass of people who are ready to embrace m-commerce, but the strong reason which could fuel the growth would be the organized retail industry which is showing positive signs and could be termed as the primary reason as to why we think m-commerce could be huge,” asserted Narsimha Suresh, CEO and Founder, TELiBRAHMA.

Growth in the telecom sector makes the addressable market for m-commerce large at over 210 million. With the mobile subscriber base predicted to be over 500 million by 2010, m-commerce is an industry looking for exponential growth. Sanjay Swamy, CEO, mChek, said, “As a personal device a mobile phone is constantly with the consumer. This is another important factor increasing the opportunity to transact. With a mobile phone, the issues of physical presence at an outlet, access to the Internet, amongst others are eliminated, giving the consumer the opportunity to transact anytime, anywhere.”

Nair commented, “Mobile phones have greater penetration than the Internet in India. SMS has almost universal reach. Consumers are already comfortable using the mobile phone for services other than voice. The mobile phone, unlike a PC, is not required to have a live electrical connection to function. The natural progression of these trends leads to commerce via a device that is connected, on the person and offers convenience unmatched by any other channel.”

In short, commerce in the form of mobile-content purchase is and will continue to be on a significant growth path. This can largely be attributed to the nature and appeal of the content and the segment that buys this content. As the number or penetration of the mobile phones increases, these content-sales will see an automatic volume growth. At a fundamental level, m-commerce also involves Internet access. So, what we will perhaps see is a trend of Internet penetration/access through mobiles going up. It would basically still be electronic-commerce, just accessed through a mobile.

Handicapping factors

India is primarily a cash economy and the low penetration of credit cards in our country acts as a major barrier to growth of m-commerce services. The second is a preference for physical vis-a-vis an online or mobile transaction. Srinivasu said, “The biggest challenge would be consumer adoption. In the short-run the lack of standards or inter-operable solutions, would be a handicapping factor.”

The challenges to m-commerce stem from bringing together the ecosystem of telecom operator, banks, merchants and consumers together in a win-win environment. Even the transaction fee and overheads, ecosystem and sustainability of the incumbent players will be a few of the concerns which could become handicapping factors.

“Consumer education would be the tipping point. Build awareness, stoke curiosity to trial and experience, and then it becomes a ‘can’t do without’ or ‘must-have’ service,” added Probir Roy, MD and Co-founder, PayMate.

Experts also believe that plenty of business applications could benefit from advancements in this space. However, major advances in m-commerce are not going to happen until higher-bandwidth networks are deployed and wireless service providers cooperate with each other instead of pushing competing standards.

One of the major reasons why m-commerce has not yet taken off is that commerce-capable cellular networks, which can route real-time transactions over the cellular network to a remote payment gateway and guarantee security over the transaction, are yet to be seen in India. Even the lack of steadiness in terms of technology and security are cited as handicapping factors.

M-commerce services

As mentioned earlier, m-commerce in India is still so nascent that the range or bouquet of offerings is yet to evolve. Mobile-content, historically, having always been offered by the mobile operator and charged to the mobile phone bill is the only business where some volume of transactions is happening. Generally, most constituents in the m-commerce business are betting on bill payments and ticketing to be the initial drivers of consumer adoption.

Meanwhile, telecom giants like Reliance and Airtel have taken the lead in offering m-commerce services here in India. From bill payments to airline and railway ticketing to booking movie tickets and other random services, they offer it all. Even the hybrid m-commerce service providers such as PayMate, OnMobile, mChek, Obopay, amongst others now offers innovative services never-heard-of before.

Reliance Communications has a partnership with ICICI Bank, wherein a Reliance customer can transfer money into any ICICI account through the mobile phone. PayMate allows mobile subscribers to make payments for merchant services using their cell phones.

mChek offers utility bill payment, e-commerce and remote merchant payment, over-the-counter merchant payment and money transfer. “With mChek, the consumer can pay his utility bills in less than 30 seconds from their mobile phone, save time. The payment can be done anywhere, anytime in a secure manner,” added Swamy.

TELiBRAHMA offers services such as auctions, e-commerce, insurance services and mobile ticketing. “At present mobile ticketing is the service that has been initiated, we are also part of this initiative,” said Suresh.

OnMobile has innovative services like railway ticketing service on telecom operator voice portal, movie and events tickets, shopping malls and payment solutions. It has also tied up with multiplex chains across the country to offer the facility to book movie tickets using mobile phones.

Obopay, one of the leaders in mobile payment services, has a plethora of offerings such as money transfer, salary payments, international money transfer, merchant transactions, insurance collections and payments, amongst other services.

Lastly, the trend which is picking up fast under the m-commerce umbrella is Mobile Remittance. There has been a rising demand of providing such financial services over the mobile network. This is where Airtel and Western Union have decided to jointly develop a mobile money transfer service, wherein migrant workers would easily and securely send remittances to their dependents.

The future of m-commerce

Experts believe that m-commerce in India will reduce the friction in transactions associated with time, space and security. All products and services that are standardized or with a shared understanding can use m-commerce to greatly improve customer convenience and business volumes. It would also be driven by organized retail, entertainment, P2P transactions and trading. Besides, it would thrive on the backdrop of targeted marketing, coupons and comparative purchasing.

“There are all the reasons to believe that m-commerce would takeover Internet commerce in terms of the number of transactions. The number of m-commerce users would definitely outnumber Internet users and I predict more than 60 percent of the mobile users being involved with m-commerce in one way or the other over the next five years. We would also see lot of synergy between Internet and mobile commerce over coming days especially around banking and Internet based purchases,” added Suresh.

There is no doubt that in the coming years, m-commerce would be a significant channel. More than m-commerce, “m-payments” would have evolved. It would be interesting to watch whether it is the banks or the mobile operators who gain ground here.

nivedan.prakash@expressindia.com