AMITY UNIVERSITY

Amity Business School

PROJECT REPORT
on
m-Commerce
SUBMITTED IN PARTIAL FULFILMENT OF COURSE COMPUTER
APPLICATIONS, 1st SEMESTER

SUBMITTED TO:

MR.GAURAV CHANDIOK

DEPT : CA/M&S

SUBMITTED BY:

ANISH KUMAR

MBA M&S,SECTION-C

ROLL NO -21

(October2010)

CERTIFICATE
It is to certify that the work is original. The project
is submitted to Amity University and not to any
other institute or university.

Anish Kumar
Email-sanish.sinha29@gmail.com

310C21

CONTENTS
1. INTRODUCTION
2. HISTORY
3. CURRENT SCENARIO
 Products and Services
• Mobile Ticketing

• Mobile Vouchers, Coupons & Loyalty cards

• Content Purchase & Delivery

• Location Based Services

• Information Services

• Mobile Banking

• Mobile Browsing

• Mobile Purchasing

• Mobile Advertisement & Marketing

• Auction

4. FUTURE PERSPECTIVE

• m-Commerce Enabling Technology

• Location Determination

• Digital Signal Compression

• Biometrics

• WAP

• Mobile Ad-Hoc Networks

• Privacy, Security & Trust in m-Commerce

5. INDIAN PERSPECTIVE

6. CONCLUSION
 M-Commerce (Mobile commerce)
INTRODUCTION
Mobile Commerce, also known as M-Commerce or m-Commerce, is the ability
to conduct commerce using a mobile device, such as a mobile phone, a Personal
digital assistant PDA, a smart-phone, or other emerging mobile equipment such as
dash-top mobile devices. Mobile Commerce has been defined as follows:
"Mobile Commerce is any transaction, involving the transfer of ownership or rights
to use goods and services, which is initiated and/or completed by using mobile
access to computer-mediated networks with the help of an electronic device
The development of the cellular telephones and related personal handheld
communication devices is very interesting (particularly in the aspect of how this
increased communication has advanced commerce and economic activity by
lowering transaction, menu, distribution, and transportation costs).
M-Commerce lowers transaction costs by expanding the distance between buyer
and seller and the speed at which they can connect. They do not have to be in the
same city or even the same continent in order to complete their order or payment.
The buyer simply types their PIN into the keypad or signs the receipt after
whatever device is being used has verified the availability of the funds. This
method of commerce lowers menu cost (the cost of updating prices) by allowing
the seller or another interested party may conveniently update a website or some
other centrally-located information storage center and then that pricing information
can be instantly updated through satellite and network connections to the vast
majority of people who are interested in the relevant prices.

HISTORY

Mobile commerce was born in 1997 when the first two mobile-phone
enabled Coca Cola vending machines were installed in the Helsinki area
in Finland. The machines accepted payment via SMS text messages. The first
mobile phone-based banking service was launched in 1997 by Merita Bank of
Finland, also using SMS.
In 1998, the first sales of digital content as downloads to mobile phones were made
possible when the first commercial downloadable ringtones were launched in
Finland by Radiolinja (now part of Elisa Oyj).
Two major national commercial platforms for mobile commerce were launched in
1999: Smart Money (http://smart.com.ph/money/) in the Philippines, and NTT
DoCoMo's i-Mode Internet service in Japan , I-Mode offered a revolutionary
revenue-sharing plan where NTT DoCoMo kept 9 percent of the fee users payed
for content, and returned 91 percent to the content owner.
Mobile-commerce-related services spread rapidly in early 2000. Norway launched
mobile parking payments. Austria offered train ticketing via mobile
device. Japan offered mobile purchases of airline tickets.
The first conference dedicated to mobile commerce was held in London in
July 2001.
The first book to cover mobile commerce was Tomi Ahonen's M-profits in 2002.
The first university short course to discuss mobile commerce was held at
the University of Oxford in 2003, with Tomi Ahonen and Steve Jones lecturing. As
of 2008, UCL Computer Science and Peter Bentley ran dedicated courses in
mobile commerce.[2]
PDAs and cellular phones have become so popular that many businesses[specify] are
beginning to use mobile commerce as a more efficient way to communicate with
their customers.
In order to exploit the potential mobile commerce market, mobile phone
manufacturers such as Nokia, Ericsson, Motorola, and Qualcomm are working
with carriers such as AT&T Wireless and Sprint to develop WAP-enabled
smartphones. Smartphones offer fax, e-mail, and phone capabilities.
"Profitability for device vendors and carriers hinges on high-end mobile devices
and the accompanying killer applications," said Burchett.[who?] Perennial early
adopters, such as the youth market, which are the least price sensitive, as well as
more open to premium mobile content and applications, must also be a key target
for device vendors.
Since the launch of the iPhone , mobile commerce has moved away from SMS
systems and into actual applications. SMS has significant security vulnerabilities
and congestion problems, even though it is widely available and accessible. In
addition, improvements in the capabilities of modern mobile devices make it
prudent to place more of the resource burden on the mobile device.

CURRENT SCENARIO
The expectations for mobile commerce products and services is coloured by the
hype generated by various consulting companies. The reports published show
inflated growth figures in markets-to-be for unlikely mobile commerce products
and services. In order to focus serious research and development work it will be
necessary to build a good methodology and to find sound and solid market
estimates.
IAMSR in co-operation with HHL, ENPC (Paris), City University of Hong Kong,
North Carolina State University and Nankiang Technological University of
Singapore has in 2001-2002 carried out a series of surveys of expert companies
(the sample in each country was 50 companies) in search of potential mobile
commerce products and services, possible business models and most promising
markets. The results are interesting and can be used as a basis for a focused effort
to build market scenarios.
Market scenarios can be built with a scanning and scenario agent technology
developed by IAMSR as part of the Imagine21 project [E28732 (ESPRIT)]. The
agents work from a hyperknowledge platform residing on a secure server at
IAMSR. The material to be collected is selected on the basis of a scenario
storyline, which has been constructed on the basis of insight in mobile commerce
products and services built through the expert surveys conducted in 2001. The
scanning agents work on a 24/7 basis and may be activated to scan tens or
hundreds of data sources and will deposit the take into a data warehouse. The
scanning agents have filters to screen out irrelevant material and are built to
retrieve only new material from scanned data sources. The scenario agents extract
material from the data warehouse and update the scenario reports semi-
automatically. The partners of the research consortium have identified the best data
sources in each country. The main data sources used so for are Reuters Business
Briefing (now replaced by Factiva) and Economist On Line for overall market
reports. The combination of surveys of expert companies and the market scenarios
outlines the future mobile commerce markets in terms of products and services.
The first results of this work will undoubtedly serve to shape the m-commerce
vision in the future.

Products and services available

Mobile ticketing
Tickets can be sent to mobile phones using a variety of technologies. Users are
then able to use their tickets immediately, by presenting their phones at the venue.
Tickets can be booked and cancelled on the mobile device with the help of simple
application downloads, or by accessing the WAP portals of various travel agents or
direct service providers.
Mobile vouchers, coupons and loyalty cards
Mobile ticketing technology can also be used for the distribution of vouchers,
coupons, and loyalty cards. These items are represented by a virtual token that is
sent to the mobile phone. A customer presenting a mobile phone with one of these
tokens at the point of sale receives the same benefits as if they had the traditional
token. Stores may send coupons to customers using location based services to
determine when the customer is nearby.
Content purchase and delivery
Currently, mobile content purchase and delivery mainly consists of the sale of ring-
tones, wallpapers, and games for mobile phones. The convergence of mobile
phones, portable audio players, and video players into a single device is increasing
the purchase and delivery of full-length music tracks and video. The download
speeds available with 4G networks make it possible to buy a movie on a mobile
device in a couple of seconds.
Location-based services
The location of the mobile phone user is an important piece of information used
during mobile commerce transactions. Knowing the location of the user allows
for location based services such

 Local discount offers

 Local weather
 Tracking and monitoring of people

Information services
A wide variety of information services can be delivered to mobile phone users in
much the same way as it is delivered to PCs. These services include:

 News
 Stock quotes
 Sports scores
  Financial records
 Traffic reporting

Customized traffic information, based on a user's actual travel patterns, can be sent
to a mobile device. This customized data is more useful than a generic traffic-
report broadcast, but was impractical before the invention of modern mobile
devices due to the bandwidth requirements.
Mobile banking
Banks and other financial institutions use mobile commerce to allow their
customers to access account information and make transactions, such as purchasing
stocks, remitting money. This service is often referred to as Mobile Banking, or M-
Banking.
Mobile brokerage
Stock market services offered via mobile devices have also become more popular
and are known as Mobile Brokerage. They allow the subscriber to react to market
developments in a timely fashion and irrespective of their physical location.
Auctions
Over the past three years[when?] mobile reverse auction solutions have grown in
popularity.[by whom?] Unlike traditional auctions, the reverse auction (or low-bid
auction) bills the consumer's phone each time they place a bid. Many
mobile SMS commerce solutions rely on a one-time purchase or one-time
subscription; however, reverse auctions offer a high return for the mobile vendor as
they require the consumer to make multiple transactions over a long period of time.
Mobile Browsing
Using a mobile browser—a World Wide Web browser on a mobile device—
customers can shop online without having to be at their personal computer.
Mobile Purchase
Catalog merchants can accept orders from customers electronically, via the
customer's mobile device. In some cases, the merchant may even deliver the
catalog electronically, rather than mailing a paper catalog to the customer. Some
merchants provide mobile websites that are customized for the smaller screen and
limited user interface of a mobile device.
Mobile marketing and advertising
In the context of mobile commerce, mobile marketing refers to marketing sent to
mobile devices. Companies have reported that they see better response from
mobile marketing campaigns than from traditional campaigns.

FUTURE PERSPECTIVE

M-COMMERCE ENABLING TECHNOLOGIES

Providing mobile users with wireless communications functions for their

communications, information, education, entertainment, and business needs, as
well as giving wireless communications functions to stationary places for access
and security and to moving objects for asset and logistic purposes form the
cornerstones of mobile commerce. To achieve these goals, significant
technological advances in a number of enabling technologies are anticipated.
Radio frequency identification (RFID) is a generic term for technologies that use
radio waves to automatically identify individual items or some of their attributes.
RFID possesses several benefits over bar codes. First, it does not need to meet line-
of-sight requirements as long as the RFID tags are within the range of a reader.
Second, quite many number of RFID tags can be read simultaneously. Third, every
unique item can have its own RFID tags. The mobile consumer will use RFID
readers in their mobile phones to scan RFID tags, say in the packaging of products
on store shelves, to pay for tolls and access fees, to purchase at vending machines
and points of sales, to access secure rooms, buildings, and other partitioned
areas, and to control home and office appliances. With RFID, a scanner can read
the encoded information even when the tag is concealed. For example, it may be
embedded in a product’s casing, or sewn into an item of clothing, or sandwiched
between a banknote’s layered paper. The stealthy nature of RFID technology has
raised concerns among privacy advocates that RFID tags could be tracked beyond
their intended use. For example, security agencies might use them to covertly
monitor individuals or their belongings. Lower frequencies (LF and MF) usually
are cheaper, use less power, are better able to penetrate non-metallic substances,
and are ideal for scanning objects with high-water content.On the other hand,
higher frequencies (HF and UHF) typically offer a better range and can transfer
data faster; they tend to be more directed and, thus, require a clearer path.
Active tags can have a farther read range than passive tags, but passive tags are
less expensive and require no maintenance. RFID will play a critical role in
emerging wireless access and monitoring applications and , especially in today’s
security-aware era.

LOCATION DETERMINATION
Location determination is seen to be an indispensable feature for mobile
commerce. Network-based positioning is carried out by terrestrial systems through
various techniques, such as cell of origin, time of arrival, angle of arrival, and
enhanced observed time difference. The device-based positioning is carried out by
satellite systems typically using three or four MEO satellites, also known as GPS.
However, a hybrid approach delivering the accuracy of device-centric option,
while avoiding a line-of-sight requirement as well as increased cost, size, and
power consumption, is also used. Though FCC does not require the mobile
network operators to use a specific technology, it has indicated specific
performance metrics for location-enabled technology. For network-based
technology, location information accuracy is required to be within 100 meters 67%
of the time and within 300 meters 95% of the time [27]. But for the device-centric
technology, these distances must be halved. In view of possible launches of LEO
satellites and the significant increase in the processing capabilities of the wireless
devices, as well as the fact that the cell sizes are shrinking from macro to micro to
pico, the location-based technologies are expected to become more accurate and
less costly in the future

Digital signal compression

Also known as source coding, is employed to reduce the bit rate
requirements (bandwidth demands). It is widely applied to all
sources of modality. Both proprietary and standard techniques
are widely available and are constantly being improved upon.
Texts, software, and faxes generally employ lossless compression
techniques, such as the Lempel-Ziv and Huffman codes. On the
other hand, MPEG video, JPEG image, and MP3 audio coding
standards employ lossy compression, where known limitations of
the human visual and audio systems are exploited to introduce
losses but in a controlled manner. With advances in compression,
a wider array of feature-rich m-commerce applications and/or
lower service costs can be provided

Biometrics
Biometrics as an essential security measure will play an imperative role in the next-
generation m-commerce services. Traditionally, most security systems authenticate
the user based on something that he/she knows, such as a password. However,
where security really matters, it makes sense to add a second layer, which could be
something that he/she has (e.g., a smartcard). Also, as a third option, and probably
the most authentic method, could be something that he/she is, something that, at
least theoretically, would be virtually impossible to forge. Biometric control
measuring physical characteristics and behavioral patterns will be widely
employed to allow the user to access his/her own wireless device, to enable the
user to access certain places, and to allow the user to monitor assets. Of course,
depending on their effectiveness, cost, intrusiveness, and accuracy, more than one
biometric controls may be simultaneously employed. Biometric control may
include finger imaging, palm print, hand geometry, iris and retina vascular pattern,
facial recognition and thermography, signature and handwriting, key stroke
dynamics, and voice recognition and speech patterns

Wireless Application Protocols

WAP (Wireless Application Protocols) appears to be the key to future IP-based m-
commerce applications. WAP, an industry-initiated world standard, has emerged as
a common communications technology and uniform interface standard for
presenting and delivering wireless services on wireless devices.WAP specifications
include a micro-browser, access functions, and layered communication
specifications for sessions, transport, and security. The WAP gateway is used to
translate the WAP protocols (protocols that have been optimized for low
bandwidth, low power consumption, limited screen size, and low storage) into the
traditional Internet protocols (TCP/IP). These specifications enable bearer-
independent and interoperable applications. In short, future trends clearly indicate
that the device manufacturers, as well as service and infrastructure providers, will
keep adopting the WAP standard

Mobile ad hoc networks

Mobile ad hoc networks, vis-à-vis fixed topology wireless networks, may be
characterized by wireless nodes, the lack of fixed infrastructure support, dynamic
topologies, bandwidthconstrained variable-capacity links, energy-constrained
operations, and limited physical security. In such peer-to-peer networks, end-user
wireless handsets also act as secure wireless routers that are part of the overall
network infrastructure. Upstream and downstream transmissions hop through
subscriber handsets and fixed wireless routers to reach the destination. Routing for
the best path is defined for the least power. Mobile ad hoc networks will help a
community of subscribers to increase dramatically spectrum reuse and reduce
overall power consumption. Mobile ad hoc networks bring about a host of
challenges and opportunities, but due to emerging wireless device-to-device
connectivity requirements, mobile ad hoc networks will prove to be an
ever-essential component

PRIVACY, SECURITY, AND TRUST IN M-COMMERCE

The growth of the Internet and e-commerce has dramatically increased the amount
of personal information that can be potentially collected about individuals by
corporations and governments. Such data collections, along with usage tracking
(clickstream data) and the sharing of information with third parties are always
invoking issues of privacy, especially in view of the fact that they can be easily
done through high-speed links and high-capacity storage devices in a very accurate
fashion, and most often without the consumer’s or citizen’s expressed knowledge
or consent .This valuable information, often collected by hidden tools such as
cookies and Web bugs can be shared with third parties for marketing purposes and
surveillance operations, and its perceived value has been occasionally behind the
stock-market valuations of some companies. In fact, this detailed information can
be combined with other off-line data such as demographic and psychographic data
to predict a user’s interests, needs, and possible future purchases. To deal with the
problem of profiling, trust seals and government regulations appear to be two
forces pushing for more and better privacy disclosures on the Web. The former
tend to promote privacy in the form of self-regulation, where they may eventually
become more of a privacy advocate for corporations rather than for consumers.
The latter can advance privacy through legislation but can also potentially create
privacy worries for citizens by monitoring their telecommunications traffic. For
instance, the FBI’s powerful DCS1000 Carnivore program is a computer-
automated snooping tool that is capable of intercepting and sorting out millions of
text messages, such as telephone conversations and e-mails passing through ISPs
by monitoring incoming and outgoing messages to specific IP addresses [41]. It is
clear that governments’ regulations and legislation can be as likely to thwart
privacy as to enforce it. Even though wireless communications possess numerous
merits, privacy is not one of them. M-commerce possesses, in addition to all
privacy issues related to e-commerce, another major privacy threat: the sharing of
knowledge about a user’s location with others. There are basically three solutions
to this positioning problem: i) the network-based solution, where the calculations
are carried out by the cellular network and the positioning information may then be
passed to the user; ii) the device-based solution, where the wireless device
computes its own position; and iii) a hybrid solution. The pitfall associated with
the network-based positioning is that the information about the user’s whereabouts
can be collected but not necessarily passed to the user. Instead, the information
may be exploited by other entities, all without the user’s knowledge, let alone
his/her consent. Also, there are some privacy implications about the requirement
that wireless devices need to be embedded with a locationtracking technology to
provide location-based services, such as targeted advertising and finding the
nearest “X.” For instance, if location records were kept over time, an in-depth
profile could be compiled for other, perhaps unwarranted, purposes. Many
countries, such as Canada and those in the European Union, strictly regulate the
collection and use of personal data by business corporations and government
agencies. They have opted for regulated self-regulation. For instance, the privacy
provisions of Canada’s PIPEDA set out rules for the protection of personal
information collected, used, or disclosed in all sectors of the economy, so as to
strike a pragmatic balance between privacy and economy.For instance, PIPEDA
warrants all mobile service providers in Canada to take steps to ensure that i) they
are responsible for personal information under their control, ii) they obtain
expressed consent before using or disclosing customers’ location information, iii)
they limit to the purpose identified for the collection of information, and iv) they
protect with the necessary security to safeguard the personal information. In
contrast, the United States has chosen self-regulation as their basic strategy, based
on the model of the well-informed, the rational and the self-protecting consumer.
In this model, privacy may be considered to be a barrier for mcommerce, and
accordingly a minimum level of protection is to be desired. A case in point is that
in 2002, the FCC turned down the wireless industry’s request to adopt location
information privacy rules [41] and [44]. The rules mainly reflected the privacy
principles of notice, consent, security, and integrity of consumer data. Due to the
FCC’s reluctance to regulate location-based wireless services, the users may
now need those mobile services where they themselves can turn off location-
tracking features (with the exception of E- 911) and reception of targeted ads be
subjected to a user’s affirmative response. Currently, the “opting-out” options are
available to the m-commerce consumers. It is anticipated that privacy advocates
will continue to push for “opting-in” options instead, through which consumers
would, by default, be opted in and would have to take action to let companies
use their information. In any event, even if there were a method to absolutely
ensure privacy, service providers and customers may not embrace the technology
quite as readily, because it may be inexpensive in practice and offer a lower quality
of service. Since every cellular telephone is a physical-locating device even when
the user is not in a call, and there is no known way to avoid revealing the caller’s
location when a cell phone is in use, privacy about the mobile user’s location can
always be potentially compromised. With the apparent omnipresent availability of
wireless devices, m-commerce services have a very promising prospect. However,
the success of m-commerce depends much on the security of the underlying mobile
technologies. Wireless technology, by its nature, violates fundamental security
principles. In short, wireless communications rely on open and public transmission
media (i.e., over the air) that raise further security vulnerabilities, in addition to the
security threats generally found in wired networks. For instance, the chargeback
rate for credit card transactions on the Internet (that is for e-commerce) is about
fifteen times more than that for point-of-sale credit card transactions; this, in turn,
points to the fact that security will always be an indispensable factor in the success
of m-commerce.

The mcommerce security challenges relate to the user’s mobile

device, the wireless access network, the wired-line backbone network, and m-
commerce applications. Security threats in m-commerce may be passive (such as
information monitoring and release for fraudulent purposes) or active (such as the
modification of information through denial-of-service and unauthorized access).
Unlike the wire-line networks, the unique characteristics of wireless networks pose
a number of non-trivial challenges to security design, such as vulnerability of the
air interface, an open peer-to-peer network architecture (in mobile ad hoc
networks), a shared wireless medium, the limited computing power of mobile
devices, a highly dynamic network topology, and the low data rates and frequent
“disconnects” of wireless communications. There are basically two approaches to
the challenges to wireless security: being proactive and being reactive. The
proactive approach attempts a priori to prevent a cracker from launching attacks in
the first place, typically through various cryptographic techniques. In contrast, the
reactive approach seeks to detect security threats a posteriori and to react
accordingly. Due to the absence of a clear line of defense, a complete security
solution should integrate both approaches. Because security is a chain, it is only as
secure as the weakest link. A failed link may significantly degrade the strength of
the overall security solutions. Enhanced security features require additional
overhead (increased bandwidth), increased complexity (additional cost), and
processing delay (degraded performance), which, in turn, can adversely impact
network performance.

INDIAN PERSPECTIVE
In India, Mobile Commerce is still in the development phase as the use of mobile
phones for carrying out transactions is very limited. However, the development is
taking place at a nice speed and in the coming years, Mobile Commerce is most
likely to make its presence feel as companies and businesses have started
understanding the benefits of Mobile Commerce.

Some of the companies have even incorporated this technology. Airtel, ICICI,
Reliance are some of the companies/businesses that are using this technology as
their users are allowed to make limited purchases from their phones. For now, the
users are mainly allowed to pay phone bills, utility bills, book movie tickets, book
travel tickets with their cell phones. However, more services will be introduced in
coming years. Security is one of the main concerns of Mobile Commerce as it’s
very important to offer secure transactions and this is the reason why Mobile
Commerce is still in the development phase in India.

For now, users are mainly allowed to do Mobile Banking i.e. to access the bank
account with a cell phone in order to pay the utility bills. With the current rate of
development, users will be soon allowed to purchase products, advertise, to take
part in auctions and pay bills with the help of a cell phone, while they are on the
move. Mobile commerce, which in India has been limited primarily to basic
banking transactions, purchase of travel tickets and payment of some utility bills, is
finally taking off with banks, cellular operators and payment service providers
coming together to find solutions that comply with regulatory guidelines.

Security, a prime concern with banking regulators, has been a hindrance to the
growth of mobile commerce services such as the so-called mobile wallet, which
helps make payments at retail outlets through text messages or Internet-enabled
phones.

The Reserve Bank of India, for one, had issued guidelines against creation of the
mobile wallet, a derivative of a phone firm’s master bank account, from which
millions of subscribers can be served on their mobile phones.

Californian mobile payment service provider Obopay Inc. and Bangalore’s mChek
India Payment Systems Pvt. Ltd are among a fast-expanding breed of mobile
payment service providers which have planned offerings that work within the
guidelines and bring the convenience of mobile transactions.

Obopay, for instance, has a debit card-like model in place. “Here, the wallet is not
created, but the (customer’s) bank account itself is linked with the mobile phone,”
says Balachandran Unni, vice-president, business development and
alliances, Obopay Payment Services Pvt. Ltd, the local unit of Obopay Inc. The
firm offers mobile wallet-based transactions in the US and plans to launch the bank
account-linked services in India, too. “Respective banks with whom we have
partnered will be launching this in three to four weeks,” says Unni.

International remittance is another service that Obopay plans to bring to India.

Unlike what Western Union, the most popular service provider for such
transactions, typically does, Obopay is planning to remit money from overseas
directly to the bank account linked to the phone. The customer would be then
notified of the transaction through a text message. This service too should be
operational this year, expects Unni.

Western Union typically charges customers around $4, or about Rs158, to transfer,
say, $1,000 from Dubai, which is considerably less than the cost of a bank transfer:
$15 to send $1,000 from, say, the US and other countries. Mobile payment service
providers won’t say exactly how much, but transfers through mobile phones are
expected to lower the transaction costs.

MChek India, meanwhile, is looking a broader reach for its offerings. It plans to
launch payment solutions for common-day uses such as paying auto or taxi fares
through mobile phones. The application can transfer small amounts from one bank
account to another via the mobile phone.

“Auto and taxi drivers could never take electronic payment, so it will bring a
complete breakthrough,” says Sanjay Swamy, chief executive of mChek, which
provides such facilities for retailers in Sri Lanka and has done trial runs for the
service with taxi drivers in India. The service is expected to launch later this year.

Another Bangalore mobile content service provider, OnMobile Global Ltd, which
concluded an initial share sale recently, plans to offer customers the option of
topping up prepaid accounts of a limited number of people. “We have worked with
a couple of banks; we are going to launch this with one or two operators in three to
six months,” says a spokesperson of OnMobile, a spin-off from software giant
Infosys Technologies Ltd.

Technology researcher Gar-tner India Research and Advisory Services Pvt.

Ltd has not done a formal survey, but reckons the market for such services to be
less than $16 million, or 1%, of the data services market. Indian wireless phone
firms are estimated to have made some $1.6 billion from text messaging,
downloading of ringtones, wall papers and other non-voice offerings.
“The initial push for mobile commerce is expected to come from banking
services,” says Neha Gupta, senior research analyst, Gartner India. “Later, point-
of-purchase sales would push the market.”

A recent report by the Consultative Group to Assist the Poor—a consortium of 33

public and private funding organizations to expand the access the poor have to
financial services—cites successes in other countries, such as Kenya and the
Philippines.

Banks in India have already started tapping this market with ICICI Bank Ltd, the
country’s largest private lender, making all of its Internet banking service available
on mobile phones from early January.

“For the first two-three months we are looking for 30,000-50,000 customers; then
we will scale it up,” says Manindra Juneja, head of mobile commerce business at
ICICI Bank. “Because of the convenience and the way the mobile network is
spread across the country, it will quickly gather the speed,” he added.

Standard Chartered Bank recently launched a service that allows a customer to

transfer money across the country from an ATM to anyone with a mobile phone.
The recipient can withdraw the money from any of the bank’s ATMs using a pin
number which is automatically messaged to his mobile phone, and the order
number that the sender should communicate to the recipient.

There are more than 220 million wireless subscribers in India—a market that adds
more than six million customers every month.

Bharti Telesoft Ltd, a software products and solutions provider to mobile operators
and a subsidiary of Bharti Enterprises Ltd, which controls India’s largest mobile
phone services firm, Bharti Airtel Ltd, is working on providing solutions for
microfinance operations, especially in data collection work.

The company, whose technology runs mobile commerce offerings of phone firms
in France and Egypt, plans to help microfinance firms update their data which, in
turn, will help in collecting funds from remote areas using mobile phones. “This
will help microfinance companies improve their efficiency for data entry by 15-
20%,” says Ashish Desai, its vice-president for mobile commerce.

Mobile commerce (m-commerce) is taking off in India, and one of the companies
leading the way is PayMate, a Mumbai-based wireless-transaction platform
provider. It is not surprising that India has become a thriving center for m-
commerce. The Telecom Regulatory Authority of India reports that the number of
mobile subscribers has already reached 185 million, far surpassing the country’s 9
million online customers.

Ajay Adiseshann, managing director and founder of PayMate, says his country is
leapfrogging the internet revolution and going straight to the mobile experience.
“The first experience people will have of digital shopping, or e-shopping, will
probably not be over the internet but rather on the mobile,” he says. “That is where
the opportunity lies, and that is why businesses are now looking at the mobile
phone as the next channel for providing their services to customers.”

PayMate launched its payment service last year, after spending two years
developing an “ecosystem” that connects banks, retailers and customers using
SMS. The service has been recognized both in India and abroad for its simplicity
and ease of use. It works like this: You register for PayMate with your bank by
calling or sending a text message. Once your phone number has been verified by
the bank, you are given a unique personal identification number (PIN) that you use
whenever you make a payment online, through your phone or over the counter.

M-COMMERCE FOR REAL

PayMate’s ecosystem has more than 3000 retailers in various categories; to make a
purchase, all you have to do is share your phone number. You then instantly
receive an SMS from the retailer asking for authorization of payment, which you
do with your PIN and by reentering a code sent in the SMS. Once you reply to the
SMS, your bank confirms the details and debits the amount from your account,
sending both you and the retailer an SMS confirming the purchase. The service
works with any phone and is free of charge. The only cost is the SMS, which, in
India, means an average of USD 0.05 (2 rupees).

Adiseshann says PayMate has woken people up to the reality of m-commerce.

“People around the world have been talking about m-commerce for ages but it is
only now since PayMate has entered the scene that they are starting to take it
seriously and looking at implementing it at their end,” he says. “In a short time, we
have had close to 85 percent penetration rate among m-commerce merchants in
India, and we hope to do the same thing in offline scenarios too.”

People who sign up to PayMate usually use the service to buy items such as
flowers and movie tickets, but Adiseshann hopes they will use it for a lot more in
the future. “We are introducing the possibility for people to pay their utility bills
with their phone, and we anticipate that this will be a key driver from a user-uptake
perspective,” he says.

FROM AIRLINE TICKETS TO RESTAURANT MEALS

Another initiative that Adiseshann hopes will encourage people to use PayMate is
the introduction of the mobile airline ticket, or m-ticket. With the “FlyBuySMS”
service, launched in partnership with Kingfisher Airlines, all the customer has to
do is send an SMS, and then the details of all Kingfisher Airlines flights for the
dates specified will be sent to the mobile phone. To book a ticket, the customer
replies to the SMS with the preferred flight option. “You use this m-ticket to check
in at the airport,” Adiseshann says. “You don’t even have to go online.”

The next big thing for PayMate is to offer its service at restaurants, which means
people can use their mobile phones to pay for meals. “You receive an SMS that
you reply back to, the restaurant receives your payment, and you are free to leave,”
Adiseshann says. “You will also be able to use this for home deliveries and even
groceries, which means you don’t have to give out sensitive credit-card details over
the phone.”

Adiseshann is positive about the future of m-commerce but says innovation and
partnerships are needed to make it a viable payment option. “When you are
changing consumer behavior, you have to make it as simple as possible. That’s
what we have been working on and we are seeing the benefits of this now,” he
says.

Banks and Financial Institutions

India has a huge population of unbanked and unbankable population, given the vast
geography and infrastructural constraints which has resulted in less than 59% of
the total Indian population having access to any kind of banking services. With
electricity continuing to be a pressing challenge in many parts of rural India,
mobile forms the ideal device to access the common man living in the remote
villages of India.

Recognizing the need for financial inclusion and riding on the growing mobile
telephony penetration, the Reserve Bank of India issued the guidelines for mobile
banking transactions in October 2008 permitting banks to provide banking services
on the mobile phone, which is a step in the right direction. Of course, it is still up
to the banks to convert these guidelines into a secured framework prior to rolling
out their mobile banking services.

These guidelines were largely SMS based until recently when RBI relaxed the
norms allowing domestic remittances and funds transfers through mobile phone.
The domestic remittances market in India has a huge growth potential with over
30% Indians being migrants, working far away from their home town and can now
easily remit to their dependents in a secured manner. The new guidelines have
eased the domestic remittances/funds transfer process as the receiver no longer
needs to have a bank account and can simply collect cash at the nearest bank or its
agent's (ie, business correspondent) outlet upon producing the PIN received via
SMS and a valid ID proof.

Having said this, the entire gamut of banking services is yet to be offered on the
mobile phone, which will significantly fuel the growth and success of m-commerce
in India. While most banks are yet to develop their m-payment gateway, the need
for a robust m-payment gateway on the lines of the e-payment gateway, cannot be
undermined.

While, regulations and guidelines are being evolved by the policy makers, it is also
the assumed responsibility of banks and financial institutions to educate the
common man to this effect and build trust. Banks must also come forward and take
a bold step towards reducing the cost of transactions on mobile phones.

Role of Media: The Opinion Builders

The role of media in making m-commerce a success can be broadly classified into
two: (a) in taking the issues of the 'value creators' viz, content developers, telcos,
etc, and getting them heard by the regulators/government. This is a significant and
yet peculiar role, which only media can deliver, especially in the case of m-
commerce where the industry is evolving and policy makers by and large would
wait for the signals from the market players before they frame the guidelines.
Industry players need to come together to establish industry standards for m-
commerce transactions and as 'opinion builders', media has a well defined role to
play. This also calls for an unbiased approach and hence a responsible media alone
can deliver. (b) in creating the curiosity and confidence in the mindsets of the
consumers to trial and experience so that m-commerce becomes a 'cannot do
without it' or 'must have' service. This is critical for m-commerce, given the
dynamics of its vast geography and population and who better than the media can
reach the common man?
Government, Regulators and Policy Makers

The impact of the global recession and economic slowdown in the recent past was
minimal on India and Indian companies mainly because of our regulatory
framework, corporate laws and the existence of effective policy guidelines and tax
regime. Therefore, the role of a regulator and the regulatory framework cannot be
undermined more so for an evolving industry-m-commerce. While stringent laws
and guidelines have to be in place, there is nothing wrong if these are determined
as the market evolves.
Trai has done a yeomen service to the development and growth of Indian telecom
industry for we have a much evolved telecom industry at world's envy.
Regulations and guidelines are like medicines and have to be administered based
on the intensity and scale at the time of need. Typically, with m-commerce
growing, the mobile usage is only expected to grow. The government should also
consider, extending financial support to application developers, easing the tax laws
for service providers engaged in m-commerce and offering special tax rates for m-
commerce transactions.

CONCLUSION
Mobile phones have already forever changed how people interact in their daily
lives. There is no denial of the fact that majority of the population are ready to
embrace m-commerce and that mobile phones have a greater penetration than the
Internet in India.
When mobile phone was introduced not even the biggest telecom experts had
predicted the impact of SMS on an average Indian's life. From relationships to
reporting to just about every small communication is now textual. With m-
commerce, even payments and transactions are facilitated through SMS. The future
is here. The issues of physical presence at an outlet, access to the Internet, amongst
others are fast getting eliminated, giving the consumer the opportunity to transact
anytime, anywhere. As things progress we should see mobile phone becoming the
de facto commerce tool.

Nowadays, empowering the common man is in everybody's agenda and m-

commerce is the panacea! Yes, m-commerce is evolving in India but if the
stakeholders in the ecosystem join hands to address these critical issues, the
success of m-commerce in India, will be, but a certainty!