MOBILE COMMERCE

Introduction

Mobile Commerce, or m-Commerce, is about the

explosion of applications and services that are becoming
accessible from Internet-enabled mobile devices. It
involves new technologies, services and business models.
It is quite different from traditional e-Commerce.
Mobile phones impose very different constraints than
desktop computers. But they also open the door to a
slew of new applications and services. They follow you
wherever you go, making it possible to look for a nearby
restaurant, stay in touch with colleagues, or pay for
items at a store.

As the Internet finds its way into our purses or shirt

pockets, the devices we use to access it are becoming
more personal too. Already today, mobile phones know
the phone numbers of our friends and colleagues. They
are starting to track our location. Tomorrow, they will
replace our wallets and credit cards. One day, they may
very well turn into intelligent assistants capable of
anticipating many of our wishes and needs, such as
automatically arranging for taxis to come and pick us
up after business meetings or providing us with
summaries of relevant news and messages left by
colleagues. But, for all these changes to happen, key
issues of interoperability, usability, security, and
privacy still need to be addressed.
 WHAT IS MOBILE COMMERCE:-

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 desktop 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."[1

M-commerce is the buying and selling of goods and

services through wireless handheld devices.
M-Commerce is the process of paying for services using
a mobile phone or personal organizer.
M-Commerce is the use of mobile devices to
communicate, inform transact and entertain using text
and data via a connection to public and private
networks.

Mobile commerce is a natural result of combining Two

strongly emerging trends: electronic commerce and
pervasive computing.
Internet + Wireless + E-Business = M-Business
Going online anywhere at anytime and using multiple
device. M-Commerce represents another wave of the e-
commerce invasion that is changing the nature of
business in the 21st century.
 Motivating Factors for M-Commerce

Internet use has grown to such a level on the

strength of PC networks. Due to the huge base of
installed PCs, which is predicted to grow in a
faster pace in the days to come, electronic
commerce and other communication applications
are bound to thrive further. Also, these computing
systems will have greater power and storage
capability, the best ever price-performance ratios,
more powerful and sophisticated applications will
likely emerge for desktop computing and the
Internet. However, there are two major limitations
on PCs. First , users have to sit in front of them,
PCs, even portable-notebook computers, have to
load software, dial into and connect with a
network service provider and await for the initial
process to be accomplished before launching an
Internet application.

It is predicted that by 2004, the installed base of

mobile phones worldwide will exceed 1 billion -
more than twice the number of PCs at that time. In
addition that, there will be a huge increase in
other wireless portable devices, such as wireless
PDA. The advantage with these wireless devices is
they do not need no booting process and thus
facilitating immediate usage of them. This makes
them attractive for quick-hit
 Wireless Technologies

Just as the TCP/IP and the general purpose Web

browsers are being the current principal drivers of
Internet growth and this in turn makes disparate
devices to connect themselves and communicate
and interoperate. Similar protocols, technologies
and software will play a very important role in
heterogeneous wireless devices to interoperate
without any complexity. In the recent past, a
common communications technology and uniform
interface standard for presenting and delivering
several distinct wireless services on wireless
devices - Wireless Application Protocol (WAP)
have emerged. The WAP specifications include a
micro-browser, scripting language just like
JavaScript, access functions and layered
communication specifications for sessions,
transport and security. These specifications enable
interface-independent and interoperable
applications. Many of the wireless device
manufacturers, service and infrastructure
providers have started to adopt the WAP standard.

The transmission rate of Current access

technologies (2G), such as TDMA, CDMA and GSM,
is dramatically slower ( between 10 and 20 Kbps)
than the dial-up rates of desktop PCs connected to
the Internet. 2G technology has steadily improved,
with increased bandwidth, packer routing and the
introduction of multimedia. The present state of
mobile wireless communications is often referred
to as 2.5G. It is believed that by the year 2003, 3G
wireless technology will be available for use. This,
in addition to higher bandwidth rates, can take the
transmission speed up to 2 Mbps. 3G is expected
to facilitate: enhanced multimedia (voice, data,
video, and remote control) transmission, usability
on all popular modes (cellular telephone, e-mail,
paging, fax, video-conferencing and Web
browsing), routing flexibility (repeater, satellite,
LAN) and operation at approximately 2 GHz
transmit and receive frequencies.

M-Commerce Applications
The general m-commerce applications are categorized
as transaction management, digital content delivery and
telemetry services. The applications can be further
subdivided into passive and active m-commerce
applications. Active application relates with the
applications in which the user has to take the initiative
on his wireless device. In contrast, the passive
applications themselves get activated towards
accomplishing the assigned jobs or facilitate the users to
carry forward. Active Applications-M-commerce
transactions point to online shopping Web sites tailored
to mobile phones and PDAs which are being equipped
with the capabilities of browsing, selection, purchase,
payment and delivery. These sites also include all the
necessary shopping features, such as online catalogs,
shopping carts, and back office functions as currently
available for desktop computers. Leading online
booksellers already started the commercial activities for
wireless devices. Another important m-commerce
transaction is to initiate and pay for purchases and
services in real time. The highest volume of m-
commerce transactions using wireless devices in the
days to come is bound to occur on the side of micro-
transactions. When individuals reach for their e-cash-
equipped mobile phones or PDAs instead of coins to
settle micro transactions, such as subway fees,
widespread use of digital cash will become a reality.

Passive Application-Nowadays mobile users can

send and receive short text messages up to 160
characters that show up on the user's display
screen. As digital convergence becomes more
commonplace, all kinds of mail, such as e-mail, fax
documents and digitized voice mail, can be
received passively. Thus it is felt that in near
future there will be many novel services for mobile
users for a fixed fee. Further on, users may be
tempted for some services free of cost for viewing
audio or video advertisement delivered to their
wireless devices. Any kind of security breach,
illegal intrusion, unusual event or unacceptable
condition will trigger automatic notification to
users irrespective of location. Airline companies
are testing this technology to alert frequent air
passengers regarding seat availability and up
gradation, to notify the changes made in the
timings etc. through wireless devices.
 Fixed Vs Mobile Commerce

Check Check
Purchase
Bank Stock
Stock
Balance Price

WAPServer
Server WebServer
Server
WAP Web

Multilingual Customer Product

Content Database Database
Database

Difference between Electronic Commerce (E-Commerce) and Mobile Commerce (M-

Commerce)
Electronic Commerce or e-commerce is concerned with
the selling as well as purchasing of services or products
by means of the internet or other computer networks.
Mobile Commerce deals with the commerce that is done
through mobile devices like mobiles, a Smartphone or a
Personal Digital Assistant
With the use of m-commerce, there are plenty of
products and promotional items that can finally be
transacted. Movie tickets can be bought via your phone
with Internet access. Not only that, you can also avail
coupons, loyalty cards, and discount cards through you
mobile phone with the help of m-commerce. M-
commerce can also let you do mobile banking, and let
you use your money in different companies. Just like
using a laptop or a desktop, as long as your phone has
Internet access, so too can you shop until you drop
using m-commerce.
E-commerce, on the other hand, is an abbreviation of
electronic commerce. This means that e-commerce is a
way of doing business transactions through the Internet
as well. If you have a laptop or a desktop then you can
easily shop online. It has become very popular in these
modern days. Not only can it help you do transactions
online, it is also very convenient with all the swipe
machines where you can swipe your credit card for
payment. People can do a business-to-business
transaction via e-commerce called B2B. It can also do a
company to consumer transaction called B2C. This is
where your orders will be received via shipments and
deliveries. You can use credit cards when doing these
transactions. One of the best examples for this is when
amazon.com do business with their clients. Another
popular online shopping site is eBay

Key differentiators between E-Commerce and M-

Commerce
Both E-Commerce as M-Commerce has great
importance in our society. While E-Commerce is done
with the aid of Computers, M-Commerce is done with
the application of mobile phones.

Mobile payment
 Mobile payment is an alternative payment method.
Instead of paying with cash, cheque or credit cards, a
consumer can use a mobile phone to pay for a wide
range of services and digital or hard goods such as:

 Music, videos, ringtones, online game subscription or

items, wallpapers and other digital goods.
 Transportation fare (bus, subway or train), parking
meters and other services
 Books, magazines, tickets and other hard goods.

There are four primary models for mobile payments:

 Premium SMS based transactional payments

 Direct Mobile Billing
 Mobile web payments (WAP)
 Contactless NFC (Near Field Communication)

Consumers can use many forms of payment in mobile

commerce, including:

 Premium-rate telephone numbers', which apply charges

to the consumer's long-distance bill
 Charges added to the consumer's mobile telephone bill,
including deductions to pre-paid calling plans
 Credit cards
o Some providers allow credit cards to be linked to a
phone's SIM card
 Micropayment services
 Stored-value cards, often used with mobile-device
application stores or music stores

The industries affected by m-commerce

 Financial services, which includes 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/retail, as consumers are given the ability to
place and pay for orders on-the-fly
 Information services, which include the delivery of
financial news, sports figures and traffic updates to a
single mobile device

Example

1. Mobile banking
2. Mobile ticketing
3. Mobile marketing
 M-Commerce: Mobile Applications

 Vehicles
– transmission of news, road condition etc
– ad-hoc network with near vehicles to prevent accidents
–
 Emergencies
– early transmission of patient data to the hospital
– ad-hoc network in case of earthquakes, cyclones
– military ...

 Travelling salesmen
– direct access to central customer files
– consistent databases for all agents
– mobile office

 Web access

– outdoor Internet access

– intelligent travel guide with up-to-date
location dependent information

 Location aware services

– find services in the local environment, e.g. printer

 Information services
– push: e.g., stock quotes
– pull: e.g., nearest cash ATM

 Disconnected operations
– mobile agents, e.g., shopping

 Entertainment
– ad-hoc networks for multi user games

Products and services available

 Mobile ticketing Template :Main :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 near by it is very simple
commerce method.

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.
 6. M-commerce benefit

 Your Internet offerings are easier and more convenient

to access. 
 You get considerable flexibility while conducting
business. 
 Transaction and personnel costs are reduced due to
widespread automation of   
 back-office operations. 
 Field staff is more effective as they have flexible access
to back-office data. 

Benefit for business

For a small business could benefit from m-commerce.

 Selling a product or service
 Improving productivity

Advantage

 Offers many payment options

 Push advertising, direct marketing.
 More efficient and extensive service offered.
 The Internet is going mobile
 Disadvantages of m-commerce:

1. Mobile devices offer limited capabilities (such as

limited display).  Between mobile devices these
capabilities vary so much that end user services will
need to be customized accordingly.
2. The heterogeneity of devices, operating systems and
network technologies is a challenge for a uniform
end user platform.  For this reason, standardization
bodies consisting of telecommunication companies,
device manufacturers and value added service
providers integrate their work.
3. Mobile devices are more prone to theft and
destruction.
4. The communication over the air interface between
mobile device and network introduces additional
security threats.

AREAS / USES OF M-COMMERCE

In the current commerce industry, mobile

commerce or M-Commerce has been entered in finance,
services, retails, telecommunication and information
technology services. In these sectors, M-Commerce is
not only being widely accepted but also it is being more
used as a popular way of business/ commerce.

 Finance Sectors
 Telecommunication Sectors
 Service / Retail sectors
 Information Sector
M-COMMERCE APPLICATIONS

1. 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 with

the help of simple application downloads or by
accessing WAP portals of various Travel agents or
direct service providers.  Mobile ticketing for airports,
ballparks, and train stations, for example, will not only
streamline unexpected metropolitan traffic surges, but
also help users remotely secure parking spots (even
while in their vehicles) and greatly facilitate mass
surveillance at transport hubs.

2. Mobile vouchers, coupons and loyalty cards

Mobile ticketing technology can also be used for the

distribution of vouchers, coupons and loyalty cards. The
voucher, coupon, or loyalty card is represented by a
virtual token that is sent to the mobile phone.
Presenting a mobile phone with one of these tokens at
the point of sale allows the customer to receive the same
benefits as another customer who has a loyalty card or
other paper coupon/voucher. Mobile delivery enables:

 economy of scale
 quicker and easier delivery
 effective target marketing
 privacy-friendly data mining on consumer behaviour
 environment-friendly and resources-saving efficacy

3. 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,
mp3 players and video players into a single device will
result in an increase in the purchase and delivery of
full-length music tracks and video. Download speeds, if
increased to 4G levels, will make it possible to buy a
movie on a mobile device in a couple of seconds, while
on the go.
 Hardware / Software Tools

Tools supporting development of Devices in Mobile Commerce

A
pplication-Specific Speech
integrated Circuitry recognition
(ASIC)
System on a
Chip (So C)
Perc
Smart matter
eptive interfaces
Field Programmable Flexible
Logic Gates (FPLG) transistors
Micro Electro
Reconfigurabl
Mechanical Systems
e processors
(MEMS).

Object Technology is playing a major part in shaping

pervasive computing paradigm.
Java, C++ and XML are often used for implementation
at the server side and in the meantime as well as on the
pervasive device.
The Open Services Gateway initiative (OSG i) will play
a key role in operating pervasive device
 CATEGORISATION OF M-PAYMENT SYSTEMS

Most e-payment systems are not suitable for use in a

mobile context that is, using a mobile device and
communicating over a mobile telecommunication
network.  This is due to the special characteristics of
mobile devices and mobile telecommunications.  In the
following, we categorise m-payment systems according
to the whereabouts of the customer’s money:

1. Software electronic coins – electronic money stored on

the mobile in file format.
2. Hardware electronic coins – electronic money stored on
the mobile device on a smart card.
3. Background account – electronic money stored in a
remote account at a trusted third party.

Software Electronic Coins

            In this case, monetary value is stored on the

mobile device and the customer has full control of
his/her money wherever he/she goes and whatever
he/she does.  An electronic coin is represented as a file
containing, among other information, a value, a serial
number, a validity period and the signature of the
issuing bank.  Since software electronic coins are easy to
copy, the validity of an electronic coin depends on its
uniqueness in terms of its serial number.  The customer
transfers electronic coins to the merchant, who
forwards them to the issuing bank for the “double
spending test.” 

Hardware Electronic Coins

            In this case, monetary value is stored on a secure

hardware token, typically a smart card, in the mobile
device.  The presentation of electronic money is not
important, as long as it is stored securely on the smart
card.  Electronic money could be represented as a
simple numeric counter.  In order to get to the money,
the customer’s smart card and the merchant’s payment
server authenticate each other and a secure channel is
set up between them.  Then, electronic money can be
transferred from one to the other.  This approach is
quite attractive because smart cards provide an
additional level of mobility.  That means the payment
 smart card can also be used in POS transactions.  E.g.,
Geldkarte, Mondex and Barclay card.

Background Account

            Here, the money is stored remotely on an

account at a trusted third party.  Depending on the
specific payment system, the account could be a credit
card account, a bank account, or an account held at the
network operator.  For example, in some cases this data
is sent in the clear (e.g. a credit card authorisation) not
providing any security against eavesdropping and in
some cases this information is encrypted and digitally
signed, providing anonymity to the customer (e.g. SET –
Secure Electronic Transactions

KEY ISSUES OF M-COMMERCE

            The success of M-Commerce depends on:

 Evolution: Technology and Business models are

constantly evolving which will demand flexibility and
patience on part of all players.

 Customer loyalty: Who will ‘own’ the customer?

Partnerships among players from various industries
will be necessary for most, if not all, m-commerce
initiatives, and, in turn, will alter the nature of any one
company to own their own customers.

 Cross-sector knowledge gulf, where the different parties

will need to learn about the functions and limitations of
the services provided by the other players, for example,
operators will need to know about content and
applications.

Moving up the value chain: To respond to market

opportunities some companies have develop subsidiaries
in order to react more rapidly to market challenges. For
example, Sonera has developed Sonera Zed, to provide
portal and application management services such as
location based mobile yellow pages as well Smart Trust,
to develop secure solution for m-commerce
transactions. And Citicorp has established e- Citi to
develop a wireless access gateway strategy for financial
service providers.
 Scope

This is a strategic and exploratory document that aims

to:
• give guidance about the possibilities of using mobile
devices to connect people with
information about products.
• provoke thinking about how mobile devices can
enhance the relationship between trading
partners in the supply chain and between businesses
and consumers.
Whilst there are many possible applications using
mobile devices, this document focuses on exploring
opportunities within the supply and demand chain. It
does not seek to replicate work of other
standards bodies active in the mobile sector.
This is not a technical or implementation document. It
does not seek to define new standards nor to
give detailed advice about the financial benefits of using
mobile commerce. It also does not address
how a future mobile commerce infrastructure might be
funded.

References

 J. Schiller, “Mobile Communications”, Addison

Wesley, 1999
 D. Johnson, D Maltz, “Protocols for Adaptive Wireless
and Mobile Networking”, IEEE Personal
Communication, 3(1), February 1996
 web site –www.googel.com