M-COMMERCE

INTRODUCTION
The advent of the World Wide Web (WWW) in the early 1990s provided the interface
that made the Internet easily accessible to the mass market, sparking the information
revolution--- participants came to have unprecedented access to a deluge of data and information.
Riding on the ubiquity and reach of the WWW is commerce in its many forms: Inter-business
trade, intra-organizational transaction, purveyors of goods and services touting wares to potential
customers and consumers soliciting purchases. The combination of the Internet as a business data
clearinghouse, and the WWW as the virtual global marketplace, transformed traditional
commerce to electronic commerce (e-commerce). Ecommerce is the primary propellant of
Internet development today and will continue to drive innovation well into the new millennium.
Electronic commerce has attracted significant attention in the last few years. This high
profile attention has resulted in significant progress towards strategies, requirements, and
development of e-commerce applications. The growth forecast for both business to- consumer
(B2C) and business-to business (B2B) aspects of ecommerce over the next few years is
phenomenal by any standard. One point that should be made here is that nearly all ecommerce
applications envisioned and developed so far assume fixed or stationary users with wired
infrastructure, such as a browser on a PC connected to the Internet using phone lines or a Local
Area Network (LAN).
FROM E-COMMERCE TO M-COMMERCE
Extraordinary market statistics are emerging from a related field: wireless
telecommunication. Conceived in the 1980s primarily to carry voice transmissions, the medium
today has developed into a fair bearer of data-including Internet communications. Wireless
and mobile networks have experienced exponential growth in terms of capabilities of mobile
devices, middleware development, standards and network implementation, and user acceptance.
Currently, more than 800 million cell phones and other mobile devices are in use worldwide, and
out of those, more than 140 million users are in US alone. The worldwide numbers are projected
to rise to 1 billion soon, thereby exceeding the combined total of all computing devices several
fold. In addition, areas around the world where wired penetration is relatively lower, mobile
phones have actually become many subscribers’ primary means of Internet access. Countries
with a lack of regular telecom infrastructure are likely to adopt wireless and mobile
communications to serve both urban and rural areas.

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Untethered by the umbilical cord of fixed line connection, the amazing possibilities of
wireless Internet access fuels the unstoppable trend towards ultimate convergence of Internet and
mobile communications. In the process, e-commerce evolves into mobile-commerce or m-
commerce. It is envisioned that many new e-commerce applications will be possible and
significantly benefit from emerging wireless and mobile networks. These applications have been
termed as “wireless e-commerce” or “mobile commerce”.
M-commerce is more than just an extension of e-commerce in conducting conventional
business----the allure of ‘anytime’ convenience and ‘anywhere’ mobility in carrying out
everyday Internet transactions has the potential to spur a myriad of novel and unique services.
M-COMMERCE
Any electronic transaction or information interaction conducted using a mobile device
and mobile networks (wireless or switched public network) that leads to transfer of real or
perceived value in exchange for information, services or goods, is known as Mobile Commerce.
Mobile Commerce, also known as M-Commerce or mCommerce, is the ability to conduct
commerce using a mobile device, such as a mobile phone, a PDA (personal digital assistant), a
smartphone, or other emerging mobile equipment such as dashtop 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.”
Customers‘point of view M-commerce
 The customer wants to access information, goods and services any time and in any place
on his mobile device.
 He can use his mobile device to purchase tickets for events or public transport, pay for
parking, download content and even order books and CDs.
 He should be offered appropriate payment methods. They can range from secure mobile
micropayment to service subscriptions.
Providers‘point of view
 The future development of the mobile telecommunication sector is heading more and
more towards value-added services. Analysts forecast that soon half of mobile
operators‘revenue will be earned through mobile commerce.

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 Consequently operators as well as third party providers will focus on value-added-

services. To enable mobile services, providers with expertise on different sectors will
have to cooperate.
 Innovative service scenarios will be needed that meet the customer’s expectations and
business models that satisfy all partners involved.
ATTRIBUTES OF M-COMMERCE
 M-Commerce is an enabling technology for delivering greater business volume, customer
loyalty, and support for urgent transactions such as travel changes and stock transactions.
 M-Commerce applications won’t work if they simply mirror the e-commerce applications
that are available on web sites.
 They must offer the correct format for a specific device, plus secure access and intuitive
navigation.
 M-Commerce must be treated as a unique opportunity for delivering personalized,
location based services to customers, and not simply as an extension to company’s web
presence.
The attributes of mobile-commerce are:
o Mobility—users carry cell phones or other mobile devices
o Broad reach—people can be reached at any time
o Ubiquity—easier information access in real-time environment
o Convenience—devices that store data and have Internet, intranet, extranet connections
o Instant connectivity—easy and quick connection to Internet, intranets, other mobile
devices, databases
o Personalization—preparation of information for individual consumers
o Localization of products and services—knowing where the user is located at any given
time and match service to them.
Wireless Messaging Developments
SMS- Short Message Service: Wireless service conceived for the bi-directional exchange of
short alphanumeric messages of up to 160 characters each among mobile services. Originally
developed in 1991 as part of the GSM Phase 1 standard. Almost all communications systems
support it. Short messages ride on a separate signaling path.
EMS- Enhanced Messaging service: A minor extension to SMS, promulgated by the ETSI

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It imbues messages with a rich mix of formatted text, simple animations, tiny pictures and small
melodies. EMS-enabled handsets were commercially available by the first half of 2001.
MMS- Multimedia Messaging Service: Proposed by the 3GPP as the next generation wireless
messaging system. A single message can contain text, audio clips, still pictures, animated
images, full-motion video and other multimedia embellishments destined for viewing on MMS-
enabled terminals.
M-COMMERCE VALUE CHAIN - ENTITIES
Customer: who is mainly mobile. The place where the transaction is initiated can be different
from the place where he receives the service, pays and the transaction is committed. These places
can be in different countries or on the borders of countries and the consumption of the services
he has acquired can take place in a third country.
Content/Service Provider: who provides specific contents to a customer through a WAP
Gateway which can be hosted at the Mobile Network Operator or though a portal that can be
hosted at the operator’s WAP server or anywhere else. · Mobile Portals: that offer personalized
and localized services to customers.
Mobile Network Operator: The role of the operator is very vital for the mobile electronic
commerce. Depending on where it stands in the whole value chain of m-commerce, its role can
vary from a simple mobile network provider to an intermediary, portal or trusted third party. The
role of the operator can be quite complex and affect also the billing and payment of m-services.
 Mobile network operators have a number of advantages over other portal players:
 They have an existing customer relationship and personal data.
 They can identify the location of the subscriber.
 Traditional portal doesn’t usually have a billing relationship with the customer.
 Provide bundle services: Provides offers with a combination of various purchases from
different suppliers with discounts. So, e.g, if customer wants to buy product A from
supplier X, he may find out about an offer from the Telecom Operator about two products
A and B from different
 Suppliers at a lower price.
 Act as a front- end to the bank: The customer pays to the operator who, in this case, is
also responsible for payment refund to the customer if the latter is not satisfied with the
products.

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 Act as Trusted Third Party: In cases the customer wants to buy a number of goods from
various suppliers who must interoperate.
Applications of Mobile commerce
Mobile financial applications (MFA) –
 Mobile banking
 Brokerage service
 Mobile money transfer
 Mobile micropayments.
These services could turn a mobile device into a business tool, replacing bank, ATM, and credit
cards by letting a user conduct financial transactions with mobile money. Secure transactions are
required before any of these applications are widely deployed.
One interesting mobile financial application is micropayment involving small purchases
such as vending and other items. A mobile device can communicate with a vending machine
using a local wireless network to purchase desired items. Micro-payments can be implemented in
a variety of ways. the user could make a call to a certain number where per minute charges equal
the cost of vending item. This approach has been used by SONERA, a Finnish wireless provider,
in their famous Coke (and now Pepsi) machine service. In effect, it collects money from the
users and credits it to the vending providers. using pre-paid numbers purchased from a service
provider, bank, or credit-card company. To support financial transactions including micro-
payments, a mobile service provider could act as a bank, acquire a bank, or compete with a bank.
Mobile advertising – Using demographic information collected by wireless service providers
and information on the current location of mobile users, much targeted advertising can be done.
The advertising messages can be personalized based on information provided by consulting the
user at an earlier stage or by the history of users’ purchasing habits. Advertisements sent to a
user can also be location sensitive and can inform a user about various on-going specials (shops,
malls, and restaurants) in surrounding areas. This type of advertising can be performed using
Short Messaging Service (SMS) or by using short paging messages to mobile users. The
messages can be sent to all users located in a certain area (the geographic region can be
identified by advertisers or even by users in advance); a user-specific message can be sent
independent of the user’s current location. As more wireless bandwidth becomes available,

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content rich advertising involving audio, pictures and video clips can be produced for individual
users with specific needs, interests, and inclinations.
Also depending on interests and the personality type of individual mobile users, a
network provider may consider using a “push” or “pull” method of mobile advertising based on a
per-user basis or a class of users. Other interesting issues include the number of advertisements
and the level and type of content that should be transmitted. These advertisements should be
limited to avoid overwhelming the user with information and also to avoid the possibility of
congestion of the wireless links. Wireless networks may consider such advertising lower priority
traffic if network load crosses a certain threshold. Since these services need the current location
information of a user, a third party may be needed to provide location services. However, this
may require a sharing of revenues between the network service provider and location service
provider.
Mobile inventory management (MIM) - This class of applications involves location tracking of
goods, services, and possibly even people. The tracking of goods may help service providers in
determining the time of delivery to customer, thus improving customer service and obtaining a
competitive edge over other businesses. One very interesting application is “rolling inventory”
– which may involve multiple trucks carrying a large amount of inventory while on the move.
Whenever a store needs certain items/goods, it can locate a truck (preferably in nearby area) and
just-in-time delivery of goods can be performed. The rolling inventory and delivery application
can reduce the amount of inventory space and cost for both vendors and stores and may also
reduce the time between when an order is placed and the goods are delivered. Rolling inventory
is a B2B m-commerce application while location tracking can be considered a B2C application.
Using inexpensive embedded radio/microwave devices (chips), a wireless network can track
goods and services. Since satellite signals may not work well inside a truck, a separate wireless
LAN can be provided on-board for intratruck communication and tracking. An interesting
research problem is to determine an appropriate match for the amount of inventory carried by
trucks in a geographical area with dynamically changing delivery demands. Also traffic in a city
may affect the just-in-time delivery in nearby areas.
Another example of MIM is just-in-time delivery/movement of components in an
assembly plant based on the rate of consumption of existing components. A variety of new
components can be moved at a certain speed after receiving a wireless signal from the

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components reaching the assembly line or from a device on the assembly line itself. This will
allow just-in time delivery leading to a reduced inventory and assembling cost. If the new
components are delayed for some reason, then signals can be sent to the assembly line for
possible adjustment of the assembly speed to match the arrival time of new components. Such an
application would reduce the inventory cost while increasing productivity by matching the speed
of new component arrival to the rate of assembly.
Potential MIM customers may include shipping companies, assembly plants (auto,
manufacturing), airline/mass-transit industry, and supermarket chain stores. One positive factor
is that many of these industries are already increasing their use of wireless technologies. Possible
wireless technologies that can be used with MIM include Global Positioning Satellite Systems
(GPS) that are operated by the Department of Defense for location tracking (the accuracy level is
based on the type of receiver and the type of user). Many luxury cars already have built-in GPS
receivers that compute location information based on received signals from at least 4 (out of 24)
GPS satellites. GPS may not work well for indoor environments, as they require line of sight
transmission between devices and satellites. Another location tracking application is called E
(enhanced) 911. E-911 allows operators to receive location information of cell phone users along
with their emergency calls. Since it is difficult for cellular/PCS systems to provide such location
information, it is likely that a GPS chip will be installed on cell phones to help 911 operators to
determine the location of mobile users. If such a chip is installed in ell/PCS phones, then location
tracking of such users under normal circumstances will also be possible. Since “people” can also
be considered inventory resources, they could also be better managed.
Product location and search (PLS) - This class of applications includes locating an item in a
particular area or location. This is somewhat different from the previous class of applications as
here we are concerned with finding an item (or person) with certain specifications and whether it
is available in a specified area or not. Potentially, there could be multiple places where such an
item or an item of similar attributes (also specified by the user) are located. Currently, many
people go to several stores to find an item (certain brand/size of TV, VCR or an automobile) and
compare price and features. Using a mobile device (such as Palm Pilot, Nokia Communicator or
Net Phone) and a centralized/ distributed database containing information on products, a user
should be able to find the exact location of a store where a certain item is located. A list of
locations and distance from a specified point can also be displayed. After that the user can buy

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on-line using a browser on his/her mobile device. In the case of multiple stores/vendors carrying
an item desired by a user, they could compete to get the customer by real-time manipulation of
prices or by offering instant discounts.
From a technological point of view, a mobile user can send a query message to a
centralized location, which in turn can interface several different stores/dealers and decide if the
item is available or not (and if yes, at what price). Alternatively, stores/vendors may connect
their inventory record systems to this site. Since the inventory of different vendors may use
different code names, a uniform product naming system (or existing code such as UPC) that
allows for easy translation to standard web content will be required.
Two factors to consider are:
(a) How the database will price its services to vendors/dealers and
(b) The correctness of information (related to availability or price) from inventory to the
database or website.
We also believe that software agent technologies will prove to be invaluable as multiple
agents can be deployed (cooperating & negotiating) to conduct various transactions at different
places.
Proactive service management (PSM) – This class of applications is based on collecting
pertinent information about current or near-future user needs and providing services to users
Proactively. One such application may involve collecting information about the aging
components of an automobile. Many vendors including car dealers/repair shops can increase
their business by acquiring information about aging components of an automobile. Information
can be collected and used by car dealers for ordering components (thus reducing inventory
costs). In a more elaborate scenario, several dealers/shops can compete for business by offering
discounts or lower rates. Such information can also be collected and analyzed by manufactures to
improve the design and manufacturing of future products. This service could even be offered as
part of the warranty for new cars or could be purchased by current automobile owners. This
would help reduce anxiety levels of owners and improve the general conditions of automobiles
on the road leading to a reduced number of traffic jams, accidents, and even fatalities. From a
technological point of view, automobiles can be equipped with smart sensors that keep track of
how much wear and tear a car component has gone through. This information can then be

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transmitted using a radio/microwave/satellite system to a specified service center or other

location. Some implications of such applications are privacy, security, reliability, and cost of
deployment. However, we envision that car dealers, repair shops, automobile owners, and even
law enforcement officers (from the public safety point of view) would be interested in such an
application.
Wireless business re-engineering – Many insurance business situations involve going to
customers’ premises, taking notes of a particular situation, going back to the office, and then
taking suitable actions. This process takes a long time and is not very efficient. To improve this
business practice, a wireless business re-engineering application can be used which allows on-
the-spot claim adjustment. In such a scenario, a claim adjuster goes to the customer’s place, takes
pictures and stores them in his/her mobile device for uploading to the company’s database. Next
the adjuster downloads necessary information (customer’s profile and coverage information)
from insurance company’s database. Using a small printer attached to the mobile device, he/she
prints a claim check. This entire process is performed in minutes as opposed to days. The speed
of this kind of service can significantly add to a company’s bottom line and competitive
advantage. Security and connectivity issues are important as they may affect the perceived
quality of service by a customer.
Mobile auction, entertainment and other services – With an increasingly mobile society, more
and more people are on the move. While mobile, people may prefer to be involved in some
business or entertainment activities. Many of these services can be offered to people through
mobile devices and wireless networks. These include mobile auction/reverse auction, videoon-
demand services, and other entertainment-oriented services. The technologies needed include
mobile devices with capabilities to match desired applications, suitable mobile middleware, and
wireless networks with high bandwidth (such as emerging LEO satellites or third generation
wireless networks). Continued connectivity is a real important issue as it may affect the
Perceived quality of service for entertainment/information services. For auction/ reverse auction,
frequent disconnection may seriously affect the usefulness of this service unless it can be
guaranteed that if users get disconnected, the state of auction will be maintained and
disconnected users will not suffer any loss during periods of disconnection.
M-Commerce Revenues Sources
 eCommerce Portals

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 Short Messaging Services (SMS)

 Subscription-Based Services
 Revenue accrued from introducing new customers
 Revenue-sharing between Wireless Network Operators

ISSUES IN M-COMMERCE WIRELESS PRIVACY - Mobile network location-based

services offer content and service providers an unprecedented avenue to target consumers based
on their physical locale. With location technology steadily improving, it is plausible subscribers
could soon be placed with near pinpoint accuracy. Consumer advocates view this to be a threat to
personal privacy, with the associated issues of undue surveillance, spam and profiling. It is
conceivable location data could be collected to explicitly track the physical movement of a
particular subscriber within the network coverage. This could escalate to become a personal
safety issue if the location information fell into the wrong hands through inadvertence or
malicious theft.
PREVENTIVE MEASURES:
 Stringent industry self-regulation such as using low granularity location information
when precision is neither critical nor desirable.
 Obtaining explicit user consent before releasing location details to advertisers
 Guaranteeing user anonymity even when data is used---by applying only aggregate
information without identifying specific individuals.
WIRELESS PAYMENT SYSTEMS- The use of transmission encryption technology has
essentially contained the risks inherent in sending credit card information over the Internet to
online merchants for payment settlement. Encrypted details like card number and expiration date
are largely secure en route, although this does not prevent subsequent misappropriation at the
destination. To further fortify security, credit card companies have implemented authentication
systems that verify the identities of transacting parties. Advocated by Visa and MasterCard, the
Secure Electronic Transaction system is supported by major banks but has been relatively costly
for merchants to implement, delaying its widespread adoption. But the biggest shortcoming of
credit card settlement schemes by far relates to the expensive fixed transaction overheads that
favor higher value transactions, precluding cost effective use for small value payments.
WIRELESS SECURITY – Concerns about security risks is the overriding reason why firms
have delayed deploying wireless Web technologies. Respondents found the WAP 1.2

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specifications immature and insecure for enterprise class deployment. The WAP Forum has
committed to delivering version 1.3 which will enable end-to-end security and add support for
Public Key Infrastructure (PKI) cryptography, removing another obstacle to the viability of
WAP as a secure wireless platform. M-commerce applications providers can use WAP digital
certificates to authenticate between transacting parties and to enable encrypted communications
over the Intranet and mobile networks. Web merchants can hence conduct secured transactions
with mobile customers.
Computer viruses have begun the migration to hand-held devices like PDAs and even
mobile phones as such terminals gain more processing power and intelligence. With the use base
of cellular phones outstripping that of personal computers, it was only a matter of time before
malicious individuals targeted the platform with rogue code. This would present a significant
security risk in the future to mobile users who are growing increasingly reliant on their wireless
devices not just for voice but data services such as mobile commerce.
The first computer virus known to have specifically targeted mobile phones as part of its
payload was isolated in Spain in mid- 2000. The virus was spread as an e-mail enclosure on
conventional computers but was also designed to send prank SMS text messages to randomly
selected mobile phone numbers on a particular cellular network in the country. Had the outbreak
not been contained early, the flood of messages could potentially have crippled the network. Few
mobile phones today possess the capability to handle e-mail attachments, but subsequent
generations of Internet-enabled devices will be better equipped and hence be more vulnerable.
Anti-virus vendors have already begun shipping anti-virus programs for hand-held computers but
the onus remains on users to be vigilant to the possibility of such infections in times to come.
WIRELESS EMISSION AND PUBLIC HEALTH- The mobile telecommunications industry
has long grappled with the contentious issue of cellular radio frequency (RF) emission and the
impact on public health and safety. In particular, there is fear that emission from wireless
handsets and cellular base stations may actually be cancer-inducing, sparking public outcry for
manufacturers to be forthcoming about the true ramifications, given the rapid increase in the use
of mobile phones and related technologies.
Research has clearly demonstrated an increase in traffic accidents when mobile phones
are operated while driving---even using so-called hands-free kits. There is also evidence to

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suggest the possibility of electromagnetic interference from the use of cellular phones near
sensitive medical devices such as pacemakers and hearing aids, and aircraft devices.
CONCLUSION
Considering that most people would rather lose their wallet than misplace their cell
phone, it’s fitting that the mobile world is quickly becoming a new hub for business. For many of
us, our cell phone never leaves our side. It holds a place at the dinner table, is easily accessible in
our bag’s front pocket, and often, somehow it even manages to end up sharing our pillow at
night. Busy schedules mean people are often on the move and when marketers and companies
can’t reach consumers at their computers, on TV, before the previews at the movies, with
billboards, or magazine and newspaper ads, they must feel assured that they can still reach them
on their cell phones.
Mobile commerce, or m-commerce, is simply the ability to conduct business transactions
through a mobile device. With smart phone sales rising 49% in the first quarter of 2010, never
before has it been so easy to shop, anywhere, anytime from the palm of your hand. There is an
enormous amount of ongoing market research, and though there has been a variety of numbers
estimated and reported, they all conclude that mobile commerce is a profitable and rapidly
growing market. By 2015, it’s estimated that shoppers from around the world will spend about
$119 billion on goods and services bought via their mobile phones, according to a study by ABI
Research released this past February. In the United States alone, mobile shopping rose from $396
million in 2008 to $1.2 billion in 2009, and mobile campaign spending also increased by 25 to
30% over the past year, with companies shelling out just under $313 million according to the
same study. Senior Analyst Mark Beccue said that he’s forecasting U.S. sales to reach about $2.2
billion in 2010.
References
1· An Introduction to E-Commerce, Winter
2. From E-Commerce To M-Commerce: The Power Of The Mobile Internet (Clarence N W Tan,
T W Teo)---Working Paper, 2001- [ This Paper Is Also Included In The Book “ Internet
Management Science: A Global Perspective” By Idea Group Publishing]
3. www.wikipedia.org

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S. SASIKALA,M.B.A.,M.Phil.,

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