Mobile Commerce
Encyclopedia
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 Personal Digital Assistant (PDA), a smartphone, or other emerging mobile equipment such as dashtop mobile
Dashtop mobile
Dashtop mobile equipment refers to wireless mobile devices mounted on the vehicle dashboard. Dashtop mobile equipment includes satellite radios, GPS navigation, OnStar, mobile TV, HD radio, vehicle tracking system, MVEDR and Broadband Wireless Access devices. Currently, the dashtop mobile devices...

 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."

History

The Global Mobile Commerce Forum, which came to include over 100 organisations, had its fully minuted launch in London on 10 November 1997. It was founded by Logica and Cellnet. The meeting was opened by Dr Mike Short, former chairman of the GSM Association, with forecasts from Kevin Duffey (Group Telecoms Director of Logica) and Tom Alexander (later CEO of Virgin Mobile and then of Orange).

Mobile commerce was born in 1997 when the first two mobile-phone enabled Coca Cola vending machines were installed in the Helsinki
Helsinki
Helsinki is the capital and largest city in Finland. It is in the region of Uusimaa, located in southern Finland, on the shore of the Gulf of Finland, an arm of the Baltic Sea. The population of the city of Helsinki is , making it by far the most populous municipality in Finland. Helsinki is...

 area in Finland
Finland
Finland , officially the Republic of Finland, is a Nordic country situated in the Fennoscandian region of Northern Europe. It is bordered by Sweden in the west, Norway in the north and Russia in the east, while Estonia lies to its south across the Gulf of Finland.Around 5.4 million people reside...

. The machines accepted payment via SMS
SMS
SMS is a form of text messaging communication on phones and mobile phones. The terms SMS or sms may also refer to:- Computer hardware :...

 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
Radiolinja
Radiolinja was a Finnish GSM operator founded on September 19, 1988. On March 27, 1991, the world's first GSM phone call was made on Radiolinja's network...

 (now part of Elisa Oyj
Elisa Oyj
Elisa Oyj is a Finnish telecommunications company founded in 1882 that was known until July 2000 as HPY. Elisa Oyj employs about 3000 people and in 2007 had revenue of about €1.57 billion...

).

Two major national commercial platforms for mobile commerce were launched in 1999: Smart Money (http://smart.com.ph/money/) in the Philippines
Philippines
The Philippines , officially known as the Republic of the Philippines , is a country in Southeast Asia in the western Pacific Ocean. To its north across the Luzon Strait lies Taiwan. West across the South China Sea sits Vietnam...

, and NTT DoCoMo
NTT DoCoMo
is the predominant mobile phone operator in Japan. The name is officially an abbreviation of the phrase, "do communications over the mobile network", and is also from a compound word dokomo, meaning "everywhere" in Japanese. Docomo provides phone, video phone , i-mode , and mail services...

's i-Mode
I-mode
NTT DoCoMo's i-mode is a mobile internet service popular in Japan. Unlike Wireless Application Protocol, i-mode encompasses a wider variety of internet standards, including web access, e-mail and the packet-switched network that delivers the data...

 Internet service in Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...

. i-Mode offered a revolutionary revenue-sharing plan where NTT DoCoMo kept 9 percent of the fee users paid for content, and returned 91 percent to the content owner.

Mobile-commerce-related services spread rapidly in early 2000. Norway
Norway
Norway , officially the Kingdom of Norway, is a Nordic unitary constitutional monarchy whose territory comprises the western portion of the Scandinavian Peninsula, Jan Mayen, and the Arctic archipelago of Svalbard and Bouvet Island. Norway has a total area of and a population of about 4.9 million...

 launched mobile parking payments. Austria
Austria
Austria , officially the Republic of Austria , is a landlocked country of roughly 8.4 million people in Central Europe. It is bordered by the Czech Republic and Germany to the north, Slovakia and Hungary to the east, Slovenia and Italy to the south, and Switzerland and Liechtenstein to the...

 offered train ticketing via mobile device. Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...

 offered mobile purchases of airline tickets.

In April 2002, building on the work of the Global Mobile Commerce Forum (GMCF), the European Telecommunications Standards Institute (ETSI) appointed Joachim Hoffmann of Motorola to develop official standards for mobile commerce. In appointing Mr Hoffman, ETSI quoted industry analysts as predicting "that m-commerce is poised for such an exponential growth over the next few years that could reach US$200 billion by 2004".

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
University of Oxford
The University of Oxford is a university located in Oxford, United Kingdom. It is the second-oldest surviving university in the world and the oldest in the English-speaking world. Although its exact date of foundation is unclear, there is evidence of teaching as far back as 1096...

 in 2003, with Tomi Ahonen and Steve Jones lecturing. As of 2008, UCL Computer Science and Peter J. Bentley
Peter J. Bentley
Dr Peter John Bentley is a British author and computer scientist based at University College London.Peter J. Bentley is an Honorary Reader and College Fellow at UCL and a Collaborating Professor at KAIST. He is also a popular science author and consultant...

 demonstrated the potential for medical applications on mobile devices.

PDAs and cellular phones have become so popular that many businesses 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
Wireless Application Protocol
Wireless Application Protocol is a technical standard for accessing information over a mobile wireless network.A WAP browser is a web browser for mobile devices such as mobile phones that uses the protocol.Before the introduction of WAP, mobile service providers had limited opportunities to offer...

-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. 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
IPhone
The iPhone is a line of Internet and multimedia-enabled smartphones marketed by Apple Inc. The first iPhone was unveiled by Steve Jobs, then CEO of Apple, on January 9, 2007, and released on June 29, 2007...

, 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.

More recently, brick and mortar business owners, and big-box retailers
Big-box store
A big-box store is a physically large retail establishment, usually part of a chain. The term sometimes also refers, by extension, to the company that operates the store...

 in particular, have made an effort to take advantage of mobile commerce by utilizing a number of mobile capabilities such as location based services
Location-based service
A Location-Based Service is an information or entertainment service, accessible with mobile devices through the mobile network and utilizing the ability to make use of the geographical position of the mobile device....

, barcode scanning, and push notifications
Apple Push Notification Service
The Apple Push Notification Service is a service created by Apple Inc. that was launched together with iOS 3.0 on June 17, 2009. It uses push technology through a constantly-open IP connection to forward notifications from the servers of third party applications to the Apple devices; such...

  to improve the customer experience of shopping in physical stores. By creating what is referred to as a 'bricks & clicks' environment, physical retailers can allow customers to access the common benefits of shopping online (such as product reviews, information, and coupons) while still shopping in the physical store. This is seen as a bridge between the gap created by e-commerce and in-store shopping, and is being utilized by physical retailers as a way to compete with the lower prices typically seen through online retailers.

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
Point of sale
Point of sale or checkout is the location where a transaction occurs...

 receives the same benefits as if they had the traditional token. Stores may send coupons to customers using location-based service
Location-based service
A Location-Based Service is an information or entertainment service, accessible with mobile devices through the mobile network and utilizing the ability to make use of the geographical position of the mobile device....

s 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
4G
In telecommunications, 4G is the fourth generation of cellular wireless standards. It is a successor to the 3G and 2G families of standards. In 2009, the ITU-R organization specified the IMT-Advanced requirements for 4G standards, setting peak speed requirements for 4G service at 100 Mbit/s...

 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 service
Location-based service
A Location-Based Service is an information or entertainment service, accessible with mobile devices through the mobile network and utilizing the ability to make use of the geographical position of the mobile device....

s 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
    News
    News is the communication of selected information on current events which is presented by print, broadcast, Internet, or word of mouth to a third party or mass audience.- Etymology :...

  • Stock quotes
    Ticker tape
    Ticker tape was the earliest digital electronic communications medium, transmitting stock price information over telegraph lines, in use between around 1870 through 1970...

  • Sports scores
  • Financial records
  • Traffic reporting
    Traffic reporting
    Traffic reporting is the distribution of information about road conditions such as traffic congestion, detours, and traffic accidents, generally as part of a radio or television broadcast program. The reports help commuters anticipate and avoid traffic problems. Many reports mention alternate...



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
Bandwidth (computing)
In computer networking and computer science, bandwidth, network bandwidth, data bandwidth, or digital bandwidth is a measure of available or consumed data communication resources expressed in bits/second or multiples of it .Note that in textbooks on wireless communications, modem data transmission,...

 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
Mobile Banking
Mobile banking is a term used for performing balance checks, account transactions, payments, credit applications and other banking transactions through a mobile device such as a mobile phone or Personal Digital Assistant . The earliest mobile banking services were offered over SMS...

, or M-Banking.

Mobile StoreFront

The reinvention of the mobile phone as a touch sensitive handheld computer has for the first time made mobile commerce practically feasible. 'According to ABI Research, mobile is going to get a lot bigger in the ecommerce market. The research firm is predicting that in 2015, $119bn worth of goods and services will be purchased via a mobile phone.'

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 mobile reverse auction solutions have grown in popularity. Unlike traditional auctions, the reverse auction (or low-bid auction) bills the consumer's phone each time they place a bid. Many mobile SMS
SMS
SMS is a form of text messaging communication on phones and mobile phones. The terms SMS or sms may also refer to:- Computer hardware :...

 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
World Wide Web
The World Wide Web is a system of interlinked hypertext documents accessed via the Internet...

 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 web
Mobile Web
The Mobile Web refers to the use of Internet-connected applications, or browser-based access to the Internet from a mobile device, such as a smartphone or tablet computer, connected to a wireless network....

sites 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. Mobile campaigns must be based on the global Content Generationor what is called Generation C and four other 'C's: Creativity, Casual Collapse, Control, and Celebrity. A brief introduction...
Creativity: let's face it, we're all creatives, if not artists! (Notice we didn't mean talented artists ;-). And as creativity normally leads to content, the link with GENERATION C is obvious. Which then brings us to Casual Collapse: the ongoing demise of many beliefs, rituals, formal requirements and laws modern societies have held dear, which continue to 'collapse' without causing the apocalyptic aftermath often predicted by conservative minds. From women's rights to gay marriage to not wearing a tie to work if you don't feel like it

Research demonstrates that consumers of mobile and wireline markets represent two distinct groups who are driven by different values and behaviors, and who exhibit dissimilar psychographic and demographic profiles. As a result, successful mobile commerce requires the development of marketing campaigns targeted to this particular market segment.

Influence on youth markets

Mobile media is a rapidly changing field. New technologies, such as WiMax
WiMAX
WiMAX is a communication technology for wirelessly delivering high-speed Internet service to large geographical areas. The 2005 WiMAX revision provided bit rates up to 40 Mbit/s with the 2011 update up to 1 Gbit/s for fixed stations...

, act to accelerate innovation in mobile commerce. Early pioneers in mobile advertising include Vodafone
Vodafone
Vodafone Group Plc is a global telecommunications company headquartered in London, United Kingdom. It is the world's largest mobile telecommunications company measured by revenues and the world's second-largest measured by subscribers , with around 341 million proportionate subscribers as of...

, Orange, and SK Telecom
SK Telecom
SK Telecom Co., Ltd. or Sunkyoung Telecom is a South Korean wireless telecommunications operator, controlled by the SK Group, one of the country's largest chaebol. As a part of SK Group, SK stands for Sun Kyung.SK Telecom is a provider of mobile service in Korea, with 50.5% of the market share as...

.

Mobile devices are heavily used in South Korea to conduct mobile commerce. Mobile companies in South Korea believed that mobile technology would become synonymous with youth life style, based on their experience with previous generations of South Koreans. "Profitability for device vendors and carriers hinges on high-end mobile devices and the accompanying killer applications," said Gibran Burchett.

Memetic research

Leveious Rolando, John Sokol and Gibran Burchett are memetic
Memetics
Memetics is a theory of mental content based on an analogy with Darwinian evolution, originating from Richard Dawkins' 1976 book The Selfish Gene. It purports to be an approach to evolutionary models of cultural information transfer. A meme, analogous to a gene, is essentially a "unit of...

 researchers who pioneered mobile advertising with their early experimentation of DVB-H in 1999 with Sony BMG recording artist Wu-Tang Clan
Wu-Tang Clan
The Wu-Tang Clan is a hip-hop group from Staten Island that consists of RZA, GZA, Method Man, Raekwon, Ghostface Killah, Inspectah Deck, U-God, Masta Killa, and the late Ol' Dirty Bastard. They are frequently joined by fellow childhood friend Cappadonna, a quasi member of the group...

.

On a 2007 trip to South Korea, Rolando created a Venn-diagram
Venn diagram
Venn diagrams or set diagrams are diagrams that show all possible logical relations between a finite collection of sets . Venn diagrams were conceived around 1880 by John Venn...

 model of rapidly evolving youth lifestyle trends. The diagram explained vital aspects of mobile adoption and sales of mobile global products and services. Rolando and his colleagues performed an experiment in which viral marketing
Viral marketing
Viral marketing, viral advertising, or marketing buzz are buzzwords referring to marketing techniques that use pre-existing social networks to produce increases in brand awareness or to achieve other marketing objectives through self-replicating viral processes, analogous to the spread of viruses...

, in the form of mobile commercials (or "mobisodes"), was used to attract and retain an audience. The two tested a theory of rapid memetic dissemination. They observed the youth cultural styles and trends, combined with the rate at which the test subjects passed on particular information to others. One group of subjects were given words and phrases to be used regularly in conversation. The control group was not given such a list This experiment measured the rate at which ideas and phrases were typically transmitted.

Rolando conducted other experiments in Europe, South Korea, and Japan involving viral mobile direct-marketing campaigns delivering products and coupons with instant savings to mobile devices. These studies were commissioned by top mobile providers like Deutsche Telekom
Deutsche Telekom
Deutsche Telekom AG is a telecommunications company headquartered in Bonn, Germany. It is the largest telecommunications company in Europe....

 (operator of T-Mobile
T-Mobile
T-Mobile International AG is a German-based holding company for Deutsche Telekom AG's various mobile communications subsidiaries outside Germany. Based in Bonn, Germany, its subsidiaries operate GSM and UMTS-based cellular networks in Europe, the United States, Puerto Rico and the US Virgin Islands...

) and Orange. The experiments used disc jockey
Disc jockey
A disc jockey, also known as DJ, is a person who selects and plays recorded music for an audience. Originally, "disc" referred to phonograph records, not the later Compact Discs. Today, the term includes all forms of music playback, no matter the medium.There are several types of disc jockeys...

s and mobile youth street teams to drive instant purchases of event-ticket sales, and the sales of three different viable youth products to over 200,000 end-users in eight days. This demonstrated how the global youth mobile market can react autonomously and create trends. It also showed how products take on new life because of the mindset of the young, who tend to be early adopters of any form of social technology services.

These researchers, along with others, developed methods deployed globally through concerts and events involving any form of youth culture in 2008, in partnership with leading mobile software and network providers. Leveious and others members of Trendwatching.com defined Content Generation a description of those born of the digital age of content and how their brains were re wired to think in real time content exchange. The Term is now globally The GENERATION C phenomenon captures the an avalanche of consumer generated 'content' that is building on the Web, adding tera-peta bytes of new text, images, audio and video on an ongoing basis.
The two main drivers fuelling this trend? (1) The creative urges each consumer undeniably possesses. We're all artists, but until now we neither had the guts nor the means to go all out. (2) The manufacturers of content-creating tools, who relentlessly push us to unleash that creativity, using -- of course -- their ever cheaper, ever more powerful gadgets and gizmos. Instead of asking consumers to watch, to listen, to play, to passively consume, the race is on to get them to create, to produce, and to participate.

Payment methods

Consumers can use many forms of payment in mobile commerce, including:
  • Premium-rate telephone number
    Premium-rate telephone number
    Premium-rate telephone numbers are telephone numbers for telephone calls during which certain services are provided, and for which prices higher than normal are charged. Unlike a normal call, part of the call charge is paid to the service provider, thus enabling businesses to be funded via the calls...

    s', 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 card
    Credit card
    A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services...

    s
    • Some providers allow credit cards to be linked to a phone's SIM card
  • Micropayment
    Micropayment
    A micropayment is a financial transaction involving a very small sum of money and usually one that occurs online. PayPal defines a micropayment as a transaction of less than 12 USD while Visa prefers transactions under 20 Australian dollars, and though micropayments were originally envisioned to...

     services
  • Stored-value card
    Stored-value card
    A stored-value card refers to monetary value on a card not in an externally recorded account and differs from prepaid cards where money is on deposit with the issuer similar to a debit card...

    s, often used with mobile-device application stores or music stores

See also

  • electronic commerce
    Electronic commerce
    Electronic commerce, commonly known as e-commerce, eCommerce or e-comm, refers to the buying and selling of products or services over electronic systems such as the Internet and other computer networks. However, the term may refer to more than just buying and selling products online...

  • Mobile Ticketing
    Mobile ticketing
    1. Mobile ticketing is the process whereby customers can order, pay for, obtain and validate tickets from any location and at any time using mobile phones or other mobile handsets. Mobile tickets reduce the production and distribution costs connected with traditional paper-based ticketing channels...

  • Mobile Banking
    Mobile Banking
    Mobile banking is a term used for performing balance checks, account transactions, payments, credit applications and other banking transactions through a mobile device such as a mobile phone or Personal Digital Assistant . The earliest mobile banking services were offered over SMS...

  • Mobile commerce service provider
    Mobile commerce service provider
    Mobile Commerce Service Provider - An organization that provides any combination of consulting, software and computer systems for mobile e-commerce platforms, mobile devices , mobile commerce, mobile content or mobile web sites.mCSPs supply businesses with the tools and services they need to...

  • Mobile dial code
    Mobile dial code
    A Mobile Dial Code is a phone number that allows the request and receipt of information directly to a mobile phone.A Mobile Dial Code combines a toll-free number, a web address and a short code into one simplified number. It is a 2-12 digit string of letters or numbers that is preceded by a...

  • Mobile Payments
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