Shop till your cell drops!

Wireless and a secure electronic payment system will have a far larger impact than ever imagined, fuelling the growth of mobile commerce, writes Probir Roy.

"Wireless is the growth hormone for e-commerce," says Bob Egan, analyst at Gartner.It is certain that the collision (or rather ''collusion'') between the digital brat pack of the internet — wireless and a secure electronic payment system will have a far larger impact than ever imagined — the tsunami of all economic waves!

Driven by the collision, m-commerce represents the single most powerful market disrupter of this decade. The impact clearly expected to be visible by 2010, when the mobile wallet starts to displace the first ATM machines.

So, how about shopping using your mobile?

It is essentially e-commerce using the mobile phone as the transaction instrument. The idea is that those connected to a cellular network should be able to pay for goods and services and have the cost debited from their bank accounts without necessarily passing through their mobile phone bill. The mobile provides a via media to transact or pay, which is safe, convenient and secure — an alternative channel to shop while on the move, or over the net or at a retail outlet, ideal for typical low value-high frequency transactions, for instance, at Barista, Café Coffee Day, INOX or just the the ''impulse buy'' transaction.

We already have seen it in limited action for recharge or top-up for prepaid customers from an ATM, bookings of tickets, mobile vending of food and beverages and magazines. For example, a local operator in Mumbai provides such a service to its subscribers. You can buy chocolates or a well-known beverage from these special vending machines called ''mobile operated vending machines'' (MoVM). The chocolates are paid for via an addition to the monthly cellular services bill or deducted from the balance on the prepaid card.

Other than using the mobile for utility bill payments, basic banking, stock alerts, etc, which we anyway associate with a service provider-utility-bank combine, it is the use of mobile phones as substitutes for credit or debit cards and cash that opens up further opportunities. While soft drinks and chocolate may just be the proverbial tip of the m-commerce iceberg parking and toll charges, renewals / re-charging of ISP, cable, satellite services, bus, train and air tickets, snacking, in store shopping, online shopping, etc are just a few other type of everyday transactions that meld well with this channel.

Making payment have evolved from the physical barter of goods to exchange of notes and coins, to writing checks, through to transferring payment card details either in person, over the telephone or internet. This evolution has involved a shift from the physical transference of tangible tokens of value to an exchange of information in the form of ''bits and bytes'' between parties. In the case of payment cards, this exchange takes place between the consumer''s bank and the merchant''s bank over networks managed either by regional payment providers or global card organizations.

Today the ubiquitous mobile phone - a digital device, has grown to be an extension of the NexGen citizen and spawned its own mainstream culture! It has become a vital source for not only communication and entertainment but storing information and other crucial data as well. Mobile data networks have now created a new channel for electronic commerce, while devices are capable of enabling the virtual exchange of payment information known as proximity payments.

The shift from physical to virtual payments has brought enormous benefits to consumers and merchants. Sure, mobile payments have been touted as the next big thing for some time but have hitherto failed to live up to the hype surrounding them. However current developments in the area of regulation, security/authentication, mobile content and services and most importantly within the mindset of the consumer hints at the beginning of process that will culminate in pervasive mobile network enabled payments sooner than later.

Japan has, by far, the largest subscriber base for mobile payments in the world today. In Hong Kong for example between 15 and 20 per cent of operator''s revenues come from m-commerce applications. In Europe, carrier portals are successfully driving up ARPU, pushing down churn and creating early stage commerce-based revenues. Overall it is estimated that by the end of last year there were 60 — million payment users generating sales of $60 billion and it is expected that the combined e-commerce and m-commerce sales could grow to $128 billion by 2009.

Blue Ocean Market

In India the internet today touches the lives of 25 million Indians and during the next couple of years will reach 165 million in the 20-40 year age group. Of this user base, 48 per cent reap the benefit of e-commerce — which incidentally celebrates its tenth anniversary this year. Yet, on this modest base the total value of e-commerce in India exceeds $150 million. If e-commerce adoption is any indication, where 39 per cent of the people who carry out e-commerce transactions, have no hesitation paying Rs1,000 to Rs5,000 at a time, then it is poised to grow to half-a-billion dollars by 2007, as estimated by the Internet and Online Association of India.

Value innovation. an electronic payment system and complementing and collaborative nature of cards, internet and wireless has opened up uncontested market space, which will drive 45 per cent of e-commerce in the future. What is this market potential? Today card-based-transactions in India are a $10-billion market. India records over 30 million transactions every year.

With internet and mobile (61 million) to grow 100 per cent and a cardholder base of 45 million by 40 per cent. The concomitant market potential of digital commerce is self-evident. Even if m-commerce appeals to one per cent of the conjoined card-cum-mobile carrying universe by 2007, the addressable market opportunity remains significant.

Now you go get it.
The author is a member, Indian Merchants Chambers'' National Information Technology Committee and FICCI''s eEntertainment Committee.