Shop till your cell drops!
09 Sep 2005
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.