The Indian mobile subscriber base has crossed the 113 mn mark. And every month approximately 5 mn plus subscribers are added to this huge user base. Another interesting aspect is that though volumes in the Indian telecom segment are high but the margins are low, so the key for success here is innovation. The mobile market is maturing and competition between service providers is intensifying. The operators cannot realize substantial margins only with mobile voice services. So, as they work towards creating new business models, mobile commerce is emerging as a service which has great potential to help service providers to make substantial profit. It is been touted as the next big thing. The reason being mobile phone users outnumber credit and debit card holders, and also Internet users 2.5 to 1.

Probir Roy, co-founder, director, PayMate, says, “As mobile use is overtaking the Internet, so using mobile as a transaction medium is a logical transition. It's a matter of time when it picks up as an integral part of VAS.”

M-commerce is emerging as an exclusive channel of distribution leveraging on the fact that mobiles are quickly becoming more than just communication devices. According to the ARC group, by 2007 approximately 546 mn users will spend around $40 bn on m-commerce.

The Take-off
The idea of m-commerce took shape a long time back, yet it has only been an overly ambitious goal of the industry. One of the main reasons being that cellular networks capable of securely routing transactions to a payment gateway are new to India. The other reason: lack of appropriate technology and the issues pertaining to security and reliability of networks.

However, the Asia Pacific region has emerged as the leader in m-commerce application deployment. Countries like Japan, South Korea, Singapore, and Hong Kong are adopting the mobile payment system enthusiastically. In Japan and South Korea, major wireless operators like NTT DoCoMo and SK Telecom have successfully implemented m-commerce. Japan has nearly 65% of mobile penetration and now mobile phones are also doubling up as 'mobile wallets' (cash and credit cards) combined with services such as GPS and location-based targeting, which are opening new market possibilities with new revenues streams.

M-transaction has worked mostly in the APAC region, says Balachandran Unni, head, Mobile Commerce, OnMobile, “There is not too much happening in the US. Europe is getting into it now but the action is in Japan, Korea, Thailand, the Philippines, and Singapore. Here it is flourishing because it is really regulated.”

Between the two types of transactions-low end (downloads and alerts) and high end (credit and debit card transactions)-the latter is more prevalent in India. Movie ticket booking, railway ticket booking, impulse shopping etc are the areas that are gaining considerable traction.

Technologies in Use
M-commerce has the potential to provide huge satisfaction to end users, generate business opportunities, and provide quick access. There are a number of technologies that enable mobile commerce such as infrared, SMS, interactive voice response, mobile scan and contact-less chips. These technologies are transforming the mobile phone into a replacement for petty cash, and debit and credit cards; here the payments are charged either through the mobile phone bill or to the bank account.

• Virtual SIM Card: Can be placed in any mobile device. Can be used for transactions on mobile networks and can be issued by merchants or service providers. They can be used through keypads or through voice commands using interactive voice responses.
• GPRS: This technology can be used for online mobile shopping from independent portals or service provider's portal. The limitation here is that the mobile has to be compatible and the end user must be educated on how to use it. In a country like India, where Internet is still an urban phenomenon, GPRS has a long way to go before mass deployment.
• SMS: This service is driving the Indian VAS markets to new heights and is all set to be the most popular medium for m-commerce too. Its strengths are familiarity with the end user and mass acceptability. 
• Voice: Voice being a convenient medium for those who are not very tech savvy will take m-commerce to a larger user base including the rural areas of the country.

Bumps in the Way
Despite all the hype, m-commerce has still has not gained speed in the country. According to Roy of PayMate, “The overriding hype and expectation has kind of built a wall around m-commerce. The prevalent assumption is that this service is for the elite, which is not the case.”

Another area which needs to be dealt with is the issue of security and reliability. The Indian user is still not comfortable with the idea of giving away his debit or credit card number over the phone. Also, security is a major concern for m-commerce to flourish. But as Balachandran Unni says, “There are a number of payment options for people such as cheque pick up, cash on delivery etc, so the number of people actually paying through cards is not very significant. Security is not a concern technologically, it is just a matter of the mindset that needs to be changed.”

There are ways such as tamper-proof digital certificates to authenticate the identity of users, for example PIN or passwords. Biometrics such as voice recognition is another area, which can be used to offer greater protection. Wireless PTAs (personal Trust Agent), which is a micro client code embedded in a phone and allows use of private keys, digital signatures etc, are some more advanced security features.

“The services that are introduced are tested properly and after extensive parameterising,” says Roy. “Once the desired levels are achieved, the issues of security and reliability are addressed to a large extent.”

The 'Convenience' Factor
Other than the obvious factors such as rising subscriber base and falling ARPUs of the service providers, there is one more aspect, which will play a crucial role in growth of m-commerce as a utility service-and that is convenience.

M-commerce provides the end user the ease of payment anywhere, anytime and this is the feature which is expected to popularize the service.” What is critical is to ensure that whatever service we have to offer, convenience and ease of use has to be the key,” says Unni of OnMobile.

“Customer adoption will drive m-commerce,” says Roy. “How they adopt it, will be the key driver as it's a new paradigm. It will require a change of mindset so that people can feel comfortable and acknowledge the convenience of the service.”

The Big Opportunity
Although in a nascent stage, a number of players have ventured into the Indian m-commerce segment. OnMobile provides services such as movie ticket booking through its voice systems. Paymate has tied up with Citibank to provide SMS-based m-commerce services and Jigrahak has launched a payment platform called “NGpay” for online mobile shopping, to name a few. Telecom service providers such as Reliance and Airtel have been providing services such as bill payments, railway and airline ticket booking etc.

To sum it up, it is evident that the opportunity is immense and mobile commerce can be seen as a potential revenue driver for the industry players. On the retail section, m-commerce provides new sales channels; and financial institutions can gain real competitive advantage by offering services such as m-banking.

The possibilities are innumerable. Once the pace is set, m-commerce will become the way of life on mobile.

Sonia Sharma
sonias@cybermedia.co.in

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