Is Your Phone Ready to be a Wallet

The concept of mobile payment is also known as mobile money, mobile money transfer, mobile banking, and mobile wallet. These services are governed by specific financial regulations. Nowadays this form of payment is offered by the following type of entities:

• financial organizations
• mobile communication companies
• credit card companies
• mobile network operators
• internet organizations like Google
• international organizations dealing in telecommunications infrastructure and handset

Mobile payment is normally used in the following type of transactions:

• music, subscriptions for online games or items, videos, wallpapers, ringtones and other digital products
• books, tickets, magazines, and other products
• transportation fare for buses, trains, and subways, and parking meters

Mobile payment is done in any of the following four modes:

• transaction payments based on premium SMSs
• mobile web payments (WAP)
• direct mobile billing
• contactless near field communication (NFC)

A new form of mobile payment called direct carrier/bank co-operation is emerging from Haiti. It is expected that by 2013 the aggregate market for different forms of mobile payment will be worth more than 600 billion dollars.

This will be 200 percent more than the corresponding figures for February 2011. By 2013 the total worth of the market for mobile payment for goods and services, with the exception of money transfers and NFC transactions, will be more than 300 billion dollars.

Forms of m-commerce

With mobile ticketing, users can buy tickets for events or film shows and then gain entry at the same by presenting their cell phones. In addition, they can also cancel the tickets by downloading simple applications or getting access to the WAP platforms’ of different direct service providers or travel agents.

Mobile ticketing technology is also helpful in buying vouchers, loyalty cards, and coupons. Virtual tokens are used to represent these on cell phones. Customers who have the virtual token receive the same privileges as the traditional token holders at points of sales. Customers can also be provided their coupons by the stores through location based services.

At present only ringtones, mobile games, and wallpapers can be bought and delivered through m-commerce. However, it is expected that if mobile phones, video players, and portable audio players can be converged into one device, it will increase the sales potential of full length music videos and tracks. With the advent of 4G, purchasing a movie on mobile will also be possible in a few minutes.

Several financial organizations like banks enable their customers to perform any of the following transactions on mobile:

• accessing account information
• sending money
• buying shares through mobile brokerage

Cell phones are now playing the roles of handheld computers and this has greatly improved the scope for mobile commerce. ABI Research expects that by 2015 this industry will see goods and services worth 119 billion dollars bought on mobile phones.

Nowadays mobile reverse auctions have also gained in popularity. The difference of this form from the traditional auctions is that a consumer’s phone is billed every time he places a bid.

Majority of the mobile SMS commerce transactions are done on a one time basis but these deals are more profitable for the service providers as the users have to make several transactions in a certain time period.

Buying products on mobile phones is normally done through catalog merchants who take orders. Often, these merchants provide customers with electronic catalogs. Mobile websites that are suited to the restricted user interfaces and small screens of cell phones are also available nowadays for letting the customers choose products with ease and buy them in a convenient way.

M-commerce: how secure is it?

The international payments industry has adopted strict security standards for m-commerce such as PCI DSS 1, 2 and PA DSS in addition to the Cert-IN certified system operated by the Indian government.

If a consumer performs any mobile based transaction through service providers it makes the whole process even more secure and they need not provide any critical information.

Every mobile based transaction is backed by a 4 digit PIN which is placed in the customer’s cell phone over an IVR call back that is both secure and automatic. This also makes sure that there is no manual interference in this process.

This process makes sure that there is practically zero possibility of any fraud and it is completely secure and controlled. Even if a regular user of m-commerce products and services loses his cell phone or if it is stolen, there is no chance that the account can be misappropriated without the PIN.

Leading m-commerce companies in India

Following are some of the leading m-commerce companies of India:

• eBay India
• E Cube
• Homeshop18
• Atom Technologies
• e-Zest Solutions
• NGPay
• mChek
• Eko
• Obopay
• mobisoc
• Paymate

There are some other companies that use e-commerce in their operations:

• ICICI Bank
• Aircel
• PVR Cinemas
• Vodafone
• Makemytrip.com
• Tata Teleservices
• Airtel
• Indian Railway Catering and Tourism Corporation

E-commerce: costs involved

Airtel has recently introduced the Airtel Money, which is essentially a mobile wallet service. According to approval from the RBI, every user who avails this service will have an upper limit of INR 10,000 for spending. It can increase later on to 50 thousand rupees in the later stages. Airtel will be charging 5 rupees for a maximum transaction of INR 500. For transactions worth more than that, the applicable fee is 10 rupees.

The following table provides further information on the costs involved in various transactions performed through the Airtel Money service:

Future of m-commerce in India

Experts are predicting a bright future for m-commerce in India as it enables people to make their payments or perform other necessary transactions in a short span of time, which is preferred by majority of the consumers over here.

The question of financial viability is yet to be answered properly but it is expected that m-commerce will be economically more feasible for the customers than the presently operational forms of transaction and this could sway things in its favor.

The Executive Director of ICICI Prudential Life Insurance Co Ltd, Madhivanan Balakrishnan, said that m-commerce will not replace paper money which is the traditional form of payment.

However, he feels that the transition of Indian economy from being cash based to electronic will make the country more efficient from an economic perspective. The COO of HSBC Oriental Bank of Commerce Life Insurance Co Ltd, Chirag Jain, has stated that due to the secure nature of m-commerce transactions, more consumers will be adopting this mode of transaction in the near future.

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