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MOBILE COMMERCE

1.1 Overview

Mobile Commerce, or m-Commerce, is about the explosion ofapplications and services that are
becoming accessible from Internet-enabled mobile devices. It involves new technologies, services and business
models. It is quite different from traditional e-Commerce. mobile phones impose very different constraints than
desktop computers. But they also open the door to a slew of new applications and services. They follow you
wherever you go, making it possible to look for a nearby restaurant, stay in touch with colleagues, or pay for
items at a store.

As the Internet finds its way into our purses or shirt pockets, the devices we use to access it are
becoming more personal too. Already today, mobile phones know the phone numbers of our friends and
colleagues. They are starting to track our location. Tomorrow, they will replace our wallets and credit cards.
One day, they may very well turn into intelligent assistants capable of anticipating many of our wishes and
needs, such as automatically arranging for taxis to come and pick us up after business meetings or providing us
with summaries of relevant news and messages left by colleagues. But, for all these changes to happen, key
issues of inter operability, usability, security, and privacy still need to be addressed.

1.2. WHAT IS MOBILE COMMERCE

Mobile Commerce, also known as M-Commerce or m Commerce, is the ability to conduct commerce using a
mobile device, such as a mobile phone, a Personal digital assistant PDA, a smart phone, or other emerging
mobile equipment such as desktop mobile 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."

M-commerce is the buying and selling of goods and services through wireless handheld devices.M-
Commerce is the process of paying for services using a mobile phone or personal organizer.M-Commerce is the
use of mobile devices to communicate, inform transact and entertain using text and data via a connection to
public and private networks.Mobile commerce is a natural result of combining two strongly emerging trends:
electronic commerce and pervasive computing. Internet + Wireless + E-Business = M-Business

Going online anywhere at anytime and using multiple device. M-commerce represents another wave of the
e-commerce invasion that is changing the nature of business in the 21st century.

1.3. Motivating Factors for M-Commerce

Internet use has grown to such a level on the strength of PC networks. Due to the huge base of installed PCs,
which is predicted to grow in a faster pace in the days to come, electronic commerce and other communication
applications are bound to thrive further. Also, these computing systems will have greater power and storage
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capability, the best ever price-performance ratios, more powerful and sophisticated applications will likely
emerge for desktop computing and the Internet. However, there are two major limitations on PCs. First , users
have to sit in front of them, PCs, even portable-notebook computers, have to load software, dial into and
connect with a network service provider and await for the initial process to be accomplished before launching an
Internet application.

It is predicted that by 2004, the installed base of mobile phones worldwide will exceed 1 billion - more than
twice the number of PCs at that time. In addition that, there will be a huge increase in other wireless portable
devices, such as wireless PDA..The advantage with these wireless devices is they do not need no booting
process and thus facilitating immediate usage of them. This makes them attractive for quick-hit applications.

1.4 WORKING OF M-COMMERCE

The M-Commerce Working Group aims at promoting the interests of European GSM operators in the
fields of mobile commerce and mobile Internet. It seeks to position GSM Europe among the reference
organizations involved in e-commerce and Internet debates, by focusing on aspects which specifically concern
mobile. To achieve these objectives, the Working Group closely follows the developments of the European
regulatory framework for electronic commerce, content and Internet and drafts relevant position papers as
appropriate.
Members of the Group also hold bilateral meetings and participate in hearings organized within the European
arena. The Working Group monitors the implementation of adopted legislation in key areas, in order to be able
to respond to developments. Attention is also given to political initiatives such as the i2010 initiative and to
international regulatory activities affecting the European framework (for instance within the Council of Europe).
The Group works to inform the main decision-makers, presenting key aspects of mobile-commerce and
demonstrating the important role played by GSM operators in the development of e-commerce and the Internet.
The M-Commerce Working group also works in collaboration with and/or provides support to other groups
within GSM Europe or GSM Association and liaises with GSMA technical groups on a
regular basis.

1.4.1 Wireless Technologies

Just as the TCP/IP and the general purpose Web browsers are being the current principal drivers of
Internet growth and this in turn makes disparate devices to connect themselves and communicate and
interoperate. Similar protocols, technologies and software will play a very important role in heterogeneous
wireless devices to interoperate without any complexity. In the recent past, a common communications
technology and uniform interface standard for presenting and delivering several distinct wireless services on
wireless devices - Wireless Application Protocol (WAP) have emerged. The WAP specifications include a
micro-browser, scripting language just like JavaScript, access functions and layered communication
specifications for sessions, transport and security. These specifications enable interface-independent and
interoperable applications. Many of the wireless device manufacturers, service and infrastructure providers have
started to adopt the WAP standard.

The transmission rate of Current access technologies (2G), such as TDMA, CDMA and GSM, is
dramatically slower (between 10 and 20 Kbps) than the dial-up rates of desktop PCs connected to the Internet.
2G technologies have steadily improved, with increased bandwidth, packer routing and the introduction of
multimedia. The present state of mobile wireless communications is often referred to as 2.5G. It is believed that
by the year 2003, 3G wireless technology will be available for use. This, in addition to higher bandwidth rates,
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can take the transmission speed up to 2 Mbps. 3G is expected to facilitate: enhanced multimedia (voice, data,
video, and remote control) transmission, usability on all popular modes (cellular telephone, e-mail, paging, fax,
video-conferencing and Web browsing), routing flexibility (repeater, satellite, LAN) and operation at
approximately 2 GHz transmit and receive frequencies.

1.4.2. CATEGORISATION OF M-PAYMENT SYSTEMS

Most e-payment systems are not suitable for use in a mobile context that is, using a mobile device and
communicating over a mobile telecommunication network. This is due to the special characteristics of mobile
devices and mobile telecommunications. In the following, we categorise m-payment systems according to the
whereabouts of the customer’s money:

 Software electronic coins – electronic money stored on the mobile in file format.
 Hardware electronic coins – electronic money stored on the mobile device on a smart card.
 Background account – electronic money stored in a remote account at a trusted third party.

A. Software Electronic Coins

In this case, monetary value is stored on the mobile device and the customer has full control of his/her money
wherever he/she goes and whatever he/she does. An electronic coin is represented as a file containing, among
other information, a value, a serial number, a validity period and the signature of the issuing bank. Since
software electronic coins are easy to copy, the validity of an electronic coin depends on its uniqueness in terms
of its serial number. The customer transfers electronic coins to the merchant, who forwards them to the issuing
bank for the “double spending test.”

B. Hardware Electronic Coins

In this case, monetary value is stored on a secure hardware token, typically a smart card, in the mobile device.
The presentation of electronic money is not important, as long as it is stored securely on the smart card.
Electronic money could be represented as a simple numeric counter. In order to get to the money, the
customer’s smart card and the merchant’s payment server authenticate each other and a secure channel is set up
between them. Then, electronic money can be transferred from one to the other. This approach is quite
attractive because smart cards provide an additional level of mobility. That means the payment smart card can
also be used in POS transactions. E.g., Geldkarte, Mondex and Barclay card.

C. Background Account

Here, the money is stored remotely on an account at a trusted third party. Depending on the specific payment
system, the account could be a credit card account, a bank account, or an account held at the network operator.
For example, in some cases this data is sent in the clear (e.g. a credit card authorisation) not providing any
security against eavesdropping and in some cases this information is encrypted and digitally signed, providing
anonymity to the customer (e.g. SET – Secure Electronic Transactions).

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2.KEY ISSUES OF M-COMMERCE

The success of M-Commerce depends on:

 Evolution: Technology and Business models are constantly evolving which will demand flexibility and
patience on part of all players.
 Customer loyalty: Who will ‘own’ the customer? Partnerships among players from various industries will
be necessary for most, if not all, m-commerce initiatives, and, in turn, will alter the nature of any one
company to own their own customers.
 Cross-sector knowledge gulf, where the different parties will need to learn about the functions and
limitations of the services provided by the other players, for example, operators will need to know about
content and applications.

2.1 Moving up the value chain:

To respond to market opportunities some companies have develop subsidiaries in order to react more
rapidly to market challenges. For example, Sonera has developed Sonera Zed, to provide portal and application
management services such as location based mobile yellow pages as well Smart Trust, to develop secure
solution for m-commerce transactions. And Citicorp has established e- City to develop a wireless access
gateway strategy for financial service providers.

3. M-Commerce Applications

The general m-commerce applications are categorized as transaction management, digital content delivery and
telemetry services. The applications can be further subdivided into passive and active m-commerce applications.
Active application relates with the applications in which the user has to take the initiative on his wireless device.
In contrast, the passive applications themselves get activated towards accomplishing the assigned jobs or
facilitate the users to carry forward.

3.1 Active Applications

M-commerce transactions point to online shopping Web sites tailored to mobile phones and PDAs which are
being equipped with the capabilities of browsing, selection, purchase, payment and delivery. These sites also
include all the necessary shopping features, such as online catalogs, shopping carts, and back office functions as
currently available for desktop computers. Leading online booksellers already started the commercial activities
for wireless devices. Another important m-commerce transaction is to initiate and pay for purchases and
services in real time. The highest volume of m-commerce transactions using wireless devices in the days to
come is bound to occur on the side of micro-transactions. When individuals reach for their e-cash-equipped
mobile phones or PDAs instead of coins to settle micro transactions, such as subway fees, widespread use of
digital cash will become a reality.

3.2 Passive Application

Nowadays mobile users can send and receive short text messages up to 160 characters that show up on the user's
display screen. As digital convergence becomes more commonplace, all kinds of mail, such as e-mail, fax
documents and digitized voice mail, can be received passively. Thus it is felt that in near future there will be
many novel services for mobile users for a fixed fee. Further on, users may be tempted for some services free of
cost for viewing audio or video advertisement delivered to their wireless devices. Any kind of security breach,
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illegal intrusion, unusual event or unacceptable condition will trigger automatic notification to users irrespective
of location. Airline companies are testing this technology to alert frequent air passengers regarding seat
availability and up gradation, to notify the changes made in the timings etc. through wireless devices.

3.3 Mobile Applications

 Vehicles
 Transmission of news, road condition etc
 Ad-hoc network with near vehicles to prevent accidents
 Emergencies
 Early transmission of patient data to the hospital
 Ad-hoc network in case of earthquakes, cyclones
 Military ...
 Traveling salesmen
 Direct access to central customer files
 Consistent databases for all agents
 Mobile office
 Web access
 Outdoor Internet access
 Intelligent travel guide with up-to-date location dependent information
 Location aware services
 Find services in the local environment, e.g. printer
 Information services
 Push: e.g., stock quotes
 Pull: e.g., nearest cash ATM
 Disconnected operation
 Mobile agents, e.g., shopping
 Entertainment
 Ad-hoc networks for multi user games

 4. M-commerce Benefit
 Your Internet offerings are easier and more convenient to access

 You get considerable flexibility while conducting business.

 Transaction and personnel costs are reduced due to widespread automation of back-office operations.

 Field staff is more effective as they have flexible access to back-office data.

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4.1 Benefit for business

For a small business could benefit from m-commerce.

 Selling a product or service

 Improving productivity

4.2 Benefit for customer

 Offers many payment options

 Push advertising, direct marketing.
 More efficient and extensive service offered.
 The Internet is going mobile
 Reducing time to order
 Streamline business processes

5. Tools supporting development of Devices in Mobile Commerce

SOFTWARE APPLICATION
Application-Specific Speech recognition
Integrated Circuitry
(ASIC)
Gesture recognition System on a Chip
Perceptive interfaces Smart matter
Field Programmable Flexible transistors
Logic Gates (FPLG)
Micro Electro Reconfigurable processors
Mechanical Systems
(MEMS).

Table 1. Tools supporting development of Devices in Mobile Commerce

Object Technology is playing a major part in shaping pervasive computing paradigm.

Java, C++ and XML are often used for implementation at the server side, and in the meantime as well
as on the pervasive device.
The Open Services Gateway initiative will play a key role in operating pervasive devices.

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6. Limitation of M-commerce:
Small screens of most devices still limit types of file and data transfer (i.e. streaming
videos, etc.)

Standards guiding applications and technology development and connection(s)

WAP and SMS limited to small number of characters and text.

Use of graphics limited

Less functionality for mobile Internet over mobile phones and existing generation of

handhelds than for mobile computers (laptops and next generation handhelds)

User interface is often difficult to learn how to use

Limited bandwidth

7. Future Scope
This is a strategic and exploratory document that aims to:

Give guidance about the possibilities of using mobile devices to connect people with information about
products.
Provoke thinking about how mobile devices can enhance the relationship between trading partners in
the supply chain and between businesses and consumers.
Whilst there are many possible applications using mobile devices, this document focuses on exploring
opportunities within the supply and demand chain. It does not seek to replicate work of other standards bodies
active in the mobile sector. This is not a technical or implementation document. It does not seek to define new
standards nor to give detailed advice about the financial benefits of using mobile commerce. It also does not
address how a future mobile commerce infrastructure might be funded.

8. Reference

Web site

 www.scribd.com// m commerce doc

 www.googel.com.
http://en.wikipedia.org/wiki/Mobile_commerce
http://searchmobilecomputing.techtarget.com/definition/m-commerce

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