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The term e-commerce (electronic commerce) denotes business processes on the Internet,
such as the buying and selling of goods. There is a distinction between B2B (business-to-business)
and B2C (business-to-consumer) markets. In the first case, the business processes are carried out
between businesses; in the latter case, they are carried out between businesses and end consumers.
This general definition of e-commerce does not say anything about the kind of that the end user
employs to gain access to the Internet. The underlying technology could be wireline (e.g. using a
home PC as end user device) or wireless (e.g. using a mobile phone as end user device).
2. M-Commerce

2.1 What is M-Commerce?

It looks as if the term M-Commerce and the business models behind become the next
great hype in the digital economy. At the moment, however, it is not clear, where the story will
end. Suppliers of M- Commerce Solutions, content providers and suppliers of hardware (mobile
phones) predict (again) a great future for this concept – with great new services for the
customers and great business for them- selves.

There are two possible directions for the development of M-Commerce in near future:

· M-Commerce becomes the next hype – with all the consequences of a hype

· M-Commerce is a natural evolution from E-Commerce into a digital and mobile world

"Mobile Commerce is the use of information technologies and communication
technologies for the purpose of mobile integration of different value chains an
business processes, and for the purpose of management of business relationships.“

The basic idea of M-Commerce is to distribute information and thus to generate business
in a mobile way. M-Commerce gives traditional media (newspapers, magazines, TV) the
opportunity to supply different pieces of information tomillions of users, and – in the end of the
day - to earn money from re- using their content. These ideas are supported by a variety of
predictions, most of them base on the sales figures of mobile phone devices. In general, this is a
good starting point. However, it does not take into consideration other devices (e.g. PDA) or the
limited usability of mobile phones. The reason for the idea to predict mobile commerce volume
from the level of mobile phone use is that powerful UMTS networks will be available to all
users in the long run. That means, that, once technical precon- ditions for mobile commerce are
available to the user, he will probably use them. Nevertheless, it is completely open to which
level there will be real sales from M-Commerce.
The term m-commerce (mobile commerce) is all about wireless e-commerce, that is,
where mobile devices are used to do business on the Internet, either in the B2B or B2C market.
As such, m-commerce is a subset of e-commerce.
With the omnipresent availability of mobile phones (and other mobile devices), m-
commerce services have a promising future, especially in the B2C market. Future applications
include buying over the phone, purchase and redemption of ticket and reward schemes, travel and
weather information, and writing contracts on the move. However, the success of m- commerce
very much depends on the security of the underlying technologies. For example, today the
chargeback rate for credit card transactions on the Internet is 15%, versus 1% for POS (Point-of-
Sales) credit card transactions. Chargeback rates grow to 30% when digital products are sold. For
m-commerce to take off, fraud rates have to be reduced to an acceptable level. As such, security
can be regarded as an enabling factor for the success of m- commerce applications. In this paper,
we discuss two main areas of m-commerce that are relevant to security, namely
Network technology– in m-commerce, all data is transmitted via a mobile telecommunication
network. Here, we consider existing network and service technologies for 2G (2 nd Generation),
3G (3 Generation) and other wireless systems. information at its sole risk and liability
. M-payment (mobile payment) – doing business on the Internet requires the payment of goods
and services. M-payment systems have different requirements and characteristics than e-payment
systems. Here, we give an overview of current payment technology. In the following section, we
provide background information on m-commerce. Section 3 is devoted to network technologies
for m-commerce.

2.2 Overview on Technology

GPRS is data transmission on the existing GSM-network in packets. Its function is
similar to the Inter-net-Protocol IP, therefore it better utilises the existing resources in today’s
mobile phone networks.

After switching on, the mobile phone is always connected to the network. It is possible to
download messages at any time, without connecting to the network again and again. Fees are
payable only when data is transmitted, not for the time the mobile phone is “online”. It is
possible to relate payments.
3. Features of M-Commerce

 Ubiquity – the end user device is mobile, that is, the user can access m-
commerce applications in real time at any place.

 Accessibility – accessibility is related to ubiquity and means that the end user is accessible
anywhere at any time. Accessibility is probably the major advantage by comparison with
e-commerce applications involving a wired end user device.

 Security – depending on the specific end user device, the device offers a certain level of
inherent security. For example, the SIM card commonly employed in mobile phones is a
smart card that stores confidential user information, such as the user’s secret
authentication key. As such, the mobile phone can be regarded as a smart card reader with
smart card.
 Localisation – a network operator can localise registered users by using a positioning
systems, such as GPS, or via GSM or UMTS network technology, and offer location-
dependent services. Those services include local information services about hotels,
restaurants, and amenities, travel information, emergency calls, and mobile office

 Convenience – the size and weight of mobile devices and their ubiquity and accessibility
makes them an ideal tool for performing personal tasks.

 Personalisation – mobile devices are usually not shared between users. This makes it
possible to adjust a mobile device to the user’s needs and wishes (starting with the mobile
phone housing and ringtones). On the other hand, a mobile operator can offer personalised
services to its users, depending on specified user characteristics (e.g. a user may prefer
Italian food) and the user’s location.

Business Applications: what’s possible with GS1 standards and how This section gives
an overview of the current and potential applications of mobile commerce. Six of these
applications are discussed in more detail with business cases, benefits and key challenges.

4.1 Business-to-Consumer Applications

These applications revolve around making life easier and richer for consumers and
deepening the relationship between consumers and businesses, so that consumers feel they have
more say in what they consume. One way to categorise these applications is to look at where
they fit in the purchase cycle (as in the diagram below).
4.2 Business-to consumer applications and the purchase cycle

Advertising & Promotion Key concept: advertising and promotional information is

sent direct to mobile phones A consumer is in a shop. She is interested in a new cosmetic product
but hesitates to buy. She notices she can view an advertisement for the product by taking the
picture of the bar code. She does this and views the advertisement.

A consumer notices a billboard advertising for a handbag while walking down the street.
By moving closer and activating the Bluetooth function of its phone, she is able to download a
coupon to get 30% off the product in any shop today. She does this and receives the coupon in an
electronic format on her mobile phone. This bar code will be read by an reader at the cash desk if
she buys the product. She then uses her phone to find the location of the nearest shop.
This application is discussed further in section 4.6 (Mobile Coupons).

4.3 Store Location

Key concept: a map is displayed on a mobile phone showing where consumers can buy a
A consumer is visiting the website for a product he likes. He is intrigued by a bar code on
the web page. Information next to the bar code explains that by scanning the bar code with his
mobile phone he can save a link to a web page that will show a map of where that product is
available in relation to where he and his mobile phone are. Next time he’s in town, he uses his
phone to consult the map and is presented with different options for finding the product.
4.4 In-store navigation

Key concept: consumers find products more easily when in a shop

A consumer comes into a store is scans an RFID tag to turn their phone into a shopping
assistant. They can now search for any product in the store and know exactly where it is (aisle,
shelf), how much it costs, and any other information necessary to make a purchasing decision.

4.5 Comparison Shopping

Key concept: consumers use their mobile phone to access information about product
characteristics and price A consumer is in a shop. She uses her mobile phone to access a web-
based comparison shopping application. By scanning a bar code on a product, she is able to see
the price of this product in different shops in her area. Having seen that the product is reasonably
priced, she decided to buy it. Using a similar set-up, consumers could also access test results
from consumer organisations or customer reviews.
5. Business Benefits

• First-level mark of authenticity

• Tool to fight counterfeited goods
• Reduced losses in revenue from counterfeiting
• Brand protection
• Protecting sales by avoiding grey and parallel markets
• Organisations such as customs can focus on high risk items instead of counterfeit products

Basic Scenario

A provider of digital music needs a system for uniquely identifying the tracks sold, so
that they can manage them effectively in their internal systems. A consumer can use a service on
their mobile phone to buy a song and download it directly to their mobile phone
6. Consumer Benefits

• Increased trust
• More control over information

6.1 Problems with technology and costs

The transfer-standard GSM, that represents the present basis of the mobile-radio-
networks, is not optimally suitable for mobile data-transfer. The connections are unstable, the
data-transfer-rate is limited on 9,6 kBit/ses and, due to too long transfer duration, the
accomplishment-costs are almost pro- hibitively high. Because of these technical problems,
actual revenues in mobile commerce are fairly low. Truly interesting and comfortable services
can be offered only with GPRS1 and UMTS2 to the customer.

GPRS can increase data transmission tenfold. Some of the mobile phones available today
are already suitable for GPRS. GPRS removes two important barriers for mobile Internet access:
pages are trans- ferred quicker and hence, costs of current Wap-services will decrease. However,
Wap will probably not rise up to I-Mode, the successful Japanese model.

Moreover, the manufacturers of mobile phones have to come up with

something more user-friendly.Today’s mobiles are by no way suitable for surfing the
Internet; their displays are much too small. In the light of M-Commerce applications,
voice messages will lose their central role in use of mobiles.

The time needed for all these developments might be too long for some content
providers. Many of these businesses have revenues of less than $ 5000 a month at the moment.
Others are already bankrupt, like the Swedish Citikey. Citikey had a business model that was
once highly-praised: a Wap- info-service made local information available by mobile phone.
The big boom for content providers is predicted to come in a few years, when UMTS is in use.
However, in order to cover the extremely high investments necessary for UMTS, providers
might start such services themselves.

Due to the high investments in UMTS licenses and in infrastructure and the related
financing costs, all players will have to increase competition in order to make this business a
success for themselves.

Our study suggests organizations will be well served to not be complacent with their
wireless site design efforts.A dominating Web presence does not necessarily translate into a
dominant wireless Web presence: ‘e’ ≠ ‘m’. For the industries we studied, the significant
differences in usability ratings for wireless sites compared to their Web counterparts suggests
much work must be done in the wireless contexts. Furthermore, the strong contrast in weights
between Web and wireless contexts has implications for site design (or redesign) efforts in the
wireless context. Since the context of the mobile experience is different from a PC-based Web
experience, what is important to consumers is also different. We strongly favor conducting
usability studies using systematic methods such as the MUG guidelines in order to understand
the overall weighting scheme used by customers. By benchmarking its site against competitor
sites, an organization may be able to identify weak areas that can be a focus of site redesign
efforts. In addition to the context of the mobile user experience, other factors influencing
usability must be considered. For example, cultural differences have been found to influence
online behavior [3] and thus, may influence the relative importance of the various categories and
sub-categories. Further work is also needed to understand how prior experience or adoption life-
cycle stages can influence perceptions of usability. Our study involved participants from
Finland, a country with deep penetration and utilization of cell phones. Results may be different
with participants from other countries, or geographic regions, where adoption is in an earlier life-
cycle stage. Today, m-commerce looks in many ways much like e-commerce did in 1995. At that
time, the future of ecommerce was not clear. Yet, as of 2002, the businessto- consumer e-
commerce market had grown to $843 billion [5]. Like e-commerce, opportunities for success in
m-commerce will go to those companies that focus on creating compelling value for customers,
founded on a deep understanding of the mobile experience.

[1] T. Weitzel, W. König: "Vom E- zum M-Payment" (in German), http://much-magic


[2] ePayment Systems Observatory, Database on E-payment Systems,