Banking on m-commerce

M-commerce, or “mobile commerce” per se, is basically about buying and selling products and services through wireless handheld telecom devices such as mobile phones and PDAs. It is an entirely new sales and promotion channel, which is seen as the enabler for an entire range of mobile Internet services, supporting payments for telecom, information, media and entertainment services that are available anywhere, anytime.

According to market reports, the term m-commerce has recently not only achieved widespread recognition but is also becoming a highly visible symbol in the contemporary language of the information technology culture that has brought significant changes in the consumer era, along with profound changes in the terminology and technology of e-commerce.

However, as content delivery over wireless devices becomes faster, more secure, and scalable, there is wide speculation that m-commerce will surpass wireline e-commerce as the method of choice for digital commerce transactions.

M-commerce in India

Experts opine that m-commerce is at an extremely nascent stage in India due to lack of consumer awareness and suitable applications. It is a new paradigm and category. But there is more interest and user traction than a year back. There are some efforts from a few companies to create an ecosystem and platform on which profitable m-commerce can be achieved. Globally, India is being seen as the test bed for many m-commerce initiatives and will take time to reach the maturity levels of the US and EU.

M N Srinivasu, Co-founder and Director, BillDesk, said, “Currently, the segment where any form of m-commerce is happening is in the mobile content purchase and delivery, mainly the sale of ringtones, wallpapers, and games for mobile phones.”

“One trend which is clearly emerging is that a consumer is ready to pay for convenience. This is validated by the repeat usage we experience on our bill payment and ticketing services. M-commerce acceptability is rising in the non-metro areas,” added Mouli Raman, CTO and Co-founder, OnMobile.

Haridas Nair, Senior Director, M-commerce Products, Sybase, believes that this technology has significant potential in India compared to the developed world because the alternatives like credit and debit cards are limited. Secondly, the mobile consumer is already tuned to paying for value. They pay for ringtones and to download games. So a consumer is well prepared to move to the next stage to pay for non-digital goods and things like airtime via the phone.

Advantages of m-commerce

• A new distribution network being available to conduct commerce.
• A ready convenient and secure way to do transactions.
• Larger reach, effective target marketing, and ability to offer location-based services.
• Trigger impact purchasing, cross selling, and up selling.
• Growth drivers for m-commerce

Over the past few years, the mobile and wireless market has been one of the fastest growing markets in India where the mobile infrastructure is comparatively much better than the fixed-line infrastructure.

“Definitely the growth of underlying infrastructure is a large reason why we are seeing interest in m-commerce. There is a critical mass of people who are ready to embrace m-commerce, but the strong reason which could fuel the growth would be the organized retail industry which is showing positive signs and could be termed as the primary reason as to why we think m-commerce could be huge,” asserted Narsimha Suresh, CEO and Founder, TELiBRAHMA.

Growth in the telecom sector makes the addressable market for m-commerce large at over 210 million. With the mobile subscriber base predicted to be over 500 million by 2010, m-commerce is an industry looking for exponential growth. Sanjay Swamy, CEO, mChek, said, “As a personal device a mobile phone is constantly with the consumer. This is another important factor increasing the opportunity to transact. With a mobile phone, the issues of physical presence at an outlet, access to the Internet, amongst others are eliminated, giving the consumer the opportunity to transact anytime, anywhere.”

Nair commented, “Mobile phones have greater penetration than the Internet in India. SMS has almost universal reach. Consumers are already comfortable using the mobile phone for services other than voice. The mobile phone, unlike a PC, is not required to have a live electrical connection to function. The natural progression of these trends leads to commerce via a device that is connected, on the person and offers convenience unmatched by any other channel.”

In short, commerce in the form of mobile-content purchase is and will continue to be on a significant growth path. This can largely be attributed to the nature and appeal of the content and the segment that buys this content. As the number or penetration of the mobile phones increases, these content-sales will see an automatic volume growth. At a fundamental level, m-commerce also involves Internet access. So, what we will perhaps see is a trend of Internet penetration/access through mobiles going up. It would basically still be electronic-commerce, just accessed through a mobile.

M-banking

• Provisioning and availability of banking and financial services.
• Conducting bank and stock market transactions.
• Mobile remittances, micro-finance, and micro-payments.
• Placing orders and making payments through SMS.
• Issuing instructions to pay monthly utility bills.
• Banking alerts, banking requests, salary credit.

Handicapping factors
India is primarily a cash economy and the low penetration of credit cards in our country acts as a major barrier to growth of m-commerce services. The second is a preference for physical vis-a-vis an online or mobile transaction. Srinivasu said, “The biggest challenge would be consumer adoption. In the short-run the lack of standards or inter-operable solutions, would be a handicapping factor.”

The challenges to m-commerce stem from bringing together the ecosystem of telecom operator, banks, merchants and consumers together in a win-win environment. Even the transaction fee and overheads, ecosystem and sustainability of the incumbent players will be a few of the concerns which could become handicapping factors.

“Consumer education would be the tipping point. Build awareness, stoke curiosity to trial and experience, and then it becomes a ‘can’t do without’ or ‘must-have’ service,” added Probir Roy, MD and Co-founder, PayMate.

Experts also believe that plenty of business applications could benefit from advancements in this space. However, major advances in m-commerce are not going to happen until higher-bandwidth networks are deployed and wireless service providers cooperate with each other instead of pushing competing standards.

One of the major reasons why m-commerce has not yet taken off is that commerce-capable cellular networks, which can route real-time transactions over the cellular network to a remote payment gateway and guarantee security over the transaction, are yet to be seen in India. Even the lack of steadiness in terms of technology and security are cited as handicapping factors.

M-commerce services

As mentioned earlier, m-commerce in India is still so nascent that the range or bouquet of offerings is yet to evolve. Mobile-content, historically, having always been offered by the mobile operator and charged to the mobile phone bill is the only business where some volume of transactions is happening. Generally, most constituents in the m-commerce business are betting on bill payments and ticketing to be the initial drivers of consumer adoption.

Meanwhile, telecom giants like Reliance and Airtel have taken the lead in offering m-commerce services here in India. From bill payments to airline and railway ticketing to booking movie tickets and other random services, they offer it all. Even the hybrid m-commerce service providers such as PayMate, OnMobile, mChek, Obopay, amongst others now offers innovative services never-heard-of before.

Reliance Communications has a partnership with ICICI Bank, wherein a Reliance customer can transfer money into any ICICI account through the mobile phone. PayMate allows mobile subscribers to make payments for merchant services using their cell phones.

mChek offers utility bill payment, e-commerce and remote merchant payment, over-the-counter merchant payment and money transfer. “With mChek, the consumer can pay his utility bills in less than 30 seconds from their mobile phone, save time. The payment can be done anywhere, anytime in a secure manner,” added Swamy. TELiBRAHMA offers services such as auctions, e-commerce, insurance services and mobile ticketing. “At present mobile ticketing is the service that has been initiated, we are also part of this initiative,” said Suresh.
OnMobile has innovative services like railway ticketing service on telecom operator voice portal, movie and events tickets, shopping malls and payment solutions. It has also tied up with multiplex chains across the country to offer the facility to book movie tickets using mobile phones.

Obopay, one of the leaders in mobile payment services, has a plethora of offerings such as money transfer, salary payments, international money transfer, merchant transactions, insurance collections and payments, amongst other services.
Lastly, the trend which is picking up fast under the m-commerce umbrella is Mobile Remittance. There has been a rising demand of providing such financial services over the mobile network. This is where Airtel and Western Union have decided to jointly develop a mobile money transfer service, wherein migrant workers would easily and securely send remittances to their dependents.

The future of m-commerce

Experts believe that m-commerce in India will reduce the friction in transactions associated with time, space and security. All products and services that are standardized or with a shared understanding can use m-commerce to greatly improve customer convenience and business volumes. It would also be driven by organized retail, entertainment, P2P transactions and trading. Besides, it would thrive on the backdrop of targeted marketing, coupons and comparative purchasing.

“There are all the reasons to believe that m-commerce would takeover Internet commerce in terms of the number of transactions. The number of m-commerce users would definitely outnumber Internet users and I predict more than 60 percent of the mobile users being involved with m-commerce in one way or the other over the next five years. We would also see lot of synergy between Internet and mobile commerce over coming days especially around banking and Internet based purchases,” added Suresh.

There is no doubt that in the coming years, m-commerce would be a significant channel. More than m-commerce, “m-payments” would have evolved. It would be interesting to watch whether it is the banks or the mobile operators who gain ground here.

m commerce making difference in rural india....a must read

Thousands of people from rural areas across 12 states are likely to get their social security pension and wages paid under the National Rural Employment Guarantee Act (NREGA) scheme with the help of mobiles over the coming few months.

In Andhra Pradesh alone, for instance, 250,000 people have registered for mobile banking services. The state government is rolling out a programme to enroll three million people by the end of 2008.

Mobile banking pilots and full-scale operations are being conducted across 12 states, and the entire ecosystem is being managed by the government with the help of the Reserve Bank of India, banks, leading telecom operators and technology implementation partners.

The ecosystem is important since banking regulations in India currently do not allow cash for exchange of another 'unit' such as 'airtime' in the case of mobiles. Only banks and the Indian Post (through money orders) are currently allowed such transfers.

Mobile banking, which is catching up fast in the cities and hinterland, is not only helping the government to take a step forward towards fulfilling its aim of having one bank account for every household, but also saving it crores of rupees by way of reduced transaction costs.

While the government incurs a transaction cost of Rs 12-13 for every Rs 100 it shells out, mobile banking helps it reduce the cost to a mere Rs 2. RBI estimates that around 40 per cent of Indians lack access to formal financial services and are largely 'unbanked'.

For instance, the AP government has tied up with banks like the State Bank of [Get Quote] India [Get Quote], Union Bank of India [Get Quote], Axis Bank, Andhra Bank [Get Quote], State Bank of Hyderabad, Andhra Pradesh Grameen Vikas Bank, and Punjab National Bank [Get Quote].

A Little World (ALW), a technology implementation partner, has collaborated with NXP Semiconductors to design a mobile for the AP government that encloses an RFID card, and works with ALW's micro-banking platform ZERO.

The mobile acts as a branch of the bank by storing a database of customers. It also has a smartcard, which biometrically stores the identity of the customer such as name, address, photograph, fingerprint templates and relevant details of the savings or loan accounts held by the issuing bank.

Customers get a secure electronic identity via phone or smartcard, while agents take deposits and dispense cash. ALW works with the banks on a revenue-sharing basis.

Anurag Gupta, founder director & CEO of ALW, says: "We have carried out pilot projects with SBI in villages located in some of the most inaccessible and difficult terrains of the country such as Pithoragarh in Uttarakhand, Mizoram, Meghalaya, and remote villages in Andhra Pradesh."

Lokanath Panda, director, ALW, also pointed out that SBI had tied up with the Indian Post to extend banking services especially in unbanked/under-banked areas. "Select post offices will make available to the public SBI's deposit and loan products, and ALW is the technology partner."

ALW is also conducting a pilot programme with SKS Microfinance and the Bank of India to provide a mobile banking service that works on BSNL SIM cards.

New Delhi-based Ekgaon Technologies too has developed a system for tracking transactions made by self-help groups. It has partnered with the likes of CARE, WorldVision and the World Bank to conduct a pilot, which it plans to extend to 14 Indian states.

Bharti Airtel [Get Quote], too, is in the process of tying up with two leading banks to extend its mobile remittance services to rural areas, according to its president (Mobile Services), Sanjay Kapoor.

Airtel has already partnered with the Indian Farmers' Fertiliser Cooperative Limited (IFFCO) to set up IFFCO Kisan Sanchar Limited in Rajasthan.

Under this initiative, the cooperative department will provide mobile handsets to farmers at marginal price through its outlets in the rural areas. These handsets would be loaded with green SIM cards, which will flash daily updates on agricultural practices and weather forecast free of cost.

While he did not provide details, Kapoor hinted that the partnership deal would be extended to mobile banking services too. Kapoor reasons that with 55 per cent of the mobiles being internet-enabled, mobile banking would help bridge the digital divide.

Reliance Communications [Get Quote], on its part, allows ICICI Bank [Get Quote] account holders with Reliance handsets (even the low-end Rs 1,000 ones - with or without Internet connectivity) to make intra-bank (to ICICI account holders) money transfers. It has already tied up with HDFC [Get Quote] to offer Reliance mPay - a virtual credit card.

Small Business E-commerce Technology: FastCommerce.com

eBay has proved to be a large marketplace for selling on-line, but it continues to present challenges, even disruptions, to the small business entrepreneur looking to succeed in on-line sales. There are upfront fees for listing products, an expense regardless of whether the item is sold. eBay sellers also go up against a large number of direct competitors, which drives down profit margins for the majority of sales. Low margins compete with incremental expenses and changes in policy to make it more difficult for many small companies to build a profitable on-line business.
Helvetica, sans-serif; TEXT-DECORATION: none" href="http://www.fastcommerce.com/" alt="Link to website">Today's small business e-commerce systems must also power the merchant's marketing. It is publish or perish, to search engines, shopping comparison sites, or retail search sites. On-line sellers do not have the skills or the time to do this themselves. They have to have an enterprise platform that connects all the dots for them. Moreover, eBay is only one marketplace at a time when the number of successful market venues continues to proliferate. The introduction of Google Products as well as Google Check-out highlights the need for moving beyond a single market strategy for increasing sales. The challenge and the opportunity for on-line sellers is to have access to an inexpensive single-system e-commerce application that can power both market reach and on-line sales.
E-commerce technologies that are market neutral enable the small business entrepreneur to compete in an array of marketing venues. FastCommerce.com automatically publishes its merchants' product catalogs to Google products. Or again, FastCommerce.com offers both Google Check-out and PayPal. With FastCommerce.com on-line merchants are not fettered by the strategy of a dominant industry player.
For example, David Pogue of the New York Times, in a review of Microsoft's revamped Office Live, points out that its integrated ad-word campaign tool is limited to only two search engines. As he writes, "You can place ads on Microsoft's search sites and Ask.com, which together represent less than 8 percent of search engine popularity. If you are going to advertise, you'd almost certainly prefer the exposure of the Big Two- Yahoo and Google- but they are not available through Office Live."
Small business entrepreneurs need access to inexpensive, single-system ecommerce applications that are easy and quick to set up, easy to use, and which let their users grow their business without growing their costs. For a low fixed monthly fee, FastCommerce.com allows a merchant to sell 2,000 product without transaction or user fees: small business entrepreneurs can grow their business at a fixed price with no hidden or incremental charges.
Finally, new Web 2.0 e-commerce technologies like FastCommerce.com offer an array of features that can power the whole of their on-line business. Gone are the days when a simple, cheap "shopping cart" can take small businesses to the next level. According to FastCommerce.com CEO Charles Han, today's small business e-commerce applications have to encompass all aspects of running a business, including detailed reports and analytics, order and customer management systems, and more. As he states, "It has to be enterprise in scope but with a small business price."

SOURCE:-www.prweb.com

Mobile commerce gets ready for the next big step in India

If you are short of change to pay an auto or taxi driver, or to recharge the prepaid phone card of your child or parent, help is on the way from an emerging breed of mobile payment service providers.
Mobile commerce, which in India has been limited primarily to basic banking transactions, purchase of travel tickets and payment of some utility bills, is finally taking off with banks, cellular operators and payment service providers coming together to find solutions that comply with regulatory guidelines.
Security, a prime concern with banking regulators, has been a hindrance to the growth of mobile commerce services such as the so-called mobile wallet, which helps make payments at retail outlets through text messages or Internet-enabled phones.

Hand-held convenience: With the expansion of mobile commerce offerings, customers in India could use mobile phones to make financial transactions such as paying for taxi fare and recharging prepaid phone cards. (Photo: Madhu Kapparath/ Mint)The Reserve Bank of India, for one, had issued guidelines against creation of the mobile wallet, a derivative of a phone firm’s master bank account, from which millions of subscribers can be served on their mobile phones.
Californian mobile payment service provider Obopay Inc. and Bangalore’s mChek India Payment Systems Pvt. Ltd are among a fast-expanding breed of mobile payment service providers which have planned offerings that work within the guidelines and bring the convenience of mobile transactions.
Obopay, for instance, has a debit card-like model in place. “Here, the wallet is not created, but the (customer’s) bank account itself is linked with the mobile phone,” says Balachandran Unni, vice-president, business development and alliances, Obopay Payment Services Pvt. Ltd, the local unit of Obopay Inc. The firm offers mobile wallet-based transactions in the US and plans to launch the bank account-linked services in India, too. “Respective banks with whom we have partnered will be launching this in three to four weeks,” says Unni.
International remittance is another service that Obopay plans to bring to India. Unlike what Western Union, the most popular service provider for such transactions, typically does, Obopay is planning to remit money from overseas directly to the bank account linked to the phone. The customer would be then notified of the transaction through a text message. This service too should be operational this year, expects Unni.
Western Union typically charges customers around $4, or about Rs158, to transfer, say, $1,000 from Dubai, which is considerably less than the cost of a bank transfer: $15 to send $1,000 from, say, the US and other countries. Mobile payment service providers won’t say exactly how much, but transfers through mobile phones are expected to lower the transaction costs.

Source:-http://www.livemint.com/2008/02/13232657/Mobile-commerce-gets-ready-for.html

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E Billing....the recent statistics from The Tribune..

200% rise in e-billing business Ravi BhatiaTribune News Service
New Delhi, February 14The e-billing business has grown by over 200 per cent. Its size is likely to reach 6.5 million by 2008-09 from the current 1.9 million, says the Associated Chamber of Commerce & Industry of India (ASSOCHAM).
An average individual saves about 80 hours of his time by paying his bills through the Internet. India’s Internet population stands at over 100 million. It is set to reach 125 million by 2008-09.
Annually, an average Indian household in top 10 cities pays approximately 50 bills, in areas like — finances, insurance, telecommunications and utilities companies, electricity, water, house and other civic taxes.
“Offline bill payment is time-consuming, and doing it online not only benefits billers but consumers as well. Electronic Bill Presentment and Payment (EBPP) as a potential cost saver, it’s a great revenue opportunity for banks and third-party service providers. Banks are in a good position to cash in because of their reputation as ‘trusted companies’ and should recognise that their online customers are more profitable than their offline customers,” said ASSOCHAM president Venugopal N Dhoot.
While automated bank debits for bill payment have been available to consumers for more than a decade, it’s the benefit of self-service at any hour and increasing comfort with online financial transactions that are attracting netizens to Internet bill payment services in large numbers.
In a survey conducted by ASSOCHAM on “e-Billing – A Better Option For Convenience”, it was discovered that Mumbai has taken lead in e-billing as about 28% of its population takes advantage of e-billing transactions followed by 22% of Delhi, 12.5% of Chennai, 12% of Bangalore, and 5.2% of Hyderabad. In Pune, online payment is affected by about 5% of its total population and between 6-7% of Kolkata, 2.4% of Ahemdabad, 2.2% of Lucknow and about 2% of Indore.
It also found that 73% of online payers access the Internet from their homes, while 79% do it from their office, 36% access it from cyber cafes, 7% from a friend’s place and 14% from the mobile phone, points out ASSOCHAM analysis.
75% of cell phone owners choose online medium for payment of their bills. 73% owners of landline telephones also opt for this medium for bill payment. 70% pay credit card bills online while 60% pay electricity bills online. 45% pay insurance premium through online, 42% pay Internet access bills with this medium while 29% pay for their magazine subscriptions online.
54% cited convenience as the most important that induced them into paying bills online. 35% cited time saving as they could pay bills without having to stand in line at a counter or even a bill payment centre. On average, customer saved 80 hours a year; paying bills online also reduced paperwork and was an easier way to manage bills. 5% were attracted to online bill payment because they could pay multiple bills at the same time on the same site or on different site.
46% of online bill payers are between the age of 26-35, followed by 22% in the age 18-25 group. 20% are in the 36-45 age group, 11% in the 40-60 bracket and 2% in the 61+ age bracket.
83% online bill payers are male and 17% are female. 43% are unmarried, 14% married with no kids and 43% are married with kids.
By occupation, online bill payers 3% are students while 6% are supervisors/officers. 64% are executives (including junior, middle and senior levels). 4% are businessmen/ industrialist, 1% are shop owners and 2% are housewives.
99% of online bill payers use the Internet for e-mails; 82% use search engines; 81% use it for surfing, 68% look up news online; 20% look up news on the mobile; 80% use it for online banking, 57% use it for online shopping; 33% trade stocks online, 28% participate in online bidding.
“Netizens will increasingly adopt online bill payment for factors such as convenience, control, trust, privacy, and improved record-keeping; another plus factor is that they can depend on customer service for recourse,” said DHOOT

The next big ECommerce opportunity for Google, Amazon, EBay - Carbon Trading

(from a post on green-broadband.blogspot.com, Nov 2007)

Google, Amazon and eBay are classic examples of the best of what America is good at- ingenuity and entrepreneurial capitalism. They dominate the global eCommerce marketplace.

Although the ecommerce economy has grown leaps and bounds over the past decade the eCommerce activities of these companies is still a relatively small part of the overall economy.

While click advertising, etrading and selling merchandise over the Internet has done wonders for the bottom line of these companies in the past decade, these markets are now maturing. The entire global advertising market is still very small compared to other economic activities. As well large portions of society still do not use eBay or Amazon for a variety of reasons including security, cross border shipping issues and so on. It is unlikely that these companies will be able to continue their spectacular growth of the past decade without some fundamental new business paradigm shift. Mobile eCommerce may provide some incremental revenues but I think its contribution to the bottom line will be miniscule at best.

The big challenge for these companies and many others like them is to move to the next wave of eCommerce which I believe will be carbon trading in exchange for bits and bandwidth.

There is a growing consensus that global warming is one of the greatest threats facing humanity. Increasingly governments and citizens are becoming aware of the severity of this threat and are clamouring for solutions.

To date the most obvious approaches to mitigate against global warming is to impose carbon taxes or implement various forms of carbon trading such as cap and trade or carbon offsetting.

Carbon taxes however, even if revenue neutral, are going to meet with stiff political resistance. Rather than imposing taxes can we instead provide carbon "rewards" where consumers and businesses are rewarded for reducing their carbon footprint, rather than being penalized if they don't?

To date carbon trading has been associated with various government mandated cap and trade systems or unregulated carbon offset trading. In cap and trade systems large carbon emitters are allocated carbon emission targets and can only exceed these targets by purchasing carbon permits from organizations who produce far less carbon. In offset trading there are a number of independent companies that audit and trade carbon offsets of individuals and businesses for high carbon emission activities such as air travel offset against telecommuting and other energy saving practices.

However these markets are very immature and relatively small.

Instead of trading carbon emission for carbon reduction, perhaps a better scheme would be to trade bits and bandwidth which have an extremely small footprint against activities that have a heavy carbon footprint.

A couple of simple examples come to mind which have been mentioned before on this blog:

(a) Amazon could work with public transportation systems and offer free eBooks with its new Kindle eReader to people who buy public bus and subway passes. Amazon would get a small percentage of every bus pass to pay for its ebooks and consumers would have a new incentive in which to take the bus or subway. Even if consumers still drive their SUV to work they would be helping out by providing a new revenue source to public transportation

(b) Free broadband Internet could be offered to consumers who are willing to pay a carbon premium on their gas and/or electric bill. See http://green-broadband.blogspot.com

(c) University students could be awarded with free cell phone, music and or videos if they agree to pay a carbon premium on their parking passes.

Etc

To my mind the trading and exchange of bits and bandwidth for carbon represents an entire new eCommerce business model with significant revenue potentials. Companies that are first movers in this space will quickly dominate this new market.

Carbon credit trading does not need to be limited to simple bilateral transactions, but like money can it can create multiplier effects, where consumers of bits and bandwidth can purchase other products and services with their carbon credits.

For example, universities could offer voluntary programs where students pay a premium on anything that creates a carbon footprint such as parking fees or residence power consumption etc. In exchange the students would be granted free access to the music and film industry libraries.

The "bits for carbon" fee would encourage students to reduce use of their automobiles and/or reduce their energy consumption within their residences or other activities. The university could also undertake energy audits on the students activities to earn additional valuable carbon credits, in the same businesses now earn carbon credits for promoting tele-working, tele-presence etc

But instead of paying the record and music industry actual money for the designated authorized music and video services, they instead would be paid in equivalent value of carbon credits, or the university would only purchase "originating" credits that were produced by the music/video industry through their own carbon reduction activities. The music and motion picture could then possibly double down their money by instituting their own carbon reduction schemes and trade in these credits or they could sell them to a variety of carbon trading brokers.

As one start to think about these concepts it becomes apparent there could be a whole range of business opportunities in trading bits and bandwidth for carbon.