Introduction to E-Commerce. m-commerce. Technology Trends

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Ami Ross
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1 Introduction to E-Commerce m-commerce Technology Trends Wireless devices are getting smarter Wireless coverage is improving Reliance on Internet-based information and services is growing Creating the: m-commerce Winter 85, 2 1

2 What is m-commerce? Any electronic transaction or information interaction conducted using a mobile device and mobile networks (wireless or switched public network) that leads to transfer of real or perceived value in exchange for information, services or goods. Winter 85, 3 m-commerce Attributes m-commerce is an enabling technology for delivering greater business volume, customer loyalty, and support for urgent transactions: such as travel changes and stock transactions. m-commerce applications won t work if they simply mirror the e-commerce applications that are available on web sites. They must offer the correct format for a specific device, plus secure access and intuitive navigation. m-commerce must be treated as a unique opportunity for delivering personalized, location based services to customers, and not simply as an extension to company's web presence. Winter 85, 4 2

3 m-commerce Attributes Mobility users carry cell phones or other mobile devices Broad reach people can be reached at any time Ubiquity easier information access in real-time Convenience devices that store data and have Internet, intranet, extranet connections Instant connectivity easy and quick connection to Internet, intranets, other mobile devices, databases Personalization preparation of information for individual consumers Localization of products and services knowing where the user is located at any given time and match service to them Winter 85, 5 Provider s point of view The future development of the mobile telecommunication sector is heading more and more towards value-added services. Analysts forecast that soon half of mobile operators revenue will be earned through mobile commerce. Consequently operators as well as third party providers will focus on value-added-services. To enable mobile services, providers with expertise on different sectors will have to cooperate. Innovative service scenarios will be needed that meet the customer s expectations and business models that satisfy all partners involved. Winter 85, 6 3

4 m-commerce Applications Entertainment Music Games Graphics Video Transactions Banking Broking Shopping Auctions Booking & reservations Mobile wallet Mobile purse M- commerce Communications Short Messaging Multimedia Messaging Unified Messaging Chatrooms Video - conferencing Information News City guides Directory Services Maps Traffic and weather Corporate information Market data Winter 85, 7 US Mobile Commerce Revenues Year Total (USD) 127 million 616 million 2.1 billion 5.7 billion 13.1 billion 29.0 billion 58.4 billion Sources: IDC and Jupiter Media Metrix Winter 85, 8 4

Global Internet and Wireless Users Subscribers 2001 2004 2007 Internet users (millions) 533 945 1,460 Wireless Internet

5 Global Internet and Wireless Users Subscribers Internet users (millions) ,460 Wireless Internet users as % of all Internet users emarketers emarketers.com Winter 85, 9 PC vs. Mobile Penetration Winter 85, 10 5

6 Global m-commerce Revenue Projections For 2009 Category Global revenues Ticket purchases Phone-based retail POS sales Value (USD) 88 billion 39 billion 299 million Source: Juniper Research, August 2004 Winter 85, 11 Global m-commerce Revenues Region North America Western Europe Asia Latin America Other Global US Japan Juniper research Winter 85, 12 6

7 m-commerce opportunities Reaching Existing Consumers Through New and Extended Channels Reaching New Consumers in Recently Opened Markets Through New and Existing Channels In many Scandinavian countries as well as in the rest of Europe, the penetration of mobile phones, as compared to that in the U.S., is higher than that of wired PCs. Offering New and Enhanced m-commerce Applications and Services areas such as location-based services. Winter 85, 13 Sources of m-commerce Revenue Revenue from ecommerce Portals Revenue from Short Messaging Services (SMS) Revenue Accrued from Introducing New Customers Revenue from Subscription-Based Services Revenue-Sharing Between Wireless Network Operators Winter 85, 14 7

8 Available Channels WAP Voice channel the cost is based on the number of additional online minutes required for the cardholder to perform authentication Data channel the cost of the authentication depends on the amount of data transmitted. SMS Almost all communications systems support it. Short messages ride on a separate signaling path. Winter 85, 15 Entities in the m-commerce Value Chain Customer: who is mainly mobile. The place s/he is when the transaction is initiated can be different from a place s/he is when s/he receives the service, pays and the transaction is committed. These places can be in different countries or in the border of countries and the consumption of the services s/he has acquired can take place in a third country. Content/Service Provider who provides specific contents to a customer through a WAP Gateway which can be hosted at the Mobile Network Operator or though a portal that can be hosted at the operator s WAP server or anywhere else. Mobile Portals that offer personalized and localized services to customers. Mobile Network Operator: The role of the operator is very vital for the mobile electronic commerce. Depending on where it stands in the whole value chain of m-commerce, its role can vary from a simple mobile network provider to an intermediary, portal or trusted third party. The role of the operator can be quite complex and affect also the billing and payment of m-services Winter 85, 16 8

Mobile Network Operator (MNO) Winter 85, 17 Portal Services Mobile network operators have a number of advantages over other portal players: They have an existing customer

9 Mobile Network Operator (MNO) Winter 85, 17 Portal Services Mobile network operators have a number of advantages over other portal players: They have an existing customer relationship and personal data They can identify the location of the subscriber Traditional portal doesn t usually have a billing relationship with the customer Winter 85, 18 9

Trusted Third Party Winter 85, 19 Provides bundle services: Provides offers with a combination of various purchases from different suppliers with discounts.

10 Trusted Third Party Winter 85, 19 Provides bundle services: Provides offers with a combination of various purchases from different suppliers with discounts. So, for example, if customer wants to buy product A from supplier X, s/he may find an offer by the Telecom Operator about two products A and B from different supplier at a lower price. Acts as a front- end to the bank: The customer pays to the operator who, in this case, is also responsible for payment refund to the customer if the latter is not satisfied with the products. Acts as Trusted Third Party: In cases the customer wants to buy a number of goods from various suppliers that must interoperate. Winter 85, 20 10

11 The world is in everyone s pocket. The major inhibitor of m-commerce is the perception that it is not safe. However, once consumers buy something using their mobile devices, in all likelihood, they will do it again, thus expanding the mobile market. Winter 85, 21 Obstacles preventing m-commerce Obstacle Credit card security concerns Fear of 'klunky' user experience Don't understand how it would work Other Never heard of it before Phones 52% 35% 16% 11% 10% PDAs 47% 31% 16% 13% 12% Forrester also indicated that fewer than 15% of consumers feel completely comfortable sending their payment card details over mobile networks and over 65% claim to be averse to sending confidential information (2002) Security is the most important factor. Source: Forrester An Research Introduction to E-Commerce Winter 85, 22 11

WPK Standards critical issue in public key infrastructures is interoperability between system components: cardholder system, Issuer system, and certificate authority.

12 WPK Standards critical issue in public key infrastructures is interoperability between system components: cardholder system, Issuer system, and certificate authority. In the mobile environment PKCS #15 (Public Key Cryptographic Standards) Wireless Identity Module (WIM) standards. Winter 85, 23 Key storage generation, storage, and PIN access to the private key in the cardholder s system. SWIM A Wireless Identity Module (WIM) storing the keys resides in the SIM. WIM in removable card The WIM resides in a removable smart card that can be inserted in a dual slot phone. WIM in phone The WIM resides in the phone secure element. Winter 85, 24 12

13 WIM Key Storage Options Winter 85, 25 13

The Goods, the Payment and the Mobile!

WHITEPAPER The Goods, the Payment and the Mobile! This whitepaper is an extract from: Mobile Payments for Digital & Physical Goods Analysis, Markets & Vendor Strategies 2011-2015... information you can