Mobile Commerce. Leveraging Ubiquitous Wireless Connectivity to Put Main Street in the Palm of Your Hand

Transcription

1 Mobile Commerce Leveraging Ubiquitous Wireless Connectivity to Put Main Street in the Palm of Your Hand

2

3 Mobile Commerce Leveraging Ubiquitous Wireless Connectivity to Put Main Street in the Palm of Your Hand Mobile commerce presents the opportunity to take full advantage of our nation s wireless resources to enhance the U.S. economy, create additional jobs, and deliver value for consumers. Whether used to access information about products, purchase, or sell, mobile commerce offerings facilitate and encourage the sort of robust and innovative economic activity that has become the hallmark of the U.S. wireless industry. This paper details the rapid growth of mobile commerce, including the following highlights: Experts predict that mobile commerce in the U.S. alone will reach $11.6 billion in 2012, and may reach $31 billion by The use of mobile devices for purchases during the holiday season increased by 552 percent from 2010 to Over 80 percent of the top 100 U.S. retailers have developed some sort of mobile commerce application. All four of the major wireless carriers have partnered with third parties to create mobile wallets using the handsets and devices. Mobile commerce applications and services have been used by presidential campaigns, the Olympic Committee, charitable organizations, and countless others. In the last two weeks alone, three publications, The Wall Street Journal, USA Today, and Travel and Leisure each presented robust reports on mobile commerce. The 8-page piece in the Journal was entitled How to Do Almost Anything on Your Mobile Devices. 1 The six-page Travel and Leisure piece was entitled The 60 Best Apps and Websites for Travelers. 2 And, the USA Today article, entitled Retailers Introduce Apps for In-Store Navigation, 3 identified Walmart,

4 Mobile Commerce Walgreens, and Home Depot, among others, as companies launching in-store mobile applications. These are just some examples of the attention that these new mobile commerce efforts are receiving from consumers and reporters alike. This paper details many of the innovations that are making the adoption of mobile commerce possible, including the development of Near Field Communications ( NFC ) technology, credit card readers that attach to smartphones, new payment systems, mobile commerce applications, location based services, and Quick Response ( QR ) codes. Mobile commerce is the use of wireless handheld devices such as cellular phones and laptops to conduct commercial transactions online Indeed, this paper describes just some of the many ways that the competitive mobile wireless industry is improving the stream of commerce, accelerating the U.S. economy, increasing productivity, creating jobs, and providing a platform for innovation not merely across the wireless ecosystem, but across the U.S. business and charitable sectors. I. Mobile Commerce Has Arrived on Main Street and is Open for Business Mobile commerce is the use of wireless handheld devices such as cellular phones and laptops to conduct commercial transactions online The term includes the purchase and sale of a wide range of goods and services, online banking, bill payment, information delivery, and so on. 4 The adoption of mobile commerce has increased dramatically over a short period of time. The use of mobile devices for purchases during the holiday season increased by 552 percent from 2010 to One survey found that 48% of those surveyed had used their mobile phone to make a purchase, 6 and worldwide, mobile payments were expected to total $86.1 billion in 2011, up 75.9 percent from In the United States alone, sales were projected to top $31 billion by 2015.

5 Source: emarketer, Nov (*indicates projected value) Mobile commerce encapsulates several different types of transactions and interactions, which generally fall into four major categories: payments, shopping, advertising and marketing, and commerce apps. Mobile payments involve a consumer shopping in a traditional brick-and-mortar store, but paying for their purchases using their mobile devices. This can be done through direct carrier billing, credit cards, direct access to a bank account, or a plug-in for the device. Mobile shopping entails a consumer conducting the entire transaction via a mobile device, from the browsing to the purchasing and payment. Included in this category are price comparisons and purchases from retailers online sites. Mobile advertising and marketing leverage the mobile technology for advertising purposes, through tools such as coupons, geographically targeted offers, and group deals. Last, mobile commerce apps facilitate commerce through mobile-friendly interfaces and applications. ABI Research has estimated that 36 billion apps, which are typically downloaded as software to a consumer s mobile device, 8 will be downloaded world-wide this year, and mobile commerce apps are an increasingly important part of this new economy.

6 Mobile Commerce In a 2011 survey, consumers reported using their mobile devices for a wide variety of mobile commerce activities. The range of uses demonstrates how pervasive and valued mobile commerce has become. Source: Deloitte s 2011 Annual Holiday Survey II. Wireless Carriers Are Driving Mobile Commerce Forward Perhaps the primary catalyst behind the mobile commerce explosion has been the initiative taken by wireless carriers and handset developers. Through partnerships with other carriers, developers, or third parties, CTIA members are enabling consumers to take advantage of the opportunities and benefits of mobile commerce. One such innovative partnership has been the creation of Isis, a joint venture between AT&T, T-Mobile, and Verizon Wireless that uses Near Field Communications ( NFC ) technology to facilitate payments through mobile devices. 9 The mobile payment platform

7 allows consumers to make payments, as well as organize their payment cards, loyalty cards, and special offers. The program is anticipated to launch in 2012, with initial roll-out in Austin, TX and Salt Lake City, UT. 10 The technology will be available on devices manufactured by HTC, LG, Motorola Mobility, RIM, Samsung Mobile, and Sony Ericsson, 11 with point-of-sale terminals provided by Verifone, ViVOtech, Ingenico, and Equinox. 12 Isis will be compatible with several payment cards, as well as an independent ISIS Card that can be loaded using another form of payment. 13 Google Wallet is a similar initiative. 14 A joint project with Sprint that also utilizes NFC technology to create a payment system, Google Wallet is accepted by twenty-two of the nation s largest retailers. 15 There are currently eight phones that are Google Wallet enabled, 16 and Sprint has announced plans to introduce ten new phones this year that can support the program. 17 The system has several security measures in place to help protect consumers, including encryption of sensitive information and pin-protected access to the app and payment options. 18 The mobile payment platform allows consumers to make payments, as well as organize their payment cards, loyalty cards, and special offers. Contactless mobile payments using NFC technology, in which a consumer simply holds their device over a reader, were deployed at the 2012 Summer Olympics in London, through a partnership between Samsung and Visa. 19 Using Visa PayWave, another NFC technology, attendees were able to pay for food, beverages, and souvenirs with their mobile devices at more than 3,000 terminals set up throughout the venues. Another industry initiative that uses mobile commerce to its full advantage is the short code. Short codes are addresses to which an SMS or text message can be sent. A short code uses fewer digits than a traditional seven or ten digit telephone number. 20 Common uses of the short code in the mobile commerce context include direct carrier billing purchases, and charitable giving campaigns. Short codes can be used to purchase ringtones, games, or other services. They have also been used as a way to make donating to a charitable cause simpler, with great success- in the aftermath of the 2010 earthquake in Haiti, approximately $43 million was donated to various relief efforts via short code replies. 21

8 Mobile Commerce Among the top 100 U.S. retailers, over 80 percent have developed some sort of mobile commerce application. Carriers are also working to make mobile commerce easier for both retailers and consumers. AT&T has partnered with Digby Mobile to launch Digby Localpoint, designed to aid retailers in making the mobile commerce experience more successful. 22 Digby Localpoint helps retailers to attract buyers to stores, engage in-store customers, and better understand the behavior of mobile consumers. By working with retailers, Digby Localpoint aims to create an effective and interactive experience. Verizon has teamed up with American Express to create Serve, a payment system similar to PayPal. 23 Serve links your mobile number to an existing bank account, credit card, or other payment source. The program also allows a transfer of funds directly between Serve users. The system can be used at any merchant that accepts American Express Cards. These initiatives are just a sample of what the wireless industry has been working on to fully embrace the mobile commerce concept. Consumer interest and technological advances are sure to increase interest in such programs and systems, and wireless carriers and handset manufacturers are poised to meet that demand. III. Mobile Commerce Applications Among the millions of mobile apps available on the various operating systems, mobile commerce apps are a burgeoning area where wireless technology is enabling users to simplify their lives. Indeed, mobile commerce is one of the areas where apps are used most effectively and efficiently to create an optimal experience for consumers. Among the top 100 U.S. retailers, over 80 percent have developed some sort of mobile commerce application, 24 and there are thousands of apps designed to make the consumer experience more convenient and enjoyable. As one recent observer noted in The Wall Street Journal, [a] wealth of mobile apps are helping shoppers find the merchandise they want at the lowest prices available whether in brick-andmortar stores or online rack up redeemable points, find fleeting

9 special deals and collect coupons. 25 Just one example of mobile apps being harnessed to improve consumers in-store experiences is seen through the Walgreens Aisle411 app, which can not only make shopping lists but then shows the selected items on the store s map. 26 Consumers are also employing mobile commerce apps on the road, using a host of new travel apps to calculate their mileage histories, track loyalty accounts and potential upgrades, locate flight and seat information, as well as comparing deals on hotels, airlines, and car rentals. 27 A. QR Codes One of the most popular features in applications is the Quick Response ( QR ) Code, a two dimensional bar code that contains information accessible to mobile device users that scan the code. 28 QR codes are a substitute to the traditional, one-dimensional bar code and in comparison can hold a significantly larger amount of data. The structure and configuration of the code creates exponentially more capacity. 29 The types of data that can be stored by a QR code are also greater, ranging from text and phone numbers to URLs and videos. 30 The QR code to the right links to the CTIA Blog when scanned by a mobile handset QR reader. When combined with a retailer s other app features, these can be an excellent tool for enabling quick access. The codes can be used as a way to direct consumers to the next step in the transaction. A grocery store provided a demonstration of the QR code as a gateway when it posted the codes on advertisements in public transportation terminals. 31 Consumers waiting for their bus could scan the code for the specific groceries they needed, and the code directs them to the store s website where they could make the purchase. The selected items would then be delivered to the consumer s home a short time latereliminating the step of actually going to the grocery store. Starbucks has also taken advantage of the QR code, embedding a unique code into each user s app. 32 By accessing the Starbucks app and displaying the code within, baristas can scan the code at the time of the transaction and the consumer s card will be charged, without the consumer ever needing to present it. CTIA Blog The types of data that can be stored by a QR code are also greater, ranging from text and phone numbers to URLs and videos.

10 Mobile Commerce B. Location Based Services Using the location based services of a consumer s handset, retailers are able to specifically target offers and services to consumers based on their geography. Retailers can focus on a geographically relevant audience when marketing a deal or sale, thereby increasing the likelihood that the recipient will have an interest in the offer. One such example is Groupon NOW, a daily deal application for smartphones that uses the consumer s current location to offer immediately usable deals within close proximity. 33 A subscriber can access Groupon NOW to see what deals are available nearby, purchase the deal through their phone, and then use the deal to get a discount on lunch, a haircut, or a variety of other goods and services. IV. Hardware and Devices are Essential to Mobile Commerce Hardware is an integral part of mobile commerce as well, primarily by enabling the use of alternative methods of payment. Near Field Communications ( NFC ) technology, as mentioned above, is one of the more prevalent methods, and the attachable credit card reader for handsets is another commonly used device. NFC is enabled through a chip embedded in the handset that stores payment data. 34 The chip can be read by NFC point-of-sale terminals, and as the chip is scanned, the linked bank account or credit card is charged. As discussed earlier, NFC technology is becoming more frequently used and offers a convenient alternative to the traditional payment methods. The use of attachable credit card readers has been another hardware initiative in the mobile commerce space. The card readers typically attach to the seller s smartphone handset via the headphone jack, and allow the customer to swipe their credit card or debit card and make Attachable Credit Card Reader from Square [

11 a payment to the seller. 35 This technology allows for payments on the go, and enables smaller retailers or individuals to accept credit card payments without the purchase of an expensive point of sale terminal. One group that recently took advantage of the opportunities presented by the use of the card reader was the Girl Scouts of America. 36 The Girl Scouts experimented with the card readers during the 2012 cookie sale season, providing some troops with the devices and the accompanying application, Sage, to test out. The card readers gave customers the option of using a credit card to purchase their Girl Scout cookies, and the troop leaders could swipe the cards and even customers a digital receipt. The convenience of the smartphone-credit card reader option produced positive results, as Girl Scout troops that participated in the study experienced an increase in sales, as much as 13 percent higher than other non-participant troops in their areas. Another use of the card readers has been soliciting credit card donations for presidential campaigns. President Barack Obama and Republican presidential candidate Mitt Romney are both using mobile payments to encourage donors by making the process quick and easy. 37 Through the use of the card reader and the application Square, campaign volunteers are able to collect credit card donations on the spot. The app then sends the money directly to the campaign fund. The option to make a donation immediately appeals to supporters through its convenience, and eliminates the burden of the traditional processing of donations by campaign staffers. Other mobile apps make use of consumers smartphone cameras to improve the shopping experience and deliver greater value. For example, apps like Barcode Scanner and The Find let consumers use their smartphone s camera to scan an item s bar code and find out whether the item is available more cheaply at nearby stores or online. 38

12 Conclusion Spectrum is critical to the continued success of the U.S. mobile ecosystem, and is particularly important for harnessing the potential of mobile commerce. Though still in its relative infancy, mobile commerce appears to be rapidly growing in adoption, particularly as consumers value more and more the convenience of the technology. With the opportunity to consolidate what they have to carry, the option of using an already everpresent, ever-connected wireless device to make payments, use coupons, compare prices, and organize payment cards is appealing. Experts predict that mobile commerce in the U.S. alone will reach $11.6 billion in 2012, and may reach $31 billion by The continued growth of mobile commerce will rely on the platform provided by the competitive and innovative wireless industry. Carriers are working to build robust and reliable 4G networks. As CTIA has previously highlighted, even though the United States accounts for less than 5% of the global population and has less than 6% of the world s mobile wireless subscribers, it boasts about 65% of global LTE subscribers as of the third quarter of This leadership will help ensure the growth of mobile commerce and is critical to our continued leadership in the global economy. Of course, another essential element necessary for the deployment and use of mobile commerce is access to additional spectrum resources. Spectrum is critical to the continued success of the U.S. mobile ecosystem, and is particularly important for harnessing the potential of mobile commerce. As the stream of commerce increasingly flows through mobile networks it will be vital to add spectrum to meet demand and ensure the robust features and security that U.S. businesses and consumers will require. The recently-passed legislation authorizing incentive auctions and the reallocation of broadcast spectrum is an important step toward meeting our nation s spectrum needs, but Congress and the Commission will need to continue to focus on the end goal of providing more usable spectrum. CTIA looks forward to working with policymakers to meet those spectrum needs and to ensure that the U.S. remains a world leader in the global economy through both mobile broadband networks and mobile commerce.

13 Endnotes 1 See The Best Way to Do Almost Anything on Your Mobile Devices, Wall Street Journal, Aug. 27, The 60 Best Apps and Websites for Travelers, Tom Samiljan, Travel and Leisure, Sept Retailers Introduce Apps for In-Store Navigation, Roger Yu, USA Today, Aug. 29, Definition of Mobile Commerce, Investopedia, 5 PayPal: Global mobile payment increased 552 percent on Cyber Monday, Mobile Commerce Daily, Nov. 30, 2011, 6 The Mobile Shopping Revolution, Lightspeed Research, Oct. 14, 2010, (Survey conducted from August 26-30, 2010, and results based on 3,905 respondents using Lightspeed Research s Mobile Phone Panel). 7 Gartner Says Worldwide Mobile Payment Users to Reach 141 Million in 2011, Gartner Newsroom, July 21, 2011, 8 See The Best Way to Do Almost Anything on Your Mobile Devices, Wall Street Journal, Aug. 27, 2012 (citing ABI Research estimates that that approximately 36 billion apps are expected to be downloaded worldwide this year). 9 What is Isis?, ISIS, (last visited March 28, 2012). 10 Mobile Wallet Isis to be Launched in September, (last visited Sept. 10, 2012). 11 HTC, LG, Motorola, RIM, Samsung and Sony Ericsson to Add Isis NFC Tech in Future Phones, Engadget, Sept. 27, 2011, 12 Isis Scores Point-of-sale Terminal Support, PhoneScoop, March 5, 2012, 13 What Cards Can I Use?, Isis, (last visited March 28, 2012). 14 What is Google Wallet?, Google Wallet, (last visited March 28, 2012). 15 Google: Wallet expanding to 10 more Sprint devices this year, Fierce Mobile Content, March 1,2012, 16 Eligible Devices, (lasted visited Sept. 11, 2012). 17 Google: Wallet expanding to 10 more Sprint devices this year, Fierce Mobile Content, March 1,2012, 18 How it Works: Security, Google Wallet, (last visited March 28, 2012). 19 Rimma Kats, Visa, Samsung to offer contactless payments during 2012 Olympics, Mobile Commerce Daily, Feb. 27, 2012, 20 About CSCs, Common Short Code Administration, (last visited April 4, 2012). 21 Elizabeth Woyke, Yes, You Can Still Donate Money to Haiti Via Your Cellphone, Forbes, Jan. 12, 2012,

14 22 Digby Localpoint, AT&T, mobile-productivity-solutions/digby.jsp (last visited April 4, 2012). 23 What is Serve?, Serve.com, (last visited April 4, 2012). 24 Congnizant, The State of Retail Mobility, (last visited Sept. 11, 2012). 25 Find Shopping Deals, Greg Bensinger, Wall Street Journal, Aug. 27, Retailers Introduce Apps for In-Store Navigation, Roger Yu, USA Today, Aug. 29, The 60 Best Apps and Websites for Travelers, Tom Samiljan, Travel and Leisure, Sept About QR Code, Denso-Wave, (last visited April 4, 2012). 29 Id. 30 Jeff Korhan, How QR Codes Can Grow Your Business, Social Media Examiner, Feb. 7, 2012, 31 Chantal Tode, Peapod, P&G Tap Mobile To Simplify Grocery Shopping For Commuters, Mobile Commerce Daily, Feb. 2, 2012, 32 Starbucks Card Mobile App for iphone, Starbucks, (last visited April 4, 2012). 33 Leslie Horn, Groupon Now Provides Instant, Location-Based Deals, PC Mag, May 11, 2011, 34 NFC and Contactless Technology, NFC Forums, (last visited April 4, 2012). 35 Zack Stern, Process Credit Cards Anywhere: 5 Smartphone Alternatives, PC World, Dec. 1, 2010, 36 Chantal Tode, Girl Scouts Add Mobile Payments to Drive Cookie Sales, Mobile Commerce Daily, Feb. 7, 2012, 37 Nick Bilton, Obama and Romney Campaigns Adopt Square for Funding, New York Times, Jan. 30, 2012, 38 Find Shopping Deals, Greg Bensinger, Wall Street Journal, Aug. 27, Press Release, US M-Commerce Sales to Grow 91% to $6.7 Billion in 2011, EMarketer, Dec. 1, 2011,

15

16