The cost of m-commerce - mobile commerce - Brief Article

GLOBAL -- M-commerce is supposed to revolutionise the way consumers pay for goods and services, but how will this new world work?

According to research from Nokia Networks -- focusing on m-commerce services (4Q 2000 and 1Q 2001) in the UK, South Korea, Italy, USA, Brazil and Finland -- the proportion of respondents that would carry out a transaction of more than US$25 ([euro]30) using a mobile device ranged from 24-54 per cent. The mass market potential for m-commerce appears strong, but in light of the fact that e-commerce still only has a minority of users making purchases online, how will m-commerce succeed?

"Operators have to create a latent need for m-commerce services and make people want to try it. They have yet to grab the imagination of the public," claims Reza Chady, global head of market research, Nokia Networks. Something that might aid m-commerce is the fact that mobile penetration is higher than internet penetration in every market, with the exception of the US, and this should help drive demand for m-commerce services.

One fundamental issue is the extent to which end-users are prepared to pay for the ability to transact using their mobile device. Four payment models have been identified: the first where the advertiser pays; secondly, where the retailer pays for allowing users to pay in this way (similar to credit cards); thirdly, a monthly service fee which could be added to the mobile phone bill, or potentially paid to another party; or finally, a small fee paid each time the service is used, similar to the use of SMS.

Clearly, the preference for a particular option depends on the situation in which the transaction is being made. In the UK, the most popular model was the small fee model with 37 per cent of respondents choosing it, and 20 per cent choosing to pay a monthly fee 'over and above' their current monthly phone bill. "A good sign for UK operators is that less than eight per cent said that they were unwilling to pay anything at all for services," adds Chady.

In fact, 90 per cent of all end-users across the countries who would consider using m-commerce, either now or sometime in the future, are willing to pay for it. However, this is on the assumption that the mobile device is free. It is still uncertain whether the cost of next-generation phones will be subsidised by operators and if they aren't, the added cost of paying over [pound]150 ([euro]245) for a mobile phone might well affect this figure.

One thing is clear; to encourage mass-market use operators have to address the concerns end-users have in using m-commerce services. In all six countries, the most important factors that would encourage widespread adoption of m-commerce relate to security. For example, precautions to ensure the device can only be used by the end-user, and a guarantee the network is secure and details cannot be passed on. "Users need to build a level of trust in the service -- in handling and processing transactions and delivering the goods or service purchased," says Chady.

COPYRIGHT 2001 Horizon House Publications, Inc.
COPYRIGHT 2001 Gale Group