Mobile commerce | An introduction

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17th May 2017 Information Systems Reference this

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CHAPTER 1: INTRODUCTION

Mobile Commerce (m-commerce) can be widely defined as “any transaction, involving the transfer of ownership or rights to use goods and services, which is initiated and/or completed by using mobile access to computer-mediated networks with the help of an electronic device”. (R. Tiwari, and S. Buse. 2007)Business-to-consumer (B2C) mobile commerce (m-commerce) refers to consumers sharing information and purchasing products and services from sellers with their mobile devices (Balasubramanian et al. 2002). With the continuous development of telecommunication technology, mobile services ranges from email receiving and sending, shopping for goods and services, playing online interactive games, trading stocks and shares, reserve tickets, conduct banking and monetary transactions and even link to social networking sites to connect with friends.Mobile commerce constitutes payment for such goods, services and information.

Users access a website or wireless access protocol (WAP) by entering the web address (URL) of the particular products required via the mobile phone browser. Text messaging (SMS) is another way users can ‘communicate’ with third party service provider. Depending on the tangibility of the product, the delivery of the product can be in the form of physical collection or downloaded digitally into the mobile devices.

1.1 Evolution of Mobile Commerce

Finland is the ‘birthplace’ of Mobile Commerce. In 1997, the first SMS-activated Coca Cola vending machines was installed in Helsinki. Same year, mobile-based finance and banking service were also launched. Finland is also the place where the first sales of digital content, ring tones were downloaded to mobile phones, were made. In 1999, Philippines and Japan commenced a national commercial platform for mobile commerce, known as SMART and i-Mode respectively. Subsequently, mobile commerce associated services begun to sprout rapidly in other markets, from mobile parking in Norway, to sales of train tickets via mobile phones in Austria to the purchase of airline tickets in Japan.

From 2002, public transportation commuters in Helsinki are able to purchase tram and undergrounds train tickets via mobile phones. The cost of the tickets is the same as those bought from a machine but without the queue. In Colorado, it is one of the first few places whereby one can order movie tickets and pay via mobile phone. A dedicated counter is arranged for the pick-up. Mobile vouchers or coupons are visible in many countries from Finland, Spain, Germany, and United States to Japan. The promotional items offered on discounts ranges from laptops to McDonalds. Ring tone and wallpaper downloading have been one of the first widely used mobile commerce services. Some mobile services providers offer mobile news services, such as headlines, sports, weather, sports to mobile subscriber, sometimes free when sponsored by mobile advertiser or at a monthly subscription cost to the user.

Small-scaled mobile commerce doesexist in most markets, from SMS voting in reality shows like ‘American Idol’ to participate in promotion lucky draws to downloading mobile ringtones. External environmental factors do play a part in promoting the mobile commerce growth. Worldwide expansion of digitalisation and automation of sales proceduresin the e-business and e-commerce on the Internet allow easier transference to the mobile commerce environment.

1.2 Technology

Mobile commerce is actualised by a series of interlinked technologies such as networking, embedded systems, databases and security. (Siau et al, 2003). Mobile devices, wireless systems and software’s enable a faster transmission of data, along with reliability and security.

Global System for Mobile Communication (GSM) is the second generation (2G) after the analogue cellular era. It is the basic circuit-switched system whereby users need to dial in to maintain connection. The 2.5G technologies consist of the General Packet Radio Service (GPRS) and Enhanced Data GSM Environment where they make used of existing infrastructure but faster in terms of sending speed. This generation of mobile technology is meant for transference of multimedia and broadband applications.

The third generation (3G) uses the Universal Mobile Telecommunication System (UMTS), which strives to provide higher bandwidth, faster transmission of voice, text, video, and multimedia for data-concentrated applications. UMTS allows users to be constantly connected to the Internet and its services worldwide, regardless of the devices (mobile or computers) used. As such, the mobile device can be integrated with functions of other equipment such as television, newspaper, organiser, computer and even credit card.

In order to access web information to the mobile devices, the Wireless Application Protocol (WAP) was designed. As an open and global standardisation for mobile applications, WAP aimed to connect and communicate mobile devices with other devices over wireless network on an interactive and real-time interface.

Global Positioning System (GPS) uses a satellites system orbiting around the earth and is particularly useful location technology. It is essential to location based mobile commerce based applications, as it offers relevant information dependent on location.

1.3 Role of channel provider

The roles of the 3G operators are more obvious than the voice-centric 2G. In fact, how these operators facilitate their roles will determine the adoption of mobile commerce. The carrier or Internet Service Provider (ISP) is the entity that delivers the data to and from the user. The initial stage of 3G-standardisation process started with dual layer model, the pure carrier and service and/or connection provider. It is viewed that this model will continue with carriers bring the main subscription provider. The gateway or portal is the entity centred to the services range. It is still unclear whether carrier will control it wholly. Regardless, it is definite that the number of content provider will increase. The role of banks in mobile commerce is considered critical since ease of payment is one of the determinant factors in adoption of mobile commerce. Certification authority is the entity that guarantees the transactions between the origin and destination.

In addition to the above mentioned infrastructure requirements, a smartcard called UMTS Subscriber Identity Card (USIM) is compulsory in every device n order to make phone calls. The basic functions for USIM are security via shared secret key, personal information manager, and SIM toolkit applications. USIM is also a platform for applications or features such as public key security content copyright control, specification and cookies, data or application cache, authentication of users and plastic roaming.

1.4 Development of Mobile Commerce

The extensive availability of Internet-accessible mobile phones is slowly creating a community of mobile commerce users. It is expected that this community might exceed the PC community. (Ahonen, 2002) With technology such as WAP or 3G, it is believed that electronic commerce information and/or interactive content will be adapted to the mobile commerce environment.

While the majority of mobile commerce opportunities and purchases are business-to-consumer (B2C), the possibility of business-to-business (B2B) still stands. It is predicted that business users and their requirements will be fulfilled by the 3G services. A report by Accenture in 2001 “Future of Wireless”, has suggested that most business activities are easily accommodated for mobile commerce.

With the rapid spread of mobile commerce, mobile phone manufacturers such as Nokia, Sony Ericsson, Samsung, Motorola and LG had began to develop WAP-enabled smart phones to exploit on the market potential. Interestingly, it was the introduction of Apple’s iPhone mobile commerce based systems like FanGo that the platform started to move into actual applications instead of SMS systems.

The key advantage of mobile commerce services is the mobility of conveniences. Mobile commerce allows users the ability to execute transactions regardless of the location and time. With such uniqueness, mobile commerce has experienced relatively greater success in markets like Japan in regards to individual adoption rate. In comparison, this novelty technology has yet to achieve widespread popularity in other markets like the USA, Australia and Singapore.

Mobile commerce actualise the possibility of accessing information at anywhere and anytime. It provides users the chance to access the Internet regardless of location (subject to the network coverage of mobile internet operators), the ability to identify a single mobile device’s location (Global Positioning System) and to retrieve and/or update information whenever needed. The features of mobile commerce can be categorised into the following:

Ubiquity. The most distinct advantage of mobile commerce is its ubiquity. With internet-enabled mobile devices, users can obtain any information required. Also, the emerging mobile commerce applications allow users to engage in activities such as instant messaging, linking to social networking websites, conducting financial transactions or looking up for weather news.

Dissemination: The wireless infrastructure that support instantaneous delivery of data to mobile devices allows an efficient distribution of information to a population.

Personalisation. With the massive amount of information available on the Internet, it is important that the content users receive is relevant. Mobile commerce companies can create applications that allow customizable information and services applicable to users.

Localisation. Another significant feature will be the ability to identify user’s physical location with prompted the creation of location-based applications. The Sekai Camera created by Tonchidot is one example of how far such applications can go. (Figure)

Source: http://popupcity.net/2009/01/tag-the-world-share-spaces/

CHAPTER 2: BACKGROUND

2.1 Mobile Commerce in Singapore

Mobile commerce innovations were also introduced. June 2001, Coca-Cola partnered with SingTel on a Dial-a-Drink scheme to enable consumers to buy drinks from the vending machines via SMS, cost of the drinks will be credited to their phone bills. M1 has a similar development with Yeo Hiap Seng too. The largest taxi fleet company, ComfortDelgro, started a free SMS taxi booking service. This service, aimed to better match demand and supply, offers commuters an alternative channel to book a taxi apart from the “call-a-cab” scheme.

Another interested application of mobile commerce will be the audience polling. When television station and/or web-based TV reality contests was newly introduced into the local media scene, audience support through SMS voting was a common trend. Although the hype is fading, SMS voting is still an alternative for media contests on top of online voting. It is evident in the Singapore Blog Awards 2009 where Rednano Mobile, the mobile platform of rednano.sg, powers SMS voting. Increasingly, real-time SMS service like messageLIVE provided by SingTel are used at events where audience can participate in lucky draws, comment, etc via SMS and it will be instantaneously reflected on screen. SMS transaction has been seen in local television charity shows such as the President Star Charity Show.

It is observed that mobile payment method plays an important part to the success of mobile commerce. There had been several mobile payment initiatives launched in Singapore. Local banks have started rolling out mobile banking services way back in 2001. TELEMONEY by [email protected] Pte Ltd has also implemented mobile payment systems for retail and parking charges at Suntec City. NETS, too, phase in YW8 whereby moviegoers can reserve and purchase Eng Wah cinema tickets. However, the demand for these services was so low that some services ceased to exist.

One of the main reasons for the unpopularity then was the complex usage procedure for mobile payments. Users first have to register and remember a sixteen-digit personal identification number. After which, users will be required to either send Short Message Service (SMS) or dial a specific number to confirm any purchase. Such inconveniences make mobile payment schemes difficult to gain prevalence.

Nonetheless, there have been ongoing efforts to improve the telecommunication technology such as Near Field Communications (NFC) and mobile scan technology to facilitate mobile commerce. NFC allows users to make payment by tapping their mobile devices against a reader. Mobile scan technology involves the using of camera in mobile phone as barcode reader. Mobile barcodes are commonly used for information or service request or content from a website. It can be promotion details, discount voucher or code via SMS or MMS, or ring tone, MP3, or game download or activation, or click to buy human agent, or purchase concert or travel ticket. The set up costs is usually the responsibility of the products company while partnering with a mobile payment service provider.

While Mobile commerce now remains at infant stage, there are a myriad of companies looking into SMS-based applications and WAP. The InfoComm development Authority of Singapore (IDA) has on-going research to identify the current local mobile commerce industry status and thereafter implemented several initiatives to encourage and support companies on mobile applications and/or platform development. At the official opening of imbX 2009, it was announced by Minster Lui Tuck Yew that the government intend to allocate $1.73 billion for new infocomm projects. Part of these projects will include the deployment of contactless point-of-sale terminals via NFC to promote electronic payment adoption and developing of applications on mobile commerce platform, location-based services and novel original mobile services.

It is observed that service provider in the mobile commerce value chain, such as the wireless application providers, mobile operators, and other players, have been swift to introduce applications to the mass-market. However, the rate of adoption has been somewhat pale.

2.2 Statistics

As of June 2009, Singapore has a mobile penetration rate of 130.6%. It is very common to for consumers to own more than one mobile device each. The mobile penetration rate has been on a steadily increase since 1997. 2009 also indicate an uprising trend lest for the stark drop of 3.2% in June 2009. While the mobile subscriptions averaged around 64000, the number of 3G subscriptions has increased over the past six months. Despite the positive increment, the market share of mobile commerce has yet to pick up similar pattern. Singapore pales comparison to Japan wheremobile commerce is a huge success, attributing more than $400 million in revenues yearly. NTT DoCoMo’s popular i-mode service allows users to buy soft drinks from vending machine, pay for food at fast food restaurants, and shop at online shops like Amazon.com, and buy most of goods via DoCoMo’s billing system. Companies like Visa also offer m-commerce services in Japan.

Chart 2.1: Mobile Penetration Rate of Singapore, Q1-Q2 2009

Source: Statistics on Telecom Services for 2009 (Jan – Jun), IDA Singapore. http://www.ida.gov.sg/Publications/20090304182010.aspx

Chart 2.2: Singapore Mobile Market

Source: Statistics on Telecom Services for 2009 (Jan – Jun), IDA Singapore. http://www.ida.gov.sg/Publications/20090304182010.aspx

Chart 2.3: Mobile Penetration Rate of Singapore, Annual, 1997-2008

Source: Statistics on Telecom Services for 2009 (Jan – Jun), IDA Singapore. http://www.ida.gov.sg/Publications/20090304182010.aspx

CHAPTER 3: LITERATURE REVIEW

3.1 Mobile Commerce Process

Mobile commerce consists of user’s participation in transactions via mobile terminals. From a user’s point of view, retrieving and sending information and purchasing products are regarded as the basic steps to mobile commerce. Most mobile commerce studies focused mainly on the purchasing stage but customers are involved in receiving and transferring information at the pre-purchase stage.

Receiving information consists of conveying of information from seller to user’s mobile device. As it is important for customers to know about the products, make comparison between products and then make buying decision.

Transferring information represent the directing of information from user to sellers. The information can be used to describe product and services requirements, registering, providing feedback and offering payment and/or delivery details.

Purchasing is the act of buying products and services via mobile devices in return of monetary returns. The act of placing orders can be done through Wireless Application Protocol (WAP) properties of mobile device. It does not include making order by calling the seller from mobile phone.

3.2 Mobile Commerce Adoption Activators and Inhibitors

There are a significant number of studies carried out to identify and predict the upcoming activators and inhibitors of mass-market mobile commerce adoption. As seen in the review here, different authors have highlighted different factors as key activators/inhibitors to the adoption of mobile commerce. Gillick and Vanderhoof (2000) suggest five broad-natured inhibitors, namely the technology, standardization of industry, the business case, expectations of consumers, security and reliability. The last factor is one of the most commonly quoted. Most authors have quoted the lack of security and privacy could be the main obstacle to the growth of mobile commerce. E-Mori conducted a multi-market study for Nokia Networks and it was found that the lack of perceived need (Signorini, 2001), conservatism, and perceptions relating to the reliability and security of the technology are the main hurdles to adoption of mobile commerce; while convenience and control are found to be the key determinants of demand. Buellingen and Woerter (2002) emphasize four vital success factors for the use of mobile services – transmission rate, personalisation, data security, and user friendliness. Based on a survey by Strong and Old (2000) propose that ease of having ubiquitous Internet access will be the most essential for customers to engage in mobile Internet applications. The authors noticed substantial obstacles to rapid adoption to mobile Internet in the future are lack of awareness in content and application, high operating costs and the unfavourable comparison towards mobile Internet in terms of small screen size, awkward input, poor search functions, unstable or expensive connections, etc. On the other hand, many studies disputed on the fact that mobile commerce may encounter considerable growth with non-Internet adopters because of the lower costs and ease of usage with mobile devices involved. (Müller-Versee, 1999; Vittet- Philippe and Navarro, 2000; Ropers, 2001)

Vittet- Philippe and Navarro (2000) and Green (2000) believe that ‘user-friendly’ is the main point for mobile commerce adoption. As such, the limitations like small screen size, low bandwidth and the basic functions of mobile devices influence the design of mobile commerce applications’ interface. Likewise, the survey conducted by Carlsson and Walden (2002) noted that slowness in speed of service and small screen size of mobile phones attributed to the hindrance in mobile commerce adoption. On the other hand, Langendoerfer (2002) assumes that technological matters such as technical environment and mobile devices will not be the main reason for the slowness in widespread usage of mobile commerce. Rather, the concerns of users such as privacy and security have a larger influence on the slow take off.

Shuster (2001) hypothesize that pricing will definitely have an influence on mobile commerce adoption. “Improved mobile devices, user-friendly shopping interfaces, effective applications and services, reduced prices, secure transactions, high bandwidth and network coverage” are the list of key success factors for escalating mobile commerce adoption from the online survey by Vrechopoulos et al (2002)

It is also highlighted from a consumer survey (Anckar, 2002b) that mobile commerce adoption is driven by “convenience and flexibility to daily routines rather than excitement and entertainment”. It is also found out that consumers regard the function to fulfill instantaneous and time-sensitive needs as important adoption drivers of mobile commerce.

Prior research has somewhat indicated that the main factors influencing the decision to adopt mobile commerce related to the services or device features has gone beyond the traditional function of a mobile phone, i.e. one-to-one voice communication. In line with this theory, consumer will be encouraged towards mobile commerce based on the fact that mobile device in transforming into a personal device, via which various transactions and activities can be carried out.

3.3 Traditional models

Several studies have been carried out using conventional adoption theories and models like the Technology Acceptance Model (TAM) and Theory of Planned Behaviour (TBP). However, the main conclusion drawn by many authors was that traditional models are lacking to derive significant deduction on the determinants of individual adoption or rejection of mobile commerce.

According to the Theory of Planned Behaviour (Ajzen, 1991), the behaviour prior to any act (behavioural intentions) is established by variables like Attitude, Subjective Norm and Perceived Behavioural Control (PBC). A user’s attitude linking to using mobile device to obtain, transmit information and purchase is believed to influence the user’s intention to carry out the three behaviours. Subjective norm is believed to have the same effects on users too. PBC is a factor of intended users’ behaviour via increasing insight of control, assurance and ease of performing act.

Based on the research by Pavlou et al, (2007), the model of m-commerce adoption emphasize largely on “technology adoption (perceived usefulness and ease of use), technological characteristics (mobile device display features, mobile device portability, and mobile site navigability and download delay), information characteristics (mobile site informativeness, information protection, and personalization), and consumer characteristics (mobile user’s skills)”.

TAM has influence many information system based findings (such as Lee et al., 2002; O’Cass and Fenech, 2003) pertaining to information technology adoption in set or mobile environment. Although many studies are in favor of TAM as a model to explain the decision of acceptance, it is still uncertain if the model is entirely appropriate with regards to different channels.

The decisions to adopt mobile commerce are very different from the decision to adopt technology for carrying reasons. Firstly, users adopt mobile commerce as a new channel of commerce rather than as technology per se. Second, mobile commerce may consist of transactional and non- transactional element. This means that adopters’ intent to engage in mobile commerce should be viewed holistically. (Pavlou, 2002) As such, we need differentiate between the various levels of mobile commerce adoption as we study consumer adoption decision. Third, Eikebrokk and Sorebo (1998) pointed out that TAM is generally applied to singular target situation, based on the assumption that potential users are only faced with one specific technology. It is therefore argued that to acquire valid forecasts and justifications of technology acceptance with TAM since users are presented with situation whereby they can choose among alternative channels. Fourth, it is argued that TAM itself is imperfect as it does not considered the influence of social factors in the adoption and usage of new technology or system. This shortcoming has to be taken into consideration when examining the adoption factors. Last, TAM assumes that usage is free and voluntary, that there are no obstacles to prevent user from adopting any technology as long as wanting to do so. This has lead to criticism from several researchers (Mathieson et al, 2001) and prompted some authors to supplement TAM with theories that hypothesize perceived risks as a pre-condition to the mobile commerce adoption. Pavlou (2002) emphasizes that the proliferation of the Internet has brought uncertainty and risk in the adoption of system. It therefore require the integration of variables that capture concepts in current technology adoption models by reflecting that trust and perceived risk are directly linked to the intent to transact via mobile devices.

One reason for the inadequacy of traditional models is that the relationship between users and mobile commerce has not been clearly defined. Past methods only analysed the interaction between the users and the technology or between people in a network connections. On the contrary, mobile commerce users interrelate in three directions, in technological aspect, as members of networks and as consumers. These three roles need to be incorporated in order to achieve a greater understanding of mobile commerce adoption.

The adoption of mobile commerce – the interaction of consumers and sellers via mobile transactions is different from the usual electronics commerce due to the nature of location-independence, instantaneous real-time exchanges, the distinctive interface of mobile devices, and the unique aspect of mobile devices like small screen size and low bandwidth. Therefore, mobile adoption is not merely an issue of usability of system or acceptance of technology. It should include several consumer pre-purchase actions such as researching for information, providing details and act of purchasing using mobile devices.

This paper will re-examine present literature of voluntary adoption of m-commerce services by individuals to emphasize the need to approach the three aspects of mobile commerce together in order to attain a holistic comprehension. The current mobile commerce industry of Singapore will be evaluated based in this research. It will enable stakeholders of the mobile commerce industry to gain informative insight on the acceptance of mobile services. Hence, this will result in wiser decision-making in terms of business strategies and provision of the product and services.

CHAPTER 4: METHODOLOGY

4.1 Survey

The self-administered survey was hosted online on speedsurvey.com, under the domain http://mobilecommercesingapore.speedsurvey.com/. The reason for having such an unsupervised survey technique was that the 16 questions were simple to understand and followed a direct logic.

The respondents are made up of 12 females and 24 males and all the respondents own a mobile phone. They survey instrument covered 16 questions pertaining to the users’ insight and purpose associated to mobile commerce and also their experience with the mobile commerce and mobile Internet. In this paper, there is a section in the questionnaire where the respondents were requested to specify to what extent does they agree or disagree with the statement related to the considered significance of different proposed benefits and obstacles to mobile commerce. The data collected were used to identify the activators and inhibitors that cover critical or non-critical factors that impact consumers’ decision in adoption or not adopting mobile commerce.

4.2 Results and Discussion

Over 41% of the respondent have a bachelor degree and about 50% of them holds a master or doctorate degree. All the respondents own a mobile phone and about 75% have Apple iPhone. This will mean that their service provider is SingTel since the Telecommunication Company has a monopoly on the distribution of the Apple iPhone until 2010 when the other 2 Telecommunication Company will also have the distributor rights. Incidentally, it is reflected from the data collection that the most common item purchase via mobile is the phone applications. Also known as widgets, these applications can be downloaded on the iApps or iTunesstore via the phone Internet browser. In terms of frequency, it is has the most recent item purchase. More then 40% of the respondent has purchase widgets for the past 1 week. Out of the 36 respondents, 34 of them has purchased (buy/order/reserve/download) item at least once for the past 12 months. None of them has bought items off the vending machine via the mobile phone. The purchase of other items such as requesting for information and buying multimedia content by SMSto a specific 5-digit number are rather sporadic.

Over 40% of the respondents agree that using mobile commerce saves them time, with the other 30% strongly agreeing. There are about 70% of them who see that using mobile commerce is fashionable and trendy. With regards to the mobile commerce being an invasion of privacy, there are equal responses from those who agree, strong agree and disagree. However, about 80% of the respondents think that it is safe to make purchases using mobile commerce. The majority of the respondents agree that they have the necessary means and resources to use mobile commerce. Same, the respondents also agree that they will seek information about the new product or services.

Among those that had never performed a mobile transaction before, the reasons mainly evolved around unawareness. Mostly, they are do not possess enough information to get started or use it, or no idea how much it will cost. It is much preferred to use other devices such as computer or payment kiosks such as SAM or AXS to perform the transaction. It is commonly believe that mobile commerce is expensive and will cost too much.

However, it is indicated that they are willing to try to mobile commerce mainly if it was easier to obtain information from the Internet via mobile phone. This will also comprise of ease of access to rich media on mobile devices and user-friendly navigation on their mobile devices.

4.3 Limitations of the survey

The data collected from the survey is highly non conclusive for several reason. Firstly, the size of respondents is less than 50; therefore the results are not substantial. Secondly, the profile of the respondents is too skewed towards certain segments; mainly male that has Apple iPhone. Hence, the data is not representative enough. Thirdly, the structure of the survey was not well organised. The lack of logic and guided instructions, which is critical in self-administered survey, may somewhat confused respondent.

4.4 Suggestions for future research

It is seen that Apple iPhone may be a boosting factor for the future mobile commerce phenomenon. The intuitive design and ease of navigation of the iPhone may propel more and more users to perform mobile commerce transaction. Also, with the fact that all three Telecommunication Companies are offering iPhone from 2010, it is believe that the market share of iPhone will expand rapidly. It is therefore suggest that an iPhone focus study may be undertaken in the future to better understand the effect of iPhone, iPhone applications, iApps, and iTunes store on mobile com

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