Mobile commerce: The evolution of online transactions

The term “Mobile Commerce” was first coined by Kevin Duffey, Logica’s mobile innovation managing consultant in 1997.  He defined it as “the delivery of electronic commerce capabilities directly into the consumer’s hand, anywhere, via wireless technology.”  This definition still stands today but I’m not sure many would have imagined the huge scale at which it was adopted.

According to Adobe, almost 1 in 3 purchases that were made in the US during the recent Thanksgiving Day and Black Friday occurred over mobile commerce.  In the UK over one quarter of all online sales take place via smartphones and tablets and by 2018 this figure is expected to grow to nearly two in five sales.

Why the rapid growth you may ask?  Well, mobile device ownership is rising fast with nearly 7 billion subscribers worldwide today and consumers are increasingly looking for more convenient and flexible ways to make purchases online on their own terms.  They want the freedom to choose when and how they do it and mobile commerce is the answer.

Mobile payments – a key adoption driver

One of the big drivers in the rapid rise in mobile commerce adoption is mobile payments.  It’s not only about providing consumers with a method of payment via mobile, it’s also about making the user experience of purchasing as seamless as possible.

The primary mobile payment method being adopted around the world is carrier billing – a powerful solution that allows consumers to purchase goods and services on the mobile, desktop and in-app and charge their transactions to their mobile phone bills.

Alternative mobile payments solutions include the Mobile Wallet or Mobile at the point of sale such as NFC technology; Mobile as the point of sale such as Square; Mobile payment platform such as Paypal and Closed loop mobile payments such as Starbucks.  All of these mobile payment methods may have had a lot of hype in the news but the only method that’s actually being adopted widely today around the world is Mobile Carrier Billing.

According to Juniper Research, content revenue billed via direct carrier billing across smartphones, feature phones and tablets is expected to reach $13.1 billion by 2017. This increased adoption trend is because it enables businesses to monetise consumers without bank accounts, including younger audiences, or those unwilling to share their card details online.  Consumers can complete their transactions quickly and securely whether it’s an in-app purchase whilst playing a game or buying a football ticket without the need to fill in any forms.

Monetisation opportunities for businesses

Many businesses have benefited from offering their customers the ability to pay for their purchases via mobile.

Leading online gaming companies allow their users to pay for virtual credits to buy in-game items to enhance their gaming experience via “pay by mobile” on a mobile browser, PC browser or in-app.  For example, European Games Group’s game Hero Zero in France enables its users to purchase additional skills and weapons with donuts (virtual credits) using direct carrier billing technology.

Online dating websites offer their users the chance to pay for their monthly or annual subscription to the service with their mobile phone bill using recurring billing technology.

It’s not only about online goods and services.  In some markets such as Turkey, commuters in Istanbul can pay for their ferry tickets to travel to and from the Princes’ Islands using their mobile phone via carrier billing.  Customers can text “MARMARA” to “3444” to buy and receive their mobile tickets for Istanbul Ferries.  The automatic gateways deployed at the piers validate their mobile tickets.  Although this may be exclusive to markets where regulation issues are more relaxed and costs are not as high; it is a trend worth mentioning.

With nearly 7 billion mobile subscribers worldwide, businesses can see the wide reach of mobile carrier billing compared to alternative payment methods.  Consumers are looking for convenient and fast mobile commerce experiences and mobile carrier billing delivers this for them that’s why businesses can expect to experience higher conversion rates, increasing overall transaction volumes.

Why SME’s should get started with mobile commerce and consider carrier billing

Mobile commerce today is a reality that all businesses big and small should consider. Just like the web, mobile web and app world, it has become a key communication and distribution channel that businesses just can’t ignore.  Here are the key aspects, specifically around carrier billing, that SME’s should consider before getting started:

It’s the new way forward for small transactions

Mobile carrier billing is a mature and widely adopted technology for purchases made in a “remote environment” i.e. on the web, mobile site, app or in some form of ‘e’ or ‘m’ commerce.  It is commonly used for digital goods such as game credits or access to premium content for example music or video streaming.  There are also other opportunities such as public transportation now growing, or classified ads, software and anti-virus that are still yet to be developed. Mobile carrier billing is most commonly used for micro or mini-transactions ranging from £1-10 range.

It can be used by anyone who has a mobile phone

Mobile carrier billing is a great tool for attracting consumers without a bank account and younger target audiences since all you need is your mobile phone to make a purchase.

It’s quick and easy to use

Due to its streamlined payment process, mobile carrier billing is very popular amongst its users.  On the web, a typical payment flow can involve either sending a text message or inserting a mobile number in the phone and receiving a PIN code.  Compared to credit cards, a payment is more likely to complete, as it’s faster than credit cards and perceived as more secure by the end user.

To conclude, with technology playing a more important role in our daily lives, consumers are increasingly embracing the flexibility and convenience of mobile commerce.  To avoid being left behind, businesses should define a mobile commerce strategy to meet the needs of consumers focusing on user experience and payment technology. As adoption grows rapidly, they should also be aware of the monetisation opportunities available today, including Mobile Carrier Billing. For those that do manage to fit in these constraints into their business models, the opportunity is enormous.

Learn more about what Onebip can do for your business here.