Mobile Commerce: A Loyalty Lever?

A more aggressive approach to mobile commerce and mobile banking could help carriers keep customers and make more money, too, according to a recent Unstrung Insider, "Dial M for Commerce: Mobile Payment Market Gains Traction."

Soon, industry analysts say, m-commerce -- the purchase and sale of goods and services through wireless handheld devices -- could become the dominant form of electronic commerce. (See Mobility Drives Commerce.) There are 33 million m-commerce users across the globe now, according to the Unstrung Insider report. That number is expected to grow to 104 million by 2011.

Applications for mobile commerce and mobile banking appear in numerous forms, from standard Internet browser purchases to the buying of items via text messaging. Some transactions allow for charges to a customer's mobile phone bill after they send text messages to a phone number requesting goods or services. About 6.5 million U.S. mobile consumers have used text messaging to purchase an item, according to the report.

Still, there are services -- such as Billing Revolution -- that allow merchants to reach consumers without paying fees to wireless carriers, either through mobile browsers or text messaging. So there's pressure for carriers to get a piece of the action that's being transacted on their networks.

Other reasons for carriers to adopt m-commerce applications include data traffic revenue and the sale of value-added services beyond traditional paid mobile applications, such as ringtones.

In emerging economies, mobile commerce is already popular, and that can help carriers add new subscribers and hang onto existing ones. "Operators do take a portion of each transaction, but most of that goes to paying the agents their commission," says Jan Sythoff, manager of EMEA Research at Pyramid Research , taking the example of the M-PESA money transfer service from Safaricom Ltd. in Kenya.

"It is envisaged that in the longer term as the industry matures, more lucrative services such as merchant payments, utility payments, wages, and even business-to-business transactions will develop where the revenues are more attractive," Sythoff says.

In addition, there is a lot of m-commerce potential tied to mobile advertising. A separate Pyramid Research study on the mobile advertising market suggests that fixed Internet and mobile platforms will account for 30 percent of total advertising dollars in developed markets and 12 percent in emerging markets by 2013.

— Michael Hopkins, Special to Unstrung

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