“Banking using Mobile Commerce”

PROJECT REPORT

Submitted in partial fulfilment of the requirements for the award of the INTERNATIONAL MBA IN INFORMATION TECHNOLOGY

By UMAMAHESH Y V Roll No.: UBI/MBA/JUL11/6454

Under the guidance of

PRABHU K. M.E., M.B.A Jaro Education

MUMBAI

July 2011

DECLARATION

I, Umamahesh Yelchuru Venkata hereby declare that this project titled submitted in

partial fulfilment of the requirement for the International MBA in Information Technology

is my original work and it has not formed the basis for the award of any other degree.

UMAMAHESH Y V

Place: ChennaiDate:

ACKNOWLEDGEMENT

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I feel fortunate to get the support of numerous sources and people in making this project

a success.

I take this golden opportunity to express my profound gratitude and thank to Mr. Prabhu

for his valuable guidance by giving me the knowledge for transforming my ideas into

reality.

I would like to thank all colleagues of Qualcomm for their kind co-operation. I gratefully

acknowledge the help provided by my friends and those who gave me their moral

support while making this project.

UMAMAHESH Y V

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TABLE OF CONTENTS

S. No. Particulars Page No.

1 Introduction 6

2 Overview of M-Commerce 8

3 Industry Profile 17

4 Company Profile 22

5 Need for Study 25

6 Technology Overview 29

7 Literature Survey 33

8 Objectives of Study 36

9 Research Methodology 46

10 Analysis 55

11 Conclusions/Recommendations 58

12 References 60

13 Glossary 61

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5

INTRODUCTION

Rarely has a new area of business been heralded with such enthusiasm as

"mobile commerce", that is the conduct of business and services over portable wireless

devices. Due to the growth of the Internet users, maturation of the Internet technologies,

realization of the Internet's capabilities, the power of electronic commerce, and the

promising advancement of wireless communication technologies and devices, mobile

commerce has rapidly attained the business forefront.

Mobile Commerce or commonly known as M-Commerce, typically designates the

use of wireless devices particularly mobile phones to conduct electronics business

transactions. M-Commerce is an evolving area of E-Commerce. M-Commerce stands

for “Electronic commerce (E-Commerce) made through mobile devices”. E-Commerce

refers to the field of marketing, buying, selling, distributing and servicing different

products and services over the internet. It aims at using electronic business applications

for the purpose of commercial transactions. E-Commerce is believed to have started off

in 1994 when the first ever banner appeared on the internet but electric commerce not

using the internet must have originated as far back as the 1970s when technologies

such as Electronic Funds Transfer and Electric Data Interchange were being used. M-

Commerce is creating entirely new opportunities both for mobile devices and services.

M-Commerce is the latest trend in which business firms looking out for online expansion

choose to have a mobile website for faster business promotion

The telecommunication and technological advancements are adding a new facet

to the already existing mobile paradigms. The migration from 2G to 3G is in progress,

and most of the mobile operators are using the intermediary 2.5G technologies. The

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shift from 2G to 3G is not yet complete, but mobile industry is already buzzing with

excitement and perspectives of 4G technologies i.e., LTE and WiMax and advanced

addressing method called the Mobile IPV6. The 4G paradigm promises a much higher

data rates of 100 Mbps or more. With these faster data rate technologies, mobile

service providers are ready to enter into a new age of wireless applications.

.  

M-Commerce refers to commercial transactions being conducted over cellular

and mobile devices. The methods of payment used are normally calling numbers with

premium rates, reduction of the caller's credit and charging the user's bill. An M-

commerce application can be B2B, B2C or any other of the classifications available with

E-commerce world. M-commerce, although not fully mature, has the potential to make it

more convenient for consumers to spend money and purchase goods and services.

Since wireless devices travel with the consumer, the ability or perhaps temptation to

purchase goods and services is always present. This is clearly a technique that can be

used to raise revenue. Also, the successful future of M-commerce depends on the

power of the underlying technology drivers and the attractiveness of M-commerce

applications.

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Overview of M-Commerce

History of m-Commerce

The Global Mobile Commerce Forum, which came to include over 100

organizations, had its fully minuted launch in London on 10 November 1997. It was

founded by Logica and Cellnet. The meeting was opened by Dr Mike Short, former

chairman of the GSM Association, with forecasts from Kevin Duffey (Group Telecoms

Director of Logica) and Tom Alexander (later CEO of Virgin Mobile and then of Orange).

Mobile commerce was born in 1997 when the first two mobile enabled Coca Cola

vending machines were installed in the Helsinki area in Finland. The machines

accepted payment via SMS text messages. The first mobile phone-based banking

service was launched in 1997 by Merita Bank of Finland, also using SMS.

In 1998, the first sales of digital content as downloads to mobile phones were

made possible when the first commercial downloadable ringtones were launched in

Finland by Radiolinja (now part of Elisa Oyj).

Two major national commercial platforms for mobile commerce were launched in

1999: Smart Money (http://smart.com.ph/money/) in the Philippines, and NTT DoCoMo's

i-Mode Internet service in Japan. i-Mode offered a revolutionary revenue-sharing plan

where NTT DoCoMo kept 9 percent of the fee users paid for content, and returned 91

percent to the content owner.

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Mobile-commerce-related services spread rapidly in early 2000. Norway

launched mobile parking payments. Austria offered train ticketing via mobile device.

Japan offered mobile purchases of airline tickets.

In April 2002, building on the work of the Global Mobile Commerce Forum

(GMCF), the European Telecommunications Standards Institute (ETSI) appointed

Joachim Hoffmann of Motorola to develop official standards for mobile commerce. In

appointing Mr. Hoffman, ETSI quoted industry analysts as predicting "that m-commerce

is poised for such an exponential growth over the next few years that could reach

US$200 billion by 2004".

The first book to cover mobile commerce was Tomi Ahonen's M-profits in 2002.

The first university short course to discuss mobile commerce was held at the University

of Oxford in 2003, with Tomi Ahonen and Steve Jones lecturing. As of 2008, UCL

Computer Science and Peter J. Bentley demonstrated the potential for medical

applications on mobile devices.

PDAs and cellular phones have become so popular that many businesses are

beginning to use mobile commerce as a more efficient way to communicate with their

customers. In order to exploit the potential mobile commerce market, mobile phone

manufacturers such as Nokia, Ericsson, Motorola, and Qualcomm are working with

carriers such as AT&T Wireless and Sprint to develop WAP-enabled smartphones.

Smartphones offer fax, e-mail, and phone capabilities.

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"Profitability for device vendors and carriers hinges on high-end mobile devices

and the accompanying killer applications," said Burchett Perennial early adopters, such

as the youth market, which are the least price sensitive, as well as more open to

premium mobile content and applications, must also be a key target for device vendors.

Since the launch of the iPhone, mobile commerce has moved away from SMS

systems and into actual applications. SMS has significant security vulnerabilities and

congestion problems, even though it is widely available and accessible. In addition,

improvements in the capabilities of modern mobile devices make it prudent to place

more of the resource burden on the mobile device.

More recently, brick and mortar business owners, and big-box retailers in

particular, have made an effort to take advantage of mobile commerce by utilizing a

number of mobile capabilities such as location based services, barcode scanning, and

push notifications to improve the customer experience of shopping in physical stores.

By creating what is referred to as a 'bricks & clicks' environment, physical retailers can

allow customers to access the common benefits of shopping online such as product

reviews, information, and coupons while still shopping in the physical store.

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DEFINITIONS

"Mobile Commerce is 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."

  "Mobile Commerce is the use of information technologies and communication

technologies for the purpose of mobile integration of different value chains a business

processes, and for the purpose of management of business relationships.”

Despite of huge popularity of mobile commerce, it is yet in the initial stage and

can be further expand in to all the fields, which affect the human life. The assumption of

mobile commerce is not as young as it mushroomed so early from adopting this

technology.

It initially begins with the use of wireless POS (Point Of Sale) swipe terminals

and has since then made its way into cellular phones and PDA's (Personal Digital

Assistants). The first enabling m-commerce technologies were presented through

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Wireless Application Protocol (WAP) and i-mode mobile Internet service. WAP builds on

digital phone technology and first emerged on 2.5G phone technology that allowed

users to browse the Internet. This technology cemented the way of m-commerce, which

has strongly developed on 3G-phone technology. Nokia has first introduced M-

commerce application software Nokia toolkit version 4.0.

The future of m-Commerce seems extremely bright because several experiments

are going on to introduce the upgraded version of mobile likely to emerged with the

evolution of 4G mobile technology.

ATTRIBUTES OF M-COMMERCE:

Ubiquity: When was the last time you left home without your mobile phone, PDA,

Pager or other mobile device that has become the center of your personal and

professional universe? Mobile devices fulfill the need for real-time information and

communication in a way desktop PCs, which are dependent on a user’s location, will

never be able to do.

Convenience and Accessibility: In the wired e-commerce world, people are constrained

by time and place. Not so in the m-commerce world where being seated at a PC is not a

prerequisite for sending email, bidding on eBay, trading stock, or getting the latest

sports results. Moreover, users can still maintain their privacy by limiting who has

access to them, and at what times.

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Localization: With technologies like GPS (Global Positioning System) or TOA (Time

of Arrival), m-commerce will enable users and merchants to push, receive and access

information and services specific to their location.

Personalization: While personalization has started to make some strides with the

wired Web, the wireless world offers a vastly superior opportunity for companies to

provide personalized, one-to-one services to its customers. Where the PC is often

shared across multiple users, mobile devices are typically operated by and configured

for a single user.

Form Factors: The physical form of mobile devices (e.g., screens, keyboards, weight)

invokes a very different user experience from that of a desktop PC. To be successful

companies should appreciate these limitations and design offerings that leverage the

positive attributes of a particular mobile device: larger screens for PDAs, QWERTY

keyboards for two-way pagers, or voice for mobile phones.

Bandwidth and Capacity: While streaming audio and video capabilities over mobile

devices are enticing, current bandwidth and device limitations (e.g., processor speeds,

memory and storage capacity) demand that the first generation of mobile offerings is

practical and predominantly text-based. With this said, adoption of mobile Internet

devices will still be explosive because applications, and not bandwidth, will drive m-

commerce growth. Keep in mind less than 10% of all wired Internet users currently have

connections faster than 56 kbps, and yet there has still been rapid adoption of the Web.

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The Value Chain: Today’s wireless Internet closely resembles the supply-driven

value chain that existed in the formative years of the wired Internet: customers are

locked into “closed-wall” relationships with access to limited, proprietary content and

services. But, like the wired Internet, this will evolve into a more open model

characterized by a proliferation of relationships between Content Providers, Content

Aggregators, Mobile Portals and Network Operators all looking to own a piece of the

customer.

Advantages of M-Commerce

      Ubiquity: The use of wireless device enables the user to receive information and

conduct transactions anywhere, at anytime.

      Accessibility: Mobile device enables the user to be contacted at virtually anytime

and place. The user also has the choice to limit their accessibility to particular persons

or times.

     Convenience: The portability of the wireless device and its functions from storing

data to access to information or persons.

      Localization: The emergence of location-specific based applications will enable the

user to receive relevant information on which to act.

      Instant Connectivity (2.5G): Instant connectivity or "always on" is becoming more

prevalent will the emergence of 2.5 G networks, GPRS or EDGE. Users of 2.5 G

services will benefit from easier and faster access to the Internet. 

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      Personalization: The combination of localization and personalization will create a

new channel/business opportunity for reaching and attracting customers.

Personalization will take the form of customized information, meeting the users’

preferences, followed by payment mechanisms that allow for personal information to be

stored, eliminating the need to enter credit card information for each transaction.

      Time Sensitivity: Access to real-time information such as a stock quote that can be

acted upon immediately or a sale at a local boutique.

      Security: depending on the specific end user device, the device offers a certain level

of inherent security.

Disadvantages of M-commerce:

- Mobile devices offer limited capabilities (such as limited display).  Between

mobile devices these capabilities vary so much that end user services will need

to be customized accordingly.

- The heterogeneity of devices, operating systems and network technologies is a

challenge for a uniform end user platform.  For this reason, standardization

bodies consisting of telecommunication companies, device manufacturers and

value added service providers integrate their work.

- Mobile devices are more prone to theft and destruction.

- The communication over the air interface between mobile device and network

introduces additional security threats.

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KEY ISSUES OF M-COMMERCE

     The success of M-Commerce depends on:

Evolution: Technology and Business models are constantly evolving which will

demand flexibility and patience on part of all players.

Customer loyalty: Who will ‘own’ the customer? Partnerships among players from

various industries will be necessary for most, if not all, m-commerce initiatives, and,

in turn, will alter the nature of any one company to own their own customers.

Cross-sector knowledge gulf, where the different parties will need to learn about

the functions and limitations of the services provided by the other players, for

example, operators will need to know about content and applications.

Moving up the value chain: To respond to market opportunities some companies

have develop subsidiaries in order to react more rapidly to market challenges. For

example, Sonera has developed Sonera Zed, to provide portal and application

management services such as location based mobile yellow pages as well Smart

Trust, to develop secure solution for m-commerce transactions. And Citicorp has

established e-Citi to develop a wireless access gateway strategy for financial service

providers.

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INDUSTRY PROFILE

QUALCOMM Incorporated (Qualcomm), incorporated in 1985, designs,

manufactures and markets digital wireless telecommunications products and services

based on its code division multiple access (CDMA) technology and other technologies.

The Company operates through four segments: Qualcomm CDMA Technologies (QCT);

Qualcomm Technology Licensing (QTL); Qualcomm Wireless & Internet (QWI), and

Qualcomm Strategic Initiatives (QSI). QCT is a developer and supplier of CDMA-based

integrated circuits and system software for wireless voice and data communications,

multimedia functions and global positioning system products. QTL grants licenses or

otherwise provides rights to use portions of its intellectual property portfolio, which

includes certain patent rights essential to and/or useful in the manufacture and sale of

certain wireless products. QWI, which includes Qualcomm Enterprise Services (QES),

Qualcomm Internet Services (QIS), Qualcomm Government Technologies (QGOV) and

Firethorn, generates revenues primarily through mobile information products and

services and software and software development aimed at support and delivery of

wireless applications. QSI consists of the Company’s strategic investment activities,

including FLO TV Incorporated (FLO TV), its wholly owned wireless multimedia operator

subsidiary. In October 2010, the Company’s wholly owned subsidiary, Qualcomm

Innovation Center, Inc., acquired iSkoot Technologies Inc. In May 2011, it acquired

Atheros Communications, Inc. In November 2011, the Company acquired all of the

technology and other assets of HaloIPT. In December 2011, it formed a wholly owned

subsidiary, Qualcomm Life Inc.

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Qualcomm CDMA Technologies Segment

QCT’s integrated circuit products and system software are used in wireless

devices, particularly mobile phones, laptops, data modules, handheld wireless

computers, data cards and infrastructure equipment. These products provide customers

with advanced wireless technology, enhanced component integration and

interoperability and reduced time-to-market. QCT markets and sells products in the

United States and internationally through a global sales force. QCT products are sold to

many wireless device and infrastructure equipment manufacturers. During the fiscal

year ended September 26, 2010 (fiscal 2010), QCT shipped approximately 399 million

mobile station modem (MSM) integrated circuits for CDMA wireless devices worldwide.

QCT revenues comprised 61% of total consolidated revenues in fiscal 2010.

QCT offers a portfolio of products, including both wireless device and

infrastructure integrated circuits, in support of CDMA2000 1X and 1x evolution data

optimized (EV-DO), as well as the EV-DO Revision A and EV-DO Revision B evolutions

of CDMA 2000 technology. It has also developed integrated circuits for manufacturers

and wireless operators deploying the Wideband CDMA (WCDMA) version of third-

generation (3G). More than 60 device manufacturers have selected its WCDMA

products that support global system for mobile communications/ general packet radio

service (GSM/GPRS), WCDMA, high-speed downlink packet access (HSDPA), high

speed uplink packet access (HSUPA) and high speed packet access (HSPA+) for their

devices. The Snapdragon family of chipset products is designed to enable its customers

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to develop computing-centric devices that also offer a range of wireless connectivity

capabilities.

Qualcomm Technology Licensing Segment

QTL’s wireless products include products implementing cdmaOne, CDMA2000,

WCDMA, CDMA time division duplex (TDD) (including TD-SCDMA), GSM/GPRS/

enhanced data rates for global evolution (EDGE) and/or orthogonal frequency division

multiplexing access (OFDMA) (long term evolution (LTE), Worldwide Interoperability for

Microwave Access, Inc. (WiMax) standards and their derivatives. QTL receives license

fees, as well as ongoing royalties based on worldwide sales by licensees of products

incorporating or using its intellectual property. QTL revenues comprised 33% of total

consolidated revenues in fiscal 2010.

Qualcomm Wireless & Internet Segment

The four divisions aggregated into QWI comprised: Qualcomm Internet Services

(QIS), Qualcomm Enterprise Services (QES), Qualcomm Government Technologies

(QGOV) and Firethorn. The QIS division offers a set of software products and content

enablement services to support and accelerate the growth and advancement of the

wireless data market. QIS offers Brew products and services for wireless applications

development, device configuration, application distribution and billing and payment. In

addition, QIS offers Plaza products and services that enable mobile shopping

experiences across various platforms and devices. The QIS division develops and sells

business-to-business products and services to companies worldwide. The QES division

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provides equipment, software and services to enable companies to wirelessly connect

with their assets and workforce. QES offers satellite- and terrestrial-based two-way

wireless connectivity and position location services to transportation and logistics fleets

and other enterprise companies that permit customers to track the location and monitor

performance of their assets, communicate with their personnel and collect data.

The QGOV division provides development, hardware and analytical expertise

involving wireless communications technologies to United States government (USG)

agencies. QGOV adapts, integrates and ships CDMA2000 1X and EV-DO deployable

base stations to the USG. QGOV also developed and launched a Brew-based

application providing encryption on mobile devices. Firethorn provides a single, secure,

certified application embedded on select wireless devices, which enables financial

institutions and merchants to deliver branded services to consumers through the

wireless devices. QWI revenues comprised 6% of total consolidated revenues in fiscal

2010.

Qualcomm Strategic Initiatives Segment

The Company’s FLO TV subsidiary operates a nationwide multicast network in

the United States based on its MediaFLO MDS and MediaFLO technology, which

leverages the Forward Link Only (FLO) air interface standard. FLO TV’s network uses

the 700 megahertz spectrum for which it holds licenses nationwide. It develops its

MediaFLO technology to enable FLO TV and other international wireless operators to

optimize the low cost delivery of multimedia content to multiple wireless subscribers

simultaneously. Its MediaFLO technology is designed specifically to bring broadcast

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quality video to mobile devices efficiently and cost effectively. The MediaFLO

technology operates on a broadcast network and is complementary to wireless

operators operating on CDMA2000 1xEV-DO, WCDMA or GSM networks.

Other Businesses

Qualcomm MEMS Technologies (QMT) is developing display technology for the

full range of consumer-targeted mobile products. MediaFLO Technologies (MFT) is

comprised of the FLO Technology group, which develops its MediaFLO technology, and

the FLO International group, which markets MediaFLO for deployment outside of the

United States.

The Company competes with Broadcom, Freescale, Fujitsu, Icera, Intel, Marvell

Technology, Mediatek, nVidia, Renesas Electronics, ST-Ericsson, Texas Instruments

and VIA Telecom, Ericsson, Matsushita, Motorola and Samsung.

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COMPANY PROFILE

Name: Qualcomm

Founded: 1985

Regional Office: 5775 More house Drive, San Diego, CA 92121, US

Industry: Wireless Technology

Website: www.qualcomm.com

Company In Brief

As the world leader in next generation mobile technologies, Qualcomm ideas and

inventions are driving wireless growth and helping to connect people to information,

entertainment and one another. Qualcomm’s breakthrough technologies enable the

convergence of mobile communications and consumer electronics, making wireless

devices and services more personal, affordable and accessible to people everywhere.

Qualcomm is ranked on Fortune’s list of ‘100 Best Companies to Work For’ and has

been for the past 14 years. With over 20,000 employees around the world, Qualcomm

puts great value in our innovative culture and excellent work environment.

Company History

Qualcomm was founded in 1985 by Irwin Jacobs, Parviz Nazarian, Neil Kadisha

and Andrew Viterbi. They began with satellite messaging services and integrated

circuits for digital radio communications.

Qualcomm branched out from there and manufactured CDMA cell phones, base

stations, and chips. They later sold the base station business (to Ericsson) and its cell

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phone manufacturing (to Kyocera) and now focuses primarily on developing and

licensing wireless technologies and selling ASICs that implement them.

Qualcomm also assisted in the development of the Global star satellite system

(along with Loral Space & Communications). They developed BREW (Binary Runtime

Environment for Wireless), a market dominant, proprietary platform for cell phones.

Qualcomm also built the Eudora email program, which they continue to sell.

Management Team

Dr. Paul E. Jacobs - CEO

Steven R. Altman - President

Marvin Blecker - EVP and President (Qualcomm Technology Licensing)

Jeffrey A. Jacobs - EVP and President (Global Development)

Dr. Sanjay K. Jha - COO and President (Qualcomm CDMA Technologies Group)

Margaret L. "Peggy" Johnson - EVP and President (Qualcomm Internet Services and

Media FLO Technologies)

William E. Keitel - EVP and CFO

Len J. Lauer - EVP and Group President

Dr. Roberto Padovani - EVP and CTO

Dr. Daniel L. Sullivan - EVP, Human Resources

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SWOT Analysis

Strength

Strong market position

Focus on research and development

Weakness

Revenue concentration

Weak presence in non-CMDA technology markets

Opportunities

Growing wireless subscriber base

Acquistion of handheld graphics and multimedia assets

Increasing adoption of 3G technology

Mobile banking solutions

Threats

Adverse changes to SDO intellectual property policies

Global economic conditions

Patent litigations

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NEED FOR STUDY

What is M-Commerce and why do we need it? This question is quite simple but

the answer to it may differ depending upon your business needs. Some of the examples

where M-Commerce website is presently being used are: iPhone, Nokia N-Series,

Samsung Devices and Google’s T-Mobile G1 with Android OS.

What is M-Commerce?

M-Commerce is a term used for transactions conducted by mobile phones and

PDAs for promotional and financial activities using wireless internet connectivity. Mobile

Commerce, commonly referred to as M-Commerce, brings the newest possibility for

small business to sell and promote their products and services through the medium of

mobile devices.

Why do we need it?

M-commerce provides multiple benefits to the consumers in form of availability of

goods at lower cost, wider choice and saves time. M-commerce is meant as anything

that involves an online transaction. This can range from ordering online, through online

delivery of paid content, to financial transactions such as movement of money between

bank accounts. M-commerce encompasses all business conducted by means of

wireless networks.

Advances in telecommunications and mobile technologies in recent years have

made wireless networks an integral part of the economic infrastructure. More and more

companies are facilitating transactions over web. People can buy goods through mobile

without moving out of their house or office. Similarly online services such as banking,

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ticketing including airlines, bus, railways, bill payments, hotel booking etc. have been of

tremendous benefit for the customers. Most experts believe that overall m-commerce

will increase exponentially in coming years. Business to business transactions will

represent the largest revenue but online retailing will also enjoy a drastic growth. Online

businesses like financial services, travel, entertainment, and groceries are all likely to

grow.

As the use of the internet continues to grow, websites are assuming greater

importance as the public face of business. Furthermore, the revenues generated by m-

commerce systems mean that organizations are becoming increasingly reliant on them

as core elements of their business. With this high level of dependency upon the

services provided by m-commerce systems, it is essential that they are protected from

the threats posed by hackers, viruses, fraud and denial-of-service attacks. Every

business should take steps to secure their m-commerce systems, although smaller

businesses may choose to work with third party specialists to implement some of the

more sophisticated security controls.

Benefits of having an M-Commerce

Mobile Usages Increased: Nowadays, mobile usage has increased rapidly due to the

evolution of Internet and other mobile technologies. This change has provided seamless

opportunities for various online businesses.

Reach your Customers: Having a mobile commerce site means that you can reach your

customers even when they are shopping offline. This makes the shopper more aware of

your services and products.

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Compete with Competitors:  Do not let your competitors ride onto you by not having an

M-Commerce website. Head start you business promotion with a mobile website to stay

ahead of the competitors in the market.

Appeal to an affluent audience: As a recent survey on mobile internet adoption says

that, 42% of mobile internet users earn over £40,000 a year, and spend more on their

mobile bills.

Low Development Cost: A mobile website takes very low development cost.

New Sales Channels: A mobile site creates various new sales channel for you. The

more number of marketing channels you have, the higher is your possibility of creating a

strong brand name in the market.

Get Shoppers to Local Channels: By having a mobile site that displays various business

details, retailers can attract more local traffic.

Shoppers like Comparisons: Often customers like to see detail information and price

comparisons of products before purchasing. Reevoo & Scoope displays such

information in their mobile website. Hence, it is better to optimize your mobile website

accordingly to increase your chances of having a successful mobile marketing

campaign.

Smart-Phones are Latest Fashion: Technology has changed the way people use their

mobile devices.  Most of the people do their shopping by using their mobile device to

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gather information or to communicate. Hence, by having an M-Commerce website, you

make sure that you create your mark amongst all active shoppers.

M-Commerce is essential part of Business: M-Commerce is now turning out to be an

essential part of Internet marketing strategy. With the increased use of Internet in

mobile devices, having an M-Commerce website makes a huge difference to your

online business campaign.

Motivating Factors for M-Commerce

Internet use has grown to such a level on the strength of PC networks. Due to

the huge base of installed PCs, which is predicted to grow in a faster pace in the days to

come, electronic commerce and other communication applications are bound to thrive

further. Also, these computing systems will have greater power and storage capability,

the best ever price-performance ratios, more powerful and sophisticated applications

will likely emerge for desktop computing and the Internet. However, there are two major

limitations on PCs. First, users have to sit in front of them, PCs, even portable-notebook

computers, have to load software, dial into and connect with a network service provider

and await for the initial process to be accomplished before launching an Internet

application. It is predicted that by 2004, the installed base of mobile phones worldwide

will exceed 1 billion - more than twice the number of PCs at that time. In addition, there

will be a huge increase in other wireless portable devices, such as wireless PDA. The

advantage with these wireless devices is they do not need no booting process and thus

facilitating immediate usage of them. This makes them attractive for quick-hit

applications.

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TECHNOLOGY OVERVIEW

Just as the TCP/IP and the general purpose Web browsers are being the current

principal drivers of Internet growth and this in turn makes disparate devices to connect

themselves and communicate and interoperate. Similar protocols, technologies and

software will play a very important role in heterogeneous wireless devices to

interoperate without any complexity. In the recent past, a common communications

technology and uniform interface standard for presenting and delivering several distinct

wireless services on wireless devices - Wireless Application Protocol (WAP) have

emerged. The WAP specifications include a micro-browser, scripting language just like

JavaScript, access functions and layered communication specifications for sessions,

transport and security. These specifications enable interface-independent and

interoperable applications. Many of the wireless device manufacturers, service and

infrastructure providers have started to adopt the WAP standard.

The transmission rate of Current access technologies (2G), such as TDMA,

CDMA and GSM, is dramatically slower (between 10 and 20 Kbps) than the dial-up

rates of desktop PCs connected to the Internet. 2G technology has steadily improved,

with increased bandwidth, packer routing and the introduction of multimedia. The

present state of mobile wireless communications is often referred to as 2.5G. It is

believed that by the year 2003, 3G wireless technology will be available for use. This, in

addition to higher bandwidth rates, can take the transmission speed up to 2 Mbps. 3G is

expected to facilitate: enhanced multimedia (voice, data, video, and remote control)

transmission, usability on all popular modes (cellular telephone, e-mail, paging, fax,

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video-conferencing and Web browsing), routing flexibility (repeater, satellite, LAN) and

operation at approximately 2 GHz transmit and receive frequencies.

The Japanese network carrier NTT DoCoMo (NTT) introduced i-mode in 1999 as

an open standard based on programming language iHTML (i-mode compatible HTML).

It is based on packet-switched network technology and 60 The Technological

Framework of Mobile Commerce is thus GPRS- and UMTS compatible, allowing for a

wide range of push and pull services. The i-mode compatible sites can be divided in two

categories:

Content provided by official providers: It is integrated in the i-mode menu and can be

accessed directly by clicking on the menu item. Official partners need an agreement

with NTT, which charges a 9% commission for collecting bills on behalf of the content

providers and approves the content.

Content provided by unofficial providers: Such sites can be viewed by customers by

typing the site-address in a mobile browser, similar to the Internet sites. These providers

have to find their own mechanisms to collect charges for their services.

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Future-Scenario: The fourth Generation (4G)

As the 3G services are just beginning to reach users, 4G is a distant scenario

expected to be launched, not withstanding announcements by individual firms, e.g.

NTT, to pre-pone 4G to year 2006. Nevertheless principal trends of 4G are expected to

go along following lines:

1. A seamless roaming between 2.5G, 3G and WLAN may be achieved so that mobile

devices will automatically detect the presence of a network with higher bandwidth and

switch to it. The handover will take place without interrupting existing connections. So

that WLAN, as a complementary technology, could become an integrated component of

Mobile Commerce.

2. Speed of data transfer is expected to reach, and probably even exceed, 100 mbps.

This would allow offering of highly data-intensive applications, e.g. live video streaming.

3. 2G and 2.5G technologies are expected to be still around since 3G/UMTS networks

are not expected to extend their reach to all geographic areas. A downward

compatibility of mobile devices would have to be ensured.

The discussion in this chapter has shown that the technology is now ripe for fully

functional, content-rich and value-added Mobile Commerce applications. The relevant

issue is of finding suitable applications and offering them for affordable prices. The next

chapter provides a brief overview of such applications. It also dwells on the modalities of

payment mechanisms for these applications.

31

Wireless Access Technologies

32

LITERATURE SURVEY

A number of papers review various aspects of m-commerce. These papers

mainly discuss which technologies and applications are available but leave out or briefly

touch upon legal aspects arising in m-commerce. This may derive from the fact that m-

commerce is still in its infancy. Therefore, the following analysis is mainly based on

current EU law which can be obtained at http://europa.eu.int/eur-lex.

In order to analyze whether the legislative framework comply with m-commerce,

certain literature, which is mainly about e-commerce, is used to discuss the issue and to

enable to come forward with proposals regarding what has to be improved in the area of

m-commerce. In this context, some of the books shall be pointed out: Edwards and

Waelde (2000), Schulze and Baumgartner (2001), Simmons and Simmons (2001) and

Woodley (2003). These books reflect the legal issues arising in e-commerce with

special focus on the harmonization of EU law. It is argued that due to the use of the

Internet and the “www” legal systems have to adopt principles which were established

by reference to different technologies and business practices. As the introduction of m-

commerce shows, the legislative framework concerning information society services is

an ongoing process.

In addition to the literature dealing with e-commerce, several articles touching on

m-commerce issues have been used in this thesis: Gow (2005, forthcoming), Gratton

(2003) and White (2003) are dealing with the legal and regulatory aspects related to the

processing of personal and location data generated by mobile devices; Camponovo and

33

Cerutti (2004), Fellner (2003) and Sarrocco (2004) address the issue of mobile

advertising by analysing current legislation restricting advertising and in addition focus

on the spam problem. All these sources make clear that the regulative regimes may not

be sufficient regarding the challenges new technologies bring along. In addition, the

authors challenge the industries to put in place measures to enable secure transactions

carried out via mobile devices.

The analysis in chapter 6 is mainly based on EU law. The formation of contracts

of PRS is currently a contemporary issue. Therefore case law will be consulted to

illustrate how effective the most important elements that can be derived from these

legislations are when it comes to disputes before court.

During the literature research the articles and books used in this thesis were

mainly found on Internet databases, namely the Library of the ‘Århus School of

Business: (especially electronic books) and the search engine ‘Google’.

No. Title Author Area of research

1 Mobile Commerce Applications

Nansi Shi, Feb 2004

Mobile Commerce Applications addresses and explores the critical architectural issues in constructing m-commerce applications and in applying mobile technologies in different areas, including methodologies, enabling technologies, models, paradigms, architectures, standards and innovations.

2 The Mobile Commerce Prospects

Rajnish Tiwari and Stepen Buse, Jan 2007

A Strategic Analysis of Opportunities in the Banking Sector

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3 M Commerce: Technologies, Services and Business Models

Norman Sadeh, April 2002

Technology and business issues surrounding m-commerce

4 The Get-Started Guide to M-Commerce and Mobile Technology

Danielle Zilliox, June 2010

The Get-Started Guide to M-Commerce is a nontechnical, easy-to-use introduction that takes you and your company through the strategic, technical, and marketing processes crucial to transforming your business into a mobile-market success story. From deciding whether or not to "go mobile" to the do's and don'ts of implementing m-commerce technology

5 Mobile Commerce: Technology, Theory and Applications

Brian Ernest Mennecke, Idea Group Inc (IGI), 2003

This book addresses issues pertaining to the development, deployment, and use of these applications. The role of m-commerce in the automotive industry, advertising, and the wireless classroom is addressed.

6 Mobile Commerce in LTE: The Future of Commerce in 4G and Beyond

Mustafa Elmoslhey, Sep 2011

Solutions and business models for 4G. Location based services with LTE and mobile Commerce

35

OBJECTIVES OF STUDY

MOBILE SHOPPING

In the current commerce industry, m-Commerce has been entered in finance,

services, retails, telecommunication and information technology services. In these

sectors, m-Commerce is not only being widely accepted but also it is being more used

as a popular way of business/ commerce.

Finance Sectors

Telecommunication Sectors

Service / Retail sectors

Information Sector

MOBILE PAYMENTS

The main payment methods used to enable mobile commerce are:

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premium-rate calling numbers,

charging to the mobile telephone user's bill or

Deducting from their calling credit.

Registration of a credit card that is linked to a Sim Card.

CATEGORISATION OF M-PAYMENT SYSTEMS

Most e-payment systems are not suitable for use in a mobile context that is,

using a mobile device and communicating over a mobile telecommunication network. 

This is due to the special characteristics of mobile devices and mobile

telecommunications.  In the following, we categorize m-payment systems according to

the whereabouts of the customer’s money:

1. Software electronic coins – electronic money stored on the mobile in file format.

2. Hardware electronic coins – electronic money stored on the mobile device on a

smart card.

3. Background account – electronic money stored in a remote account at a trusted

third party.

Software Electronic Coins

In this case, monetary value is stored on the mobile device and the customer has

full control of his/her money wherever he/she goes and whatever he/she does.  An

electronic coin is represented as a file containing, among other information, a value, a

serial number, a validity period and the signature of the issuing bank.  Since software

electronic coins are easy to copy, the validity of an electronic coin depends on its

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uniqueness in terms of its serial number.  The customer transfers electronic coins to the

merchant, who forwards them to the issuing bank for the “double spending test.” 

Hardware Electronic Coins

            In this case, monetary value is stored on a secure hardware token, typically a

smart card, in the mobile device.  The presentation of electronic money is not important,

as long as it is stored securely on the smart card.  Electronic money could be

represented as a simple numeric counter.  In order to get to the money, the customer’s

smart card and the merchant’s payment server authenticate each other and a secure

channel is set up between them.  Then, electronic money can be transferred from one

to the other.  This approach is quite attractive because smart cards provide an

additional level of mobility.  That means the payment smart card can also be used in

POS transactions.  E.g., Geldkarte, Mondex and Barclay card.

Background Account

            Here, the money is stored remotely on an account at a trusted third party. 

Depending on the specific payment system, the account could be a credit card account,

a bank account, or an account held at the network operator.  For example, in some

cases this data is sent in the clear (e.g. a credit card authorisation) not providing any

security against eavesdropping and in some cases this information is encrypted and

digitally signed, providing anonymity to the customer (e.g. SET – Secure Electronic

Transactions).

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M-COMMERCE APPLICATIONS

The general m-commerce applications are:

1. Mobile ticketing

Tickets can be sent to mobile phones using a variety of technologies. Users are

then able to use their tickets immediately by presenting their phones at the venue.

Tickets can be booked and cancelled on the mobile with the help of simple application

downloads or by accessing WAP portals of various Travel agents or direct service

providers.  Mobile ticketing for airports, ballparks, and train stations, for example, will

not only streamline unexpected metropolitan traffic surges, but also help users remotely

secure parking spots (even while in their vehicles) and greatly facilitate mass

surveillance at transport hubs.

2. Mobile vouchers, coupons and loyalty cards

Mobile ticketing technology can also be used for the distribution of vouchers,

coupons and loyalty cards. The voucher, coupon, or loyalty card is represented by a

virtual token that is sent to the mobile phone. Presenting a mobile phone with one of

these tokens at the point of sale allows the customer to receive the same benefits as

another customer who has a loyalty card or other paper coupon/voucher. Mobile

delivery enables:

economy of scale

quicker and easier delivery

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effective target marketing

privacy-friendly data mining on consumer behaviour

environment-friendly and resources-saving efficacy

3. Content purchase and delivery

Currently, mobile content purchase and delivery mainly consists of the sale of

ring-tones, wallpapers, and games for mobile phones. The convergence of mobile

phones, mp3 players and video players into a single device will result in an increase in

the purchase and delivery of full-length music tracks and video. Download speeds, if

increased to 4G levels, will make it possible to buy a movie on a mobile device in a

couple of seconds, while on the go.

4. Location-based services

Unlike a home PC, the location of the mobile phone user is an important piece of

information used during mobile commerce transactions. Knowing the location of the

user allows for location based services such as:

local maps

local offers

local weather

people tracking and monitoring

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5. Information services

A wide variety of information services can be delivered to mobile phone users in

much the same way as it is delivered to PCs. These services include:

news services

stock data

sports results

financial records

traffic data and information

Particularly, more customized traffic information, based on users' travel patterns,

will be multicast on a differentiated basis, instead of broadcasting the same news and

data to all Users. This type of multicasting will be suited for more bandwidth-intensive

mobile equipment.

6. Mobile Banking

Banks and other financial institutions are exploring the use of mobile commerce

to allow their customers to not only access account information, but also make

transactions, e.g. purchasing stocks, remitting money, via mobile phones and other

mobile equipment. This service is often referred to as Mobile Banking or M-Banking.

More negative issues like ID theft, phishing and pharming are lurking when it comes to

mobile banking, particularly done on the mobile web. Net security technology free from

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redundancy and paradigm shifts away from mobile web-based banking will be an

optimal solution to mobile banking in the near future.

7. Mobile brokerage

Stock market services offered via mobile devices have also become more

popular and are known as Mobile Brokerage. They allow the subscriber to react to

market developments in a timely fashion and irrespective of their physical location.

8. Auctions

Over the past three years, Mobile reverses action solutions have grown in

popularity. Unlike traditional auctions, the reverse auction (or low-bid auction) bills the

consumer's phone each time they place a bid. Many mobile PSMS commerce solutions

rely on a one-time purchase or one-time subscription; however, reverse auctions are

high return applications as they allow the consumer to transact over a long period of

time.

9. Mobile purchase

Mobile purchase allows customers to shop online at any time in any location.

Customers can browse and order products while using a cheap, secure payment

method. Instead of using paper catalogues, retailers can send customers a list of

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products that the customer would be interested in, directly to their mobile device or

consumers can visit a mobile version of a retailer’s ecommerce site. Additionally,

retailers will also be able to track customers at all times and notify them of discounts at

local stores that the customer would be interested in.

10. Mobile marketing and advertising

Mobile marketing is an emerging concept, but the speed with which it's growing

its roots is remarkable. Mobile marketing is highly responsive sort of marketing

campaign, especially from brands’ experience point of view. And almost all brands are

getting higher campaign response rates.  Corporations are now using m-commerce to

expand everything from services to marketing and advertisement. Although there are

currently very few regulations on the use and abuses of mobile commerce, this will

change in the next few years. With the increased use of m-commerce comes increased

security. Cell phone companies are now spending more money to protect their

customers and their information from online intrusions and hackers.

MOBILE SECURITY

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M-Commerce occurs through the use of wireless devices such as cell phones,

pocket PCs and PDA. It allows a user to purchase goods and services on the move,

anytime, and anywhere. M-Commerce is becoming a larger part of the Internet

commerce experience. Juniper Research performed a study that predicted that by 2009,

global M-Commerce revenue will exceed 88 billion dollars. A Morgan Stanley report

found that in 2005 there was 19.5 billion dollars in M-Commerce transactions. These

included revenue from people buying ring tones, Cell phone personalization, games,

and services.

M-Commerce, like E-commerce, faces formidable security hurdles. As identity

theft, phishing and other attacks on the Internet become more prevalent, consumer trust

in Internet technologies seems to be falling. In order for M-Commerce to be successful

the security weaknesses and concerns need to be addressed and solved. The key to

widespread usage of m-Commerce is to gain the trust of users so that they will be

willing to perform transaction on their mobile devices. As previously mentioned m-

Commerce has the same security problems that occur within e-commerce plus it has its

own set of unique challenges. M-Commerce has the problem of viruses and malware,

data theft, Denial of Service attacks, phishing, insecure default settings, inexperienced

users and sniffing that seem to affect all Internet technologies. M-Commerce also has

some unique problems such as limited computer power, loss or theft of the mobile

device, varying standards, the broadcast nature of wireless transmissions, immature

technologies, lack of authentication, and weak device operating systems. In order to

reach its full potential these challenges and weaknesses must be addressed.

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M-Commerce has two major security challenges that differentiate it from normal

Internet commerce. The first challenge is that the devices are small and portable which

can result in loss or theft of the device. Mobile devices are by design small and portable.

While this is good for day to day usability and convenience it is not a good then when it

comes to security. Modern mobile devices contain more and more sensitive information.

In recent years there has been an abundance of instances where companies have lost

personal data by losing laptops or backup tapes. This same type of incident could occur

with a mobile device. Mobile devices often contain phone book entries, journal entries,

calendars, etc. that can contain valuable personal or corporate information. In a

corporate setting the theft of this data could lead to financial losses or loss of a

company’s trade secrets. Today Pocket PCs and Smart Phones can contain full

documents or spreadsheets that could contain sensitive data. Loss of this data could

harm an individual or company more then just the disclosure of a phone book or date

book. The challenge with mobile devices is that we need to be able to protect the

sensitive data on the phone even if it is lost or stolen. The second challenge is that

mobile devices are not as powerful as modern computers. This makes security a

challenge because the same security mechanisms that may work on a desktop or

laptop PC may not work on a mobile device. The capabilities of Mobile devices often lag

behind PCs because they typically lack in processor power, memory, storage space,

display capabilities and input capabilities. This causes problems when trying to use PC

security protocols on a mobile device. For example many encryption standards used on

the Internet today use a large amount of processing power to perform the mathematical

computations required by cryptography. Mobile devices may not have the processing

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power necessary to perform these computations and therefore certain types of

encryption may not be able to be used. Mobile Devices are becoming more and more

powerful but they will always be a step or two behind the power of PCs. Because of this

lag there will probably always be protocols and standards that function on a PC that

cannot be used on a mobile device.

RESEARCH METHODOLOGY

This study is based on both primary and secondary data sources. Primary data

was collected through interviews of the m-banking users and non-users. In spite of

collecting statistical data regarding to m-banking service author was used qualitative

method to study the issue m-banking concern to financial inclusion.

Term ‘M-Banking’

Mobile banking is simply application of mobile (Cell) phone dives as mean of

banking via Wireless Application Protocol (WAP), GPRS and 3G technology and short

message service (SMS) facilities. Mobile financial services is a term applied to a range

of financial activities conducted using mobile devices, such as cellular phones or

personal digital assistants (Cheney, 2008). The terms m-banking, m-payments, m-

transfers, m-payments, and m-finance refer collectively to a set of applications that

enable people to use their mobile telephones to manipulate their bank accounts, store

value in an account linked to their handsets, transfer funds, or even access credit or

insurance products (Donner, 2007; Donne and Telleze, 2008). Mobile banking allows

bank customers to check balances, monitor transactions, obtain other account

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information, transfer funds, locate branches or ATMs, fund transfer, mobile phone

recharge, pay bills, tax pay etc. All these service are performing via SMS, WAP, GPRS,

3G or mobile Internet. According to International Finance Corporation (World Bank), m-

banking refers to financial transactions undertaken using a mobile device against a

bank account accessible from that device i.e. M-Payment, Mobile-money Transfer, M-

Wallets etc it is the broader set of payments and financial transactions that can be

enabled across mobile networks.

Origin of M-Banking

According to Ogawara, Jason and Pete (2002) the concept of mobile payment

originates in Finland. Sonera, a telecommunication company in Finland, released a

mobile payment system named Sonera Mobile Pay (SMP) in 1999. Then cellular

payment service named PayBox started in 2000 to online shopping In Germany. In

2001, service like SMP service Pro-tect was released as Mobile Money System

(MMS) in Japan. Korean banks also developed mobile banking network to reduce

transaction cost in banking operations and increase convenience since 2002 and

launched post pay mobile payment system (Terri and Fumiko, (2007). Bank of America

offers mobile banking through a browser-based program In USA. Wells Fargo offers

mobile banking through either a browser-based program or SMS text messaging service

and Wachovia offers mobile banking either through a browser-based service or a

downloadable mobile banking application in USA. Over 1.6 million users was using m-

banking services in 2007, Bank of America, reported having 5,00,000 active users of its

mobile banking service In USA. Mobile banking users are projected to reach almost 35

million by 2010. In order to demand of mobile divides to use in m-banking almost of

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cellular device developer companies alike Ericsson, Motorola, Nokia, LG, Siemens,

Samsung, Sony etc. are developing their mobile handset according to m-banking

requirements. Most recent handsets are enabled with CDMA, GSM, WAP, 3G, SMS,

MMS, JAWA, GPRS, Bluetooth, Infrared, and windows also.

Scope for M-Banking in India

Indian telecommunication service scenario indicates that cellular or mobile phone

service was growing tremendously in last five years. As TRAI’s report on

telecommunication industry in India, The wire line phone connections were declining in

the last few years and mobile phone connections were increased very fast. At present,

16 cellular service providers providing cellular service in Indian and there were 621.28

million phone connections in India out of these 584.32 million mobile phone

connections. Mobile phone service was not only spread in urban areas but also in rural

areas in India. The rural mobile connections have reached the 190.88 million as shown

in the below figure, mark as against 111.63 million in the previous year and now 32.67%

of total wireless subscribers are now in rural areas and the rural tele density at the end

of March 2010 was 24.29%. It is great opportunity to the bankers to facilitate banking

service to „unbanked‟ through mobile banking system in India. Providing mobile

banking services to the unbanked is not only social responsibility of the bankers but also

it is a golden opportunity to the business expansion.

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Economics of M-Banking

M-banking is cost effective way to provide banking services to the unbanked because

there is no need to set up physical branches to facilitate customers it called as it is

‘branchless banking’. It is branchless bank model includes enhanced ability to carry

out limited banking transactions via mobile phone. Only bank should develop their m-

banking system and register their customers‟ electronically for m-banking. It is note

that, initial cost for establishment of m-banking system may be high but marginal cost

for additions of new customers in m-banking wills declines continuously till full utilization

of existing installed capacity. Connectivity for mobile device is not the part of banking

service it is duty and part of business of telecommunication department and cellular

service providers. Hence, bank should only lease the telecommunication lines provided

by telecommunication department to provide access to the customers.

From a consumer’s point of view, m-banking is expensive to enter the m-banking world

because they should have JAVA enable or windows based mobile handset, with GPRS,

WAP or 3G system. Almost all m-banking software are either JAVA based or windows

based and works thorough GPRS, WAP or 3G system of the cellular service. However,

49

recently it is noticed that mobile handsets having mentioned facilities are available in `

1500 to onwards. Because of decreased price of mobile handset and service charges of

mobile communication is becoming increasingly affordable for the poorer segment of

the population (Bångens and Söderberg, 2008). According to mobile handset market

reports most of existing users were using at least JAVA based mobile handsets and

having GPRS and WAP facilities. Recently, 3G enable handsets are also available in

the Indian market.

Mobile banking in India

Mobile banking has not widely accepted but there is significant growth found in recent

years after spread of mobile network. Since 1995 in India, there is found tremendous

growth in mobile users in India.

In past two years, mobile banking users have increased three times if we compare the

use of either debit card or credit card. Now, 32 banks had been granted permission to

operate Mobile Banking in India till June 30, 2009, of which 6 belonged to the State

Bank Group, 12 to nationalized banks and 13 to private / foreign banks. The RBI has

adopted Bank Led Model in which mobile phone banking is promoted through business

correspondents of banks. Recently, Indian banks are offering followings facilities

through mobile banking: 1) Check account balance 2) Get automatic updates on bill

payments 3) Get automatic updates scheduled payments 4) Mini account statement 5)

SMS alert about deposit and withdrawal 6) Electronic fund transfer 7) Bill Payment,

Donations, Subscriptions etc. 8) Information about new schemes, changes in charges

and interest rates 9) Stop payment order and cheque book request 10) ATM and branch

locating 11) Mobile Top Up, Recharge of Other DTHs, 12) Merchant payment, SBI life

50

insurance premium 13) De-mat Enquiry Service 14) Real-time stock quotes RBIs and

M-Banking service in India Recognizing its potential to achieve financial inclusion

faster, RBI has issued guidelines for enabling mobile telephony-based financial services

the Reserve Bank of India issued the guidelines for Mobile Banking Transactions in

October 2008. Some important guidelines are:

1. Only banks which are licensed and supervised in India and have a physical presence

in India including core banking solution will be permitted to offer mobile banking

services.

2. The services shall be restricted only to customers of banks and/or holders of

debit/credit cards issued as per the extant Reserve Bank of India guidelines.

3. Only Indian Rupee based domestic services shall be provided. Use of mobile banking

services for cross border inward and outward transfers is strictly prohibited.

4. The guidelines issued by Reserve Bank on “Know Your Customer (KYC)”, “Anti

Money Laundering (AML is a term mainly used in the financial and legal industries to

describe the legal controls that require financial institutions and other regulated entities

to prevent or report money laundering activities.) and Combating the Financing of

Terrorism (CFT) from time to time would be applicable to mobile based banking

services also.

5. Banks should follow the rules of Know Your Customer (KYC) and provide full details

of the Terms and Conditions of the service offered shall be communicated to the

customer.

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6. Technology used for mobile banking must be secure and should ensure

confidentiality, integrity, authenticity and non-reputability i.e authentication by ID and

mPIN. (As per new guidelines Transactions up to Rs 1000/- can be facilitated by banks

without end-to-end encryption.)

7. The customer /consumer protection issues assume a special significance in view of

the fact that the delivery of banking services through mobile phones is relatively new.

8. For the present, banks are permitted to offer this facility to their customers subject to

a daily cap of Rs. 5000/- per customer for funds transfer and Rs.10,000/- per customer

for transactions involving purchase of goods/services (Daily cap of Rs 50,000/- per

customer for both funds transfer and transactions involving purchase of goods/services

since December 2009).

9. Banks wishing to provide mobile banking services shall seek prior one time approval

of the Reserve Bank of India, by furnishing full details of the proposal.

10. Banks are required to maintain secrecy and confidentiality of customers' accounts.

In the mobile banking scenario, the risk of banks not meeting the above obligation is

high. Banks may be exposed to enhanced risk of liability to customers on account of

breach of secrecy, denial of service etc., on account of hacking/ other technological

failures.

11. Banks are required to make mandatory disclosures of risks, responsibilities and

liabilities of the customers on their websites and/or through printed material.

Problems in M-Banking

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Mobile banking is simplest and cost effective way to provide banking services to the

unbanked in India. However, at present it is not accepted by common peoples in India

because of followings reasons:

1. Less IT literacy is adversely affecting on the use of mobile phone as electronic device

for banking. They have just using mobile phones for communication.

2. Most of rural peoples have no idea about m-banking and how it is used. Even we

realized that about only 3 per cent of existing customers are using m-banking services

in urban areas they have not clear idea about benefits of m-banking.

3. Continues and good quality of cellular service connectivity is not available in the rural

areas.

4. Security and trust are most important aspects of any banking service, but people

have much of doubts about its security and trustworthiness.

5. M-banking provides limited range of services it not provides deposit facility which is

essential service for the customers. If they want to deposit their money they must go in

the branch.

6. Refund service is very poor in the m-banking. If customer made some wrong

transaction and he/she sent money to wrong person by mistake the bank does not

refund that money immediately. Stipulated time for refund such money is defined

maximum 15 days.

7. Breakdown of M-banking create inconvenience for customers. Many time it fund that

m-banking services are not ready to use.

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8. Language used in the m-banking software is also one of the barrier, almost all

software using English as common language but rural people and less literate unable to

use this software‟ due to poor knowledge about English

9. Charges on GPRS or 3G service is not cheap to use in m-banking service. It reduces

cost effectiveness of m-banking.

10. What about very poor (Poorer) people who can‟t purchase mobile phone, if they

used mobile phone with the banking correspondents staff is to be used for transactions,

how will transactions be authenticated and recorded? It is basic problem in m-banking

from poor‟s point of view.

11. If customer is using m-banking, he would not be able to change to a different service

provider and his phone number (it may be permanent customer of the particular cellular

service provider).

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ANALYSIS

Over the last few years, the mobile and wireless market has been one of the

fastest growing markets in the world and it is still growing at a rapid pace. Mobile

phones have become an essential communication tool for almost every individual.

Advent of m-Commerce has managed to take mobile VAS to next level, adding

tremendous value to telecommunication industry. Mobile banking which is an integral

part of m-Commerce has become very popular among mobile users ever since its

existence in 2007. It creates new, convenient communication and fast financial

transactional channel for mobile users which is accessible from anywhere, anytime.

Checking account information, balance available, credit/debit card information,

cheque status, setting alerts, payment reminders, locating ATMs and bank branches,

accessing mini statement, accessing loan and equity statements, insurance policy

management, placing orders for cheque books etc via mobile phones are some of the

services offered in mobile banking. With multiple access channels such as SMS,

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downloadable client, mobile Internet (WAP) mobile banking is encouraging mobile users

more to explore the service.

Mobile banking services - insights and reports

Based on data gathered in April 2009 for Feb/March mobile banking urban Indian

customers checking account balance is the most frequently cited reason for using

mobile banking. 40 million Urban Indians used their mobile phones to check their bank

account balances followed by viewing last three transactions. ICICI bank continues to

maintain its leadership extending in mobile space, 42% of all mobile banking users bank

with ICICI, followed by HDFC (25.3%).

Mobile banking report: “Most popular services and income profile” (Two month ended March 2009, Urban Indian Mobile Phone Users).

Statistics on most popular mobile banking services

Filtering the data further to understand which income groups in urban India use

mobile banking more. As depicted in the chart below, mobile banking is most used by

subscribers falling in Rs. 1 Lakh to Rs. 2.99 Lakhs income bracket followed by less than

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Rs 1 Lakh income bracket. Therefore it is observed, mobile banking is more popular

among low income group of mobile users than higher income group of mobile users.

Mobile banking users – Income profile

Many believe that mobile users have just started to fully utilize data capabilities in

their mobile phones. Service providers are every day coming up with new services,

providing methods to make the solution more easy to use, implementing techniques to

improve security, launch of 3G is providing higher data transfer rate and invention of new

phones more frequently is driving mobile users towards subscribing to mobile banking

services. In India, where mobile subscribers far exceed fixed line subscribers because of

better mobile infrastructure in comparison to fixed line infrastructure has made mobile

banking much more appealing in India today. Various players involved in providing

mobile banking services (banks, financial institutions, service providers, operators etc)

are therefore expecting a potential growth in mobile banking industry in India.

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Conclusions/Recommendations

M-commerce is an evolving area of e-Commerce, where users can interact with

service providers through a mobile and wireless network, using mobile devices for

information retrieval and transaction processing. There are a number of business

opportunities and grand challenges of bringing forth viable and robust wireless

technologies ahead for fully realizing the enormous strength of m-commerce in this

Internet era and thereby meeting both the basic requirements and advanced

expectations of mobile users and providers.

Although there are many systems supporting mobility and many solutions for

wireless access, there are issues influencing the performance of the various mobile

systems during implementation of e-Commerce. These challenges range from limitation

of physical mobile devices to technological inadequacies such as lack of desirable

bandwidth, low security features and lack of universal standards. Companies have

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incorporated m-Commerce into their existing business models, but they use mobile

devices only as additional channels to strengthen their positions. Current mobile

services such as mobile gaming, portals, directory services, banking, and mobile e-

tailing are clear indicators of such integration. As technology advances, m-Commerce

will see more success with the next wave of trends such as transition from 2G to 3G,

personalization of applications, robust payment systems, new entertainment methods,

device independent applications and rise in security levels. Services and applications

are designed and developed according to these requirements and constraints. One of

the main feature challenges will be to unify payment solutions, providing the highest

possible level of security. These changes shall bring about development of

personalized, location based and context aware services, which provide excellent value

propositions to the customers. Different entities of the mobile value chain are investing

resources on infrastructure, research and development. Complete success of m-

Commerce requires development of new business models, where the mobile devices

are the primary sources of relationships with the customers. It will be the innovativeness

of the implementer, which will drive m-Commerce to a new level.

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References

1. http://tnmg4u.wordpress.com/

2. http://soa.sys-con.com/node/2134295

3. www.mobilecommercedaily.com/2012/03/01/mobile-disrupts-the-retail-channel-

opportunity-or-threat

4. http://mcom.cs.cmu.edu/

5. http://www.articlesbase.com/ecommerce-articles/mcommerce-and-its-

applications-1011452.html

6. http://www.peterindia.net/M-CommerceLinks.html

7. http://www.mobilecommerce.co.uk/

8. http://in.reuters.com/finance/stocks/companyProfile?symbol=QCOM.O

9. http://www.thestudymaterial.com/presentation-seminar/computer-presentation/

204-presentation-mobile-commerce.html

10.http://seminarprojects.com/Thread-m-commerce--5637

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11.http://www.thestudymaterial.com/presentation-seminar/computer-presentation/

204-presentation-mobile-commerce.html?showall=1

12.http://ebizarchitects.wordpress.com/2011/02/18/lte-nachfolger-von-umts/

13. http://dev.hil.unb.ca/Texts/PST/pdf/grami.pdf

14.http://www.mobile-prospects.com/

Glossary

1G First Generation

2G Second Generation

3G Third Generation

4G Fourth Generation

ASICs Application Specific Integrated Circuit

B2B Business to Business

B2C Business to Consumer

C2C Consumer to Consumer

E-commerce Electronic commerce

EMS Enhanced Messaging Service

EU European Union

GPRS General Packet Radio Service

GSM Global System for Mobile Communication

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HTML Hypertext Markup Language

Kbps Kilo bits per second

LTE Long Term Evolution

mPIN Mobile PIN

M-commerce Mobile commerce

MMS Multimedia Messaging Service

SIM card Subscriber Identity Module Card

SMS Short Message Service

UMTS Universal Mobile Telecommunication System

URL Uniform Resource Locator

WiMax Worldwide Interoperability for Microwave

Access

WAP Wireless Application Protocol

WLAN Wireless Local Area Network

WWW World Wide Web

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