Punch And Pay: SMS shows the way

A year from now, as you pass a Domino's pizza outlet, your cellular phone might beep loudly. If you look at the screen, it'll read: " Stop by for two today for the price of one."

Or you might walk into an electronics store, check out a music system and compare prices at other stores on a wireless device in your hand.

Satisfied you have the best price, you might use your cell phone to authorise credit card transactions to seal the deal.

Welcome to the world of mobile commerce "� a world that is already on us. M-commerce (as it's more widely known) is expected to be one of the next killer applications for mobile phone users.

To put it simply, just as e-commerce is associated with the internet, mobile commerce comprises transactions that have monetary value conducted via a mobile phone.

These transactions may involve intangible goods (ringing tones, screen savers, wallpapers, games and downloadable phone applications, MP3 music and video applications, information delivered to the mobile device in digital format) or tangible products that are delivered separately (movie tickets, flowers).

Such mobile phone transactions are not exactly in the realm of fantasy either.

In Mumbai, BPL Mobile has tied up with Cadbury India to allow its subscribers to buy Cadbury's products through SMS-enabled vending machines.

With over 30 of these machines placed at select points in Mumbai, Cadbury chocolates are now only an SMS away for over 7 lakh BPL Mobile subscribers in the city.

The chocolates are paid for via an addition to the monthly cellular services bill or directly deducted from the balance available on the pre-paid card. BPL Mobile also plans to have a similar arrangement with Pepsi.

It is also exploring alliances with coffee and tea vending companies. For mobile phone users, Mobile Operated Vending Machines (MOVMs) eliminate the problems associated with coin-operated machines (insufficient coins, lack of adaptability with currency notes). BPL Mobile, meanwhile, gets extra revenue from cellphone users.

Says Kunal Ramteke, marketing controller at BPL Mobile: " We want to redefine the way telephone companies function. We started as a voice company, then we moved into data but now we don't want to be identified only as a telephony company. We want to see how we can become part of our subscribers' lives to a greater extent."

In Mumbai, BPL Mobile is also understood to be exploring the option of tying up with the Mumbai police so that traffic violators can pay fines using their mobile phones.

The mobile service company also offers mobile games at Rs 50 per download "� and gets more than 1,000 requests a day for games. Bharti Cellular's Airtel offers ringtones for Rs 9 per download.

AirTel also offers mobile banking (m-banking) or access to banking and credit card services directly from your cellular phone.

AirTel subscribers can now conduct banking and credit card transactions (checking the balance in their account, applying for a new cheque book) by sending an SMS from anywhere in India and from over 46 countries. AirTel has tied up with HDFC Bank , ICICI Bank, Bank of Punjab and Global Trust Bank.

What is more, Hutchison Max subscribers can order food, airline tickets or even consult a doctor in an emergency at an additional cost of Rs 3 per minute.

Just how widespread m-commerce is poised to become is illustrated by Idea Cellular's partnership with online lottery PlayWin.

"The big ticket items are gambling, online gaming and lotteries which have proved to be a major hit elsewhere in the world," says Himanshu Kapania, chief operating officer at Idea Cellular.

To be sure, most of the current m-commerce applications are very basic and involve amounts below Rs 100. The very profitable m-commerce applications are yet to hit India.

"Big ticket m-commerce applications will happen only when operators find a mechanism to conduct the transaction without taking the credit burden on themselves. For this, they'll have to tie up with banks and credit card companies which will automatically deduct the charges from the subscriber's account," Kapania points out.

In Hong Kong, for example, 15-20 per cent of an operator's revenues comes from m-commerce applications.

Says Ramteke: "Right now subscribers purchase goods over their mobile phone and pay for them through the phone bill. The next phase would give subscribers the flexibility to buy through the mobile phone and pay through any mechanism."

Ramteke points out that the first such applications are already in evidence. Cellular service companies are using m-commerce to sell their own recharge coupons to pre-paid mobile phone service users.

Subscribers to pre-paid cards can top up their cards by sending an SMS from the comfort of their home.

Adventis, the Boston-based consultancy, predicts that the big ticket m-commerce applications are just 18-24 months away.

In the Philippines, cellular service companies have tied up with MasterCard to offer mobile wallet facilities for customers to buy things and pay for them over their mobile phones.

Unquestionably, in the not-too-distant future m-commerce will catch on in a huge way. But in the short run, technological, social, and business problems will block its wide adoption.

Most mobile handsets are not yet adapted for mobile internet transactions. This might discourage early mobile shoppers.

Location-based commerce, where the cellular service company determines which street you are on and sends you ads or offers from local stores, remains mired in privacy issues. And platforms for payment through the phone have yet to catch on.

Standardisation is another challenge. The lack of uniformity makes it harder to create an international m-commerce coverage area.

Finally, wireless operators still have to figure out viable m-commerce business models. One of the challenges is to discover just what mobile phone users will use their instruments for while shopping.

People clearly are not as interested in buying a toaster over a cellphone as they might be in buying movie tickets without having to stand in a line.

The biggest challenge mobile service companies face is to offer compelling applications. Subscribers won't pay for information on the weather, on sports scores or on stock quotes, all of which is available free on the telly.

Mobile service companies aren't fretting right now about this. As they stare at market growth numbers, they're emitting whoops of joy.

According to technology consultancy Strategy Analytics, the value of global m-commerce transactions will touch an estimated $2 billion by 2005, up from virtually zero today.

The National Association of Software Service Companies' (Nasscom) 'Strategic Review 2003' expects the Asia-Pacific region and the rest of the world are expected to account for 40 per cent of the estimated $225 billion m-commerce market by 2005.

Datamonitor, the statistical consultancy, reckons that operators will be spending $4.7 billion worldwide on m-commerce infrastructure by 2005, up from about $280 million in 2000.

Europe and Asia Pacific show the greatest potential for expansion, and more than 12,000 m-commerce applications will be available by 2005.

So will m-commerce be the next big thing?

Perhaps. Meanwhile, when you're next in Mumbai and have to pay a fine for a traffic violation and don't have a rupee in your pocket, worry not "� just reach for your mobile phone and SMS your way out of your predicament.