Ten lessons for m-commerce implementation

While mCommerce implementations are relatively new, successes such as Safaricom in Kenya, paybox in Austria, Compass Bank in the United States, mpass in Germany and others provide a solid set of lessons learned for mobile operators, enterprises and financial institutions.

After years of working with organisations and deployments to more than 15 million end consumers and 20,000 merchants, Sybase 365 has found that these ten best practices consistently lead to the most successful deployments.

1. Control the enrollment process. The mobile ecosystem has multiple players: banks, operators, merchants and consumers. If a member of the ecosystem is to have direct contact with the m-commerce subscriber, it needs to control and manage the enrollment process. The tussle to control the enrollment will increasingly play out among the ecosystem participants, resulting in an acceleration of m-commerce services offered to consumers.

2. Minimize Adoption Barriers. One barrier to adoption is the amount of information requested to enroll in a service. Requesting too much information to register for a mobile service reduces its likelihood of success. In Malaysia, customers can enroll in Celcom’s AirCash by providing only their passport number or national identification number and name. When the customer goes to cash in or cash out, additional Know Your Customer (KYC) data is collected. Simplifying enrollment to two pieces of information lowers the barrier to adoption significantly, and it increases the service’s chance of success.

3. Capture mobile credentials. When offering a mobile service, capturing the consumer’s mobile credentials and payment credentials is essential. In India, for example, per Reserve Bank of India guidelines that went into effect February 1, 2011, all merchants are required to collect a one-time password and card details for transactions completed by phone. This guideline requires the issuers to provide a system to request a one-time password; however, it forces the consumer to register the mobile credentials. A one-time password to a mobile phone reduces the potential for fraudulent use. The issuers now have a means to connect with their card customers and the opportunity to offer additional services based on the relationship in the future.

4. Launch multiple services. Offering a set of services ensures repeat business. Commercial Bank of Qatar, for example, has a mobile banking offering that includes standard functions such as balance and statement transfer, as well as bill payments, local money transfer and international money transfer. Celcom’s AirCash in Malaysia provides customers a mobile wallet service that includes balance and transaction history, and services such as domestic transfer, international remittance, airtime remittance internationally and air-time top-up.

5. Offer a cash-in and cash-out service. Make it easy to put cash in and take cash out of mobile wallets, especially in areas with large populations of under- or unbanked customers. At Celcom, subscribers use the AirCash service as a mobile wallet. Subscribers can add money or take money out of their mobile wallets by visiting their operator agents. Money can also be sent to the subscriber’s mobile wallet that the subscriber can access through the agent.

6. Enable second-factor authentication. A simple touch or a text from a mobile device can secure a payment. If users do not have a smartphone, an SMS combined with interactive voice response as the second-factor authentication can enable payments. For mobile Web or Web transactions, a mobile wallet can be used for payment by collecting a mobile phone number and a mobile personal identification number (MPIN), supported by an SMS confirmation. mpass in Germany uses this type of combination for Web and mobile Web transactions.

7. Tie revenue models to the value of service to consumers. Revenue models can include fixed subscriber fees, per transaction fees, merchant service charges, foreign exchange spread and more. These models vary within emerging and developed markets. In emerging markets, for instance, fees are charged even for balance lookups, as the alternative is a two-hour trek to a bank branch. That service is essentially free in developed markets because of the multiple options available to the consumer.

8. Expect an m-commerce ecosystem with friction. Although the desired state is a friction-free ecosystem, the effort to control enrollment will cause banks and operators to launch competing m-commerce services. Success will be driven by the value they provide to their customers and what regulators will permit in each market. While operators have led in offering m-commerce services, banks are now joining the mix. In markets such as Germany, Indonesia and Malaysia, banks are offering mobile banking services that encompass airtime TopUp. Increasingly, third parties in emerging markets and merchants in developed markets are entering the market, evidenced by the number of mobile money services in Kenya and m-payment applications on smartphones. Watch for each ecosystem player try to leap frog the others.

9. Support mobility at ATMs. Once a customer’s mobile credential is registered, ATMs can be a convenient vehicle for cash-in and cash-out scenarios in some markets—without the need to have a physical card. ATMs can also be a good payout vehicle for merchant promotions that involve cash rewards.

10. Plan your service for all mobile channels. The mobile phone supports multiple channels, including SMS, Unstructured Supplementary Services Data (USSD), rich client and mobile web. Investments in technology should be made with an eye to offering or extending the service easily across all the available channels. Many banks, such as Compass Bank in the United States, started with basic SMS banking, then added iPhone, iPad and Android applications. Compass Bank was able to deliver the additional services easily because it invested in a common mobile banking platform that is extensible across all mobile modalities.

When launching new m-commerce services, keep these best practices in mind. As the market matures, the industry will add new knowledge based on real-world experiences, but for now, these lessons learned can help ensure a successful m-commerce launch.

As Vice President, mCommerce Solutions and Services, Haridas Nair manages Solutions and Services for m-commerce within Sybase 365. He is responsible for driving the strategy and implementations across m-banking, m-payments and m-remittance.