Securing transactions and payment systems for m-commerce 9781522502371, 1522502378

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Securing Transactions and Payment Systems for M-Commerce Sushila Madan University of Delhi, India Jyoti Batra Arora Banasthali Vidyapeeth University, India

A volume in the Advances in E-Business Research (AEBR) Book Series

Published in the United States of America by Business Science Reference (an imprint of IGI Global) 701 E. Chocolate Avenue Hershey PA, USA 17033 Tel: 717-533-8845 Fax: 717-533-8661 E-mail: [email protected] Web site: http://www.igi-global.com Copyright © 2016 by IGI Global. All rights reserved. No part of this publication may be reproduced, stored or distributed in any form or by any means, electronic or mechanical, including photocopying, without written permission from the publisher. Product or company names used in this set are for identification purposes only. Inclusion of the names of the products or companies does not indicate a claim of ownership by IGI Global of the trademark or registered trademark. Library of Congress Cataloging-in-Publication Data Names: Madan, Sushila, 1964- editor. | Arora, Jyoti Batra, 1979- editor. Title: Securing transactions and payment systems for m-commerce / Sushila Madan and Jyoti Batra Arora, editors. Description: Hershey : Business Science Reference, 2016. | Includes bibliographical references and index. Identifiers: LCCN 2016000646| ISBN 9781522502364 (hardcover) | ISBN 9781522502371 (ebook) Subjects: LCSH: Electronic commerce. | Mobile communication systems. Classification: LCC HF5548.32 .S43 2016 | DDC 332.1/78--dc23 LC record available at http://lccn.loc.gov/2016000646

This book is published in the IGI Global book series Advances in E-Business Research (AEBR) (ISSN: 1935-2700; eISSN: 1935-2719) 

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Technology has played a vital role in the emergence of e-business and its applications incorporate strategies. These processes have aided in the use of electronic transactions via telecommunications networks for collaborating with business partners, buying and selling of goods and services, and customer service. Research in this field continues to develop into a wide range of topics, including marketing, psychology, information systems, accounting, economics, and computer science. The Advances in E-Business Research (AEBR) Book Series provides multidisciplinary references for researchers and practitioners in this area. Instructors, researchers, and professionals interested in the most up-to-date research on the concepts, issues, applications, and trends in the e-business field will find this collection, or individual books, extremely useful. This collection contains the highest quality academic books that advance understanding of e-business and addresses the challenges faced by researchers and practitioners.

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E-business strategies E-business standardizations E-procurement methods E-Business Management Mobile Business Models E-business systems integration E-Marketing Economics of e-business Online consumer behavior Interorganizational information systems

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Editorial Advisory Board Dharmendra,Guru Jambeshwar University, India YashwantSangwan,Guru Jambeshwar University, India GeetanjaliShah,Indraprastha University, India Shesh,SECLabs, India AlokVijayant,NSA (PMO), India



Table of Contents

Foreword.............................................................................................................................................. xv Preface. ...............................................................................................................................................xvii Acknowledgment. .............................................................................................................................xxiv Chapter 1 InvestigatingtheRolesofMobileCommerceandMobilePaymentinGlobalBusiness. ..................... 1 Kijpokin Kasemsap, Suan Sunandha Rajabhat University, Thailand Chapter 2 MobileServicesBehavioralIntention:TheoreticalBackgroundandEmpiricalResearch. ................. 24 Vaggelis Saprikis, Technological and Educational Institute of Western Macedonia, Greece Maro Vlachopoulou, University of Macedonia, Greece Theodora Zarmpou, University of Macedonia, Greece Chapter 3 SWOTAnalysisofM-Commerce. ....................................................................................................... 48 Ramandeep Kaur, Institute of Information Technology and Management, India Harmeet Malhotra, Institute of Information Technology and Management, India Chapter 4 UnderstandingFraudulentActivitiesthroughM-CommerceTransactions. ........................................ 68 Rajan Gupta, University of Delhi, India Sunil Kumar Muttoo, University of Delhi, India Saibal Kumar Pal, DRDO, India Chapter 5 TheRealityofMobilePaymentSystemsandSocialInclusioninLatinAmerica. .............................. 94 Myriam Martínez-Fiestas, ESAN University, Peru Katia Oviedo-Cáceres, ESAN University, Peru Ignacio Rodriguez-Garzon, Cientifica del Sur University, Peru

 



Chapter 6 AttractingCustomers’toOnlineShoppingUsingMobileApps:ACaseStudyofIndian Market.. 117 Baljeet Kaur, Delhi University, India Tanya Jain, Delhi University, India Chapter 7 MobileCommerceSecurityandItsPrevention. ................................................................................ 141 Mona Adlakha, University of Delhi, India Chapter 8 MobilePaymentsforConductingM-Commerce. .............................................................................. 158 Rupali Ahuja, University of Delhi, India Chapter 9 RegulatoryFrameworkofMobileCommerce. .................................................................................. 176 Jyoti Batra Arora, Banasthali Vidyapeeth University, India Chapter 10 AnalysingArchitectureandTransactionModelinSecuringMobileCommerce. ............................. 193 Poonam Ahuja Narang, Guru Tegh Bahadur Institute of Technology, India Basanti Pal Nandi, Guru Tegh Bahadur Institute of Technology, India Chapter 11 ConsumerPerceptiontoMobileCommerce. ..................................................................................... 217 Neeru Kapoor, Delhi University, India Chapter 12 ExploringBarriersAffectingtheAcceptanceofMobileCommerce. ............................................... 234 Priyanka Gupta, Delhi University, India Chapter 13 ServicesofMobileCommerce. ......................................................................................................... 251 Mukta Sharma, Teerthanker Mahaveer University, India Chapter 14 SecurityRisksofMobileCommerce. ................................................................................................ 275 Ashish Kumar, Bharati Vidyapeeth College of Engineering, India Rachna Jain, Bharati Vidyapeeth College of Engineering, India Sushila Madan, Delhi University, India



Chapter 15 PresentandFutureofMobileCommerce:Introduction,ComparativeAnalysisofMCommerce andECommerce,Advantages,PresentandFuture............................................................................ 293 Barkha Narang, Jagannath International Management School, India Jyoti Arora, Banasthali Vidyapeeth University, India Compilation of References............................................................................................................... 309 About the Contributors.................................................................................................................... 343 Index................................................................................................................................................... 347

Detailed Table of Contents

Foreword.............................................................................................................................................. xv Preface. ...............................................................................................................................................xvii Acknowledgment. .............................................................................................................................xxiv Chapter 1 InvestigatingtheRolesofMobileCommerceandMobilePaymentinGlobalBusiness. ..................... 1 Kijpokin Kasemsap, Suan Sunandha Rajabhat University, Thailand Thischapteraimstoinvestigatetherolesofmobilecommerce(m-commerce)andmobilepayment(m-payment) inglobalbusiness,thusrevealingtheoverviewofm-commerce;m-commerceandTechnologyAcceptance Model(TAM);m-commerceandtrust;theconceptofm-payment;theimportanceofm-commercein globalbusiness;andtheimportanceofm-paymentinglobalbusiness.Theoperationofm-commerceand m-paymentisneededformodernorganizationsthatseektoservesuppliersandcustomers,increasebusiness performance,strengthencompetitiveness,andachievecontinuoussuccessinglobalbusiness.Therefore,itis requiredformodernorganizationstoinvestigatetheirm-commerceandm-payment,developastrategicplan toregularlychecktheirpracticaladvancements,andimmediatelyrespondtom-commerceandm-payment needsofcustomersinmodernorganizations.Thechapterarguesthatapplyingm-commerceandm-payment hasthepotentialtoenhancebusinessperformanceandreachstrategicgoalsinglobalbusiness. Chapter 2 MobileServicesBehavioralIntention:TheoreticalBackgroundandEmpiricalResearch. ................. 24 Vaggelis Saprikis, Technological and Educational Institute of Western Macedonia, Greece Maro Vlachopoulou, University of Macedonia, Greece Theodora Zarmpou, University of Macedonia, Greece Thischapterpresentsareviewofliteratureconcerningbehavioralintentiontheoryandresearchmodels, focusingonthefactorsdrivingconsumeradoptionintentionofmobileservices.Basedonthistheoretical background a conceptual framework that combines perceived ease of use, perceived usefulness, innovativeness, trust, demographic characteristics and relationship drivers in order to examine their influence on the mobile services’ adoption intention has been proposed. Furthermore, the proposed frameworkisempiricallytestedusingdatacollectedfromasurveyinGreece.Thecollecteddataare analyzedthroughfactoranalysis,stepwiseregressionanalysisandANOVAs.Accordingtotheresults ofthestudy,individuals’innovativeness,theireducationallevel,andtherelationshiptiesbetweenthe usersandthemobileservicesarekeyfactorstoencouragem-services’adoption.Theoutcomesprovide interestinginsightsandusefulhintstopractitionersandresearchers. 



Chapter 3 SWOTAnalysisofM-Commerce. ....................................................................................................... 48 Ramandeep Kaur, Institute of Information Technology and Management, India Harmeet Malhotra, Institute of Information Technology and Management, India M-Commerceisavailingservicesonlinewithoutphysicallygoingtogeographicallocationssuchasbanks, shoppingmallsetc.Itisacustomer-drivenapproachofferingconvenienceofpersonalizedmarketing, sellingandpurchasinggoodsandservicesonmobilephones.Fromsellinghome-madechocolatesto sellingapparelsonline,ithasinvadedall.Smartphoneshaswidenitsreachandhasintroducedinnovation ininformationexchangeandtransactionsthroughmobileapplications.Certainchallengesandthreats posed by M-commerce, which are faced by business organizations and customers, are analyzed via SWOTtoaiddecisionmakingoforganizationsbeforeshiftingtheirfocusonM-commerce,atthesame time,ofcustomerspriortosharingtheirsensitiveinformationviasmartphones.Thischapterfocuses onthefeasibilityandacceptabilityofM-commercewiththehelpofSWOTanalysisamongstexisting andprospectivestakeholders.Detrimentalfactorsleadingtogrowthinbusinessrevenue,challengesfor implementingtechnology,challengesfacedbyend-usersetc.hasbeendiscussedindetail. Chapter 4 UnderstandingFraudulentActivitiesthroughM-CommerceTransactions. ........................................ 68 Rajan Gupta, University of Delhi, India Sunil Kumar Muttoo, University of Delhi, India Saibal Kumar Pal, DRDO, India Technology changes its facet quicker than anything else. Every few years there is a revolution that changesthewayweperceivetechnologyandthewayitimpactsourlives.Mobilecommerceindustry hasbeenswiftlybringingaboutanalterationinhowweaccessthewirelessnetworkandmarksashift frompersonalcomputerstomobiledevices.Thischaptergivesanoutlineofmobilecommerceandwill discussaboutthevariousfraudsprevalentontheinternetandonmobilesspecifically,andwaysinwhich itcanbecurbed.Thepurposeofthischapterwillbetomakereadersawareofthedifferenttypesof fraudulentactivitiesthatcanoccurduetom-commercetransactionsandtheirpossiblesolutionswillbe elaboratedattheend.Theworkwillbebeneficialforthestudentsaswellasresearcherstoformabasic backgroundaboutm-commerce,variousrisksassociatedwithitandtheirpossiblesolutions. Chapter 5 TheRealityofMobilePaymentSystemsandSocialInclusioninLatinAmerica. .............................. 94 Myriam Martínez-Fiestas, ESAN University, Peru Katia Oviedo-Cáceres, ESAN University, Peru Ignacio Rodriguez-Garzon, Cientifica del Sur University, Peru ThischapterdescribestheroleofmobilepaymentsystemsinLatinAmericaasameansleadingultimately tosocialinclusionandfinancialinclusion.Specifically,thefirstsectionwilldiscussthesocialdisparity inLatinAmericaandtheexistenceoffinancialandsocialexclusion.Thesecondsectionwillanalyze LatinAmerica’smobilepaymentsystems,theregion’scurrentpanoramaofmobilemoney,thegeneral trendsthatcharacterizemoneyandthebusinessmodelsusedformobilemoney.Thethirdsectionwill reviewmobilemoneyasamechanismoffinancialinclusionanditsroleinreducingpovertyinLatin America.Thissectionwillalsoanalyzethebarrierstofinancialinclusion.Thefourthsectionwillfocus ontherisksofmobilepaymentsystemssuchasmoneylaunderingandterrorismfunding.Thechapter willconcludebycomparingthesimilaritiesanddifferencesofmobilepaymentsystemsthatcontribute tosocialinclusionimplementedinBrazil,Colombia,Mexico,ParaguayandArgentina.



Chapter 6 AttractingCustomers’toOnlineShoppingUsingMobileApps:ACaseStudyofIndian Market.. 117 Baljeet Kaur, Delhi University, India Tanya Jain, Delhi University, India ThechapterwilltrytotakeasystematicandholisticapproachtotheM-Commercetrustdiscussing complete issues of trust in E-Commerce from the customer’s perspective. It will mainly focus on understandingtrustandtheelementsofM-CommercetrustprevalentintheIndiansociety.Thestudywill focusonidentifyingthetrustfactorspertainingtoB2CE-Commercewebsites/mobileapplicationsfrom theperspectiveofIndiancustomers.ThechapterwillprimarilydiscussacasestudyofIndianmarketto explainwhattrustfactorsinfluencetheconsumerstobuyonline.Thepresentcasestudyisanin-depth examinationofthecustomers’situationintheirdailypracticeofonlineshopping.Ithighlightsseveral valuablelessonsconcerningtheevaluationofB2CE-Commerceinvestmentandwaysofenhancing thecustomers’trustinthee-vendor,therebyincreasingthee-vendors’salesalongwiththeeaseofthe customers.Thestudyisbasedontheresponsescollatedfrompersonalinterviews,questionnairesand experts’judgements. Chapter 7 MobileCommerceSecurityandItsPrevention. ................................................................................ 141 Mona Adlakha, University of Delhi, India Mobilecommerceisthenextgenerationofe-commerce,wherepaymentsandfinancialtransactionscanbe carriedoutwithutmosteaseusinghandheldmobiledevices.Mobiledevicesareatahighersecurityrisk duetothelargeamountofcriticalfinancialandpersonaldataavailableonit.Thecauseorconsequence ofthesethreatscouldbe-malwareandspywareattacks;multipleorincorrectm-Commercepayments; breachesduetounauthorizedaccessordisclosure,unauthenticatedtransactionsandriskduetotheuse ofthirdpartynetworks.Thischapterdiscusseshowtomanagesecurityrisksinm-commercebyfirst identifyingthemandthendiscussingpreventivemeasuresfortheirmitigation.Acontinuousapproachfor riskpreventionneedstobefollowed,reviewingthestrategyaccordingtothelatestchallenges.Various riskpreventionandmitigationstrategiescanbeadopted.Serviceprovidersmustfollowphysicaland digitalsecuritymeasurestoprotectconsumer’sbusinessinformation.Independentauditingshouldensure compliancewithbestpracticesecuritystandards. Chapter 8 MobilePaymentsforConductingM-Commerce. .............................................................................. 158 Rupali Ahuja, University of Delhi, India Mobile commerce or M-commerce facilitates users to conduct commercial activities using mobile equipmentlikeSmartphone,tabletetc.M-commercehascomealongwaysinceitsinceptionin1997. Withadoptionof4Gnetworks,itisbelievedthatM-CommercewilloutpaceE-commercesoonbecause ofitshighspeed,convenience,flexibilityandmobilityfeatures.Mobilepaymentisanintegralcomponent of M-commerce. Any transaction on mobile devices involving monetary value has to go through a paymentmechanism.WithincreasedinterestofusersinM-Commerce,themechanismsavailablefor mobilepaymentsarebecomingmoreprevalentandarecontinuouslyevolving.Thischapterdescribes stakeholdersofthemobilepaymentecosystem,mobilepaymenttechnologies,paymentcarriers,payment gateways and issues involved with them. We also discuss the popular payment options available in M-commercemarketspacetoday.



Chapter 9 RegulatoryFrameworkofMobileCommerce. .................................................................................. 176 Jyoti Batra Arora, Banasthali Vidyapeeth University, India Mobilecommercehasgivenanewdefinitiontowirelesspaymentmethods.Itisnewemergingtechnique whichrequiressecurityatthetoppriority.Usersarenotstillconfidentinusingthistechnology.The properinfrastructureandsupportfromgovernmentisrequiredtodealwithmobilecommercewhich canbeachievedbydevelopingfundamentalregulatoryframework.Regulatoryframeworkdescribedthe technologicalandlegalregulationstoensurethesecurityintransactioninmobilecommerce.Ithelpsto dealwithsecurityrelatedproblem,financialissuesandotherlegalissuesthatcauseahurdleinmaking mobilepayment.Aclearlydefinedregulatoryframeworkisalsorequiredtoenhancethecustomers’ confidenceandincreaseacceptanceofmobilepaymentintheirdailylife.Thecooperationandinformation sharingbetweentelecommunicationregulator,mobileserviceprovider,andmobileoperatorandbanking regulatorisrequiredtomakeasuccessfulandefficientworkingregulatoryframework. Chapter 10 AnalysingArchitectureandTransactionModelinSecuringMobileCommerce. ............................. 193 Poonam Ahuja Narang, Guru Tegh Bahadur Institute of Technology, India Basanti Pal Nandi, Guru Tegh Bahadur Institute of Technology, India Mobile communication is becoming one of the most popular and high growth area in recent times, creditforthisrapidgrowthgoestonewresearchandinventionsinallareasofmobileandwireless technology.Useof3Gisgrowingrapidly;ontheotherhand,4Gleadthewayfornextgenerationof mobilecommunication.ThischapterdescribestheMobileArchitectureLayersandflowoftransactions andshowscomparisonbetweenExistingTransactionmodels.ThreatsandRisksassociatedwithmobile transactionsareprimaryconcernalongwiththesecuritytechniquesonvariouspaymentmodes.Database securityisalsoapartofthediscussionofthischapter. Chapter 11 ConsumerPerceptiontoMobileCommerce. ..................................................................................... 217 Neeru Kapoor, Delhi University, India Consumers’perceptionandopinionaboutmobilecommerceactivitiesplayaveryimportantroleintheir success.Industrypeopleshouldunderstandconsumers’worries,fearsandphobiasSlowconnections, privacyandthreatofgovernmentregulationhasplayedanimportantroleinlimitingthegrowthofmobile commerce.Lackofinformationaboutmobilecommerceisalsooneofthebiggestproblemsbeingfaced bytheindustrypeople.Moreover,mostconsumersarenottotallyconvincedaboutbuyingsomething fromtheirmobiledevicesastheydonotconsideritasatisfactoryexperience.Stickingtothetraditional waysofshoppingisanothermajorfactorintheslowgrowthofmobilecommerce.Mobilecustomers have raised expectations in terms of service, convenience, speed of delivery. The difficult tasks for m-commerceistoensureconsumers’trustbymakingthemfeelcomfortablewithwirelesstransactions. Itisimportanttofindsolutionstotheirconsumerproblemsandservethembetterthanthecompetitors andprovidethemwithrelevantincentivestokeepthemcomingbackagain.



Chapter 12 ExploringBarriersAffectingtheAcceptanceofMobileCommerce. ............................................... 234 Priyanka Gupta, Delhi University, India Withthecontinuousincreaseinnumbersofusersofmobiledevices,theadoptionofM-commerceisstill farfromreachingitsfullpotential.Therearevariousbarriersthathindertheproliferationofm-commerce such as mobile devices inefficiency, lack of consumer’s trust, incompatible networks, poor network coverage,limitedbandwidth,lowspeed,lackofsecurity&privacy,highcostofhandsetsandcostof establishingthenecessarywirelessinfrastructureandlackofawareness.Perceivedusefulness,perceived ease of use and gender differences were other influential factors in m-commerce. Recently, Mobile Payment(m-payment)isapromisingandexcitingdomainthathasbeenrapidlydeveloping.However, Consumeradoptionofmobilepayment(m-payment)solutionsislowcomparedtotheacceptanceof traditionalformsofpayments.Thechapterdiscussestheseabovem-commerce’sbarriersindetails. Chapter 13 ServicesofMobileCommerce. ......................................................................................................... 251 Mukta Sharma, Teerthanker Mahaveer University, India MobilephoneshavebeencoinedbyMartinCooperwithathoughtofstayingconnectedanytimeanywhere. Withthedevelopmentofmobilephonesin1973anditscommercializationlater;hasproliferatednot onlythebigbusinesshousesbutalsosmallbusinessesandindividuals.Mobilephoneshavecomealong wayfromtalkingonamobilephone,textingamessagetoefficientlyusinginternet.Thesedaysmobile commerceistheboomingtechnologywhichhasenhancedindustriesvisibilityandthewayofconducting business.ThecustomersaregettingbenefitedbyusingtheseAppstheycanshopanytime,anywhere; theygetgooddiscounts,companiesareofferinggoodreturnpoliciesforbetterCRMandaboveallthe customershaveaprovisiontocomparethecostbeforeorderingandcanpayCOD.Thestudywillfocus ontheconceptofmobilephone,mobilecommerce,characteristicsofM-Commerce,Driversaffecting themobilecommerce,variousservicesofferedonmobile.Thechapterfocusesonpotentialofmobile commerce,howthecustomerisbenefitedfromtheseservices. Chapter 14 SecurityRisksofMobileCommerce. ................................................................................................ 275 Ashish Kumar, Bharati Vidyapeeth College of Engineering, India Rachna Jain, Bharati Vidyapeeth College of Engineering, India Sushila Madan, Delhi University, India Mobilecommerce(m-commerce)isevolvingasanalternativetoE-commerceservices.M-commerce isatypeofe-commercewhichemphasesontheuseofservicesonhandhelddevices.Itisbecoming verypopularamongusersbecauseofeaseofconnectivityanditsusage.Withincreaseinthedemand,it becomesessentialtoprovidesecuritytotheservicesusedonmobile.Theuserisusingthemobiledevices tomaketheirsecurepaymentsandtransactions.Itbecomesessentialtoincreasesecuritylayersinthe m-commercetoprovideprivacytotheuser.Thesecurityrisksinm-commerceareincreasingexponentially. Thischapterinvestigatesthesecuritybreachesandthesolutionsassociatedwiththem-commerce.Italso focusesonthenetworkservicesandproblemrelatedwithdeviceanduserauthentication.Manyalgorithms areproposedtomakethedeviceandthetransactionsafe.Itiscompulsorytomakem-paymentmethod verysafeandsecure,sothatusercantrustm-commercetousetheirsensitivepersonalinformation.



Chapter 15 PresentandFutureofMobileCommerce:Introduction,ComparativeAnalysisofMCommerce andECommerce,Advantages,PresentandFuture............................................................................ 293 Barkha Narang, Jagannath International Management School, India Jyoti Arora, Banasthali Vidyapeeth University, India MobileCommerceisatermtodescribeanycommercialactivityonamobiledevice,suchasamobile phone(iPhone,Android,Blackberry)oratablet(iPad,GalaxyTab,Surface).Thisincludesallstepsof thecustomerjourney;reach,attract,choose,convertandretain.Hencemobilecommerceisprobably bestdescribedasshoppingthattakesadvantageofuniquepropertiesofmobiledevices.Itisalsocalled asm-commerce.Pervasivecomputingaimsatavailabilityandinvisibility.Ontheonehand,pervasive computingcanbedefinedasavailabilityofsoftwareapplicationsandinformationanywhereandanytime. Ontheotherhand,pervasivecomputingalsomeansthatcomputersarehiddeninnumerousso-called information appliances that we use in our day-to-day lives Characteristics of pervasive computing applicationshavebeenidentifiedasinteractiontransparency,contextawareness,andautomatedcapture ofexperiences. Compilation of References............................................................................................................... 309 About the Contributors.................................................................................................................... 343 Index................................................................................................................................................... 347

xv

Foreword

Mobilecommerce(m-commerce)isuseofhandhelddevicetosaleandbuyanyproductorservice.Mcommerceisnotabouttechnologybutaboutthebehaviortoo.Themainobjectiveofm-commerceisto providesecuretransactionandimprovethetrustofconsumerandbusinessperson.Itbecomesacomplex fieldthatrevolvearoundthesecurityoftransactionandpaymentthroughmobiledevices,networkand databasemanagement,enhancingthetrustandperceptionofconsumerandlastlyemergenceofmobile technologyintobusinessprocess. Mobilephonehasbecomepartofeveryone’slifebeastudent,aprofessionalorahousewife.Most ofthepeoplestoretheirpersonal,financialandotherofficialdetailonthissmalldevice.Peopleare becomingdependentonmobiledeviceforeveryworkbeingshopping,readingorplaying.Shopping hasgivenanewdefinitiontomobileworld.Peoplecanbuyanyproductorservicefromanywhereand byanywhere.Securityisoneofthemajorconcernswhilemakinganytransactionusingmobiledevices. Assuranceofsecuremobiletransactionisverymuchrequiredbycustomer,vendorandotherstakeholder. Weneedtobeawareofdifferentattacksontechnologyorphysicaldimensions,attacksonsoftwareand preventionandsolutionofthesevaryattacks.Wealsoneedtoknowabouttheregulationsofnations whilemakingtransactionamongdifferentnations. Thisbookprovidesavaluablewindowonsecuringthepaymentandtransactiononmobiledevices andcoversthetechnicalandnontechnicalsecurityissuesandrisks.Systemfraud,fraudwithmobile devicesandnetwork,attacksoncellularnetworkweakenthesecuretransactionmechanism.Authenticationprotocolscontroltheattackonnetwork,similarly2Dbarcode,BiometricandAESmodelcontrol theattackonpaymentmethod.WAP,SMS,J2MEareworkingasemergingtechnologytomakesecure paymentmodel.InordertodevelopanymodelweneedtoconsiderSWOTanalysisofmobilepayment fromconsumerandbusinessperspective.Themainobjectiveofthisbookisnotonlytoeliminatethe risk,buttoprovidethepolicyandmethodologybywhichriskscouldbemanaged. Themobilepaymentmethodisemergingintoeverybusinesssectorandeveryoneprefersmobilemode ofpayment.Ithasmajorconcernofconsumer’sperceptionanditstrustonthisnewtechnology.Mobile paymentisininfantstagesothetechnologicalaspectindevelopinganddevelopednationsaredifferent. Itisrequiredtohaveasameregulatoryframeworkfordifferentnationsaswehavefore-commerce. Asthemobiletechnologyisdevelopingveryfastsoitisverymuchrequiredtomakechangesintothe frameworkonregularbasis.



Foreword

Thechallengesinmakingsecuremobilepaymentaredifficultandinteresting.Peopleareworking withgreatenthusiasmanddedicationtodevelopnewmethodsinformofprotocolandalgorithmof analysisandprovidenewsolutionstokeepthetransactionsafeandsecure.Itisnecessarytoprovide securitypractitioners,bothprofessionalsandstudents,withstate-of-theartknowledgeonthemobile paymentsecurity.Thisbookisagoodstepinthatdirection. Jyoti Batra Arora Banasthali Vidyapeeth University, India Sushila Madan University of Delhi, India

xvi

xvii

Preface

Wewrotethisbookforpeoplewhowantedanindepthlookathownewemergingareaofmobiletechnologyhaschangedtherelationshipofbusinessorganizationsandconsumers.Mobiletechnologyisoneof themajortoolsavailabletoeveryoneforachievingoperationalexcellence,smartwayofbuyingproducts andservices,achievingcompetitivesuccessandimprovingdecisionofmakingpaymentusingmobile. Whiletalkingaboutmobiletechnologyeveryoneoftenlooksfordifferentmobiledevicesandits services.Mobilecommerceisalsotheserviceofmobiletechnology.Thesecurityisthemajorconcern withmobilecommercewhilemakinganytransaction.Regardlessofwhetheryouareintelecommunication,management,internetserviceprovider,mobiledevicedeveloper,softwaredevelopment,hacking andinsecuritydevelopmenttechnologyyouwillfindthisbookwillbevaluablethroughoutyourcareer development. Wehavemadeeveryefforttoensuretheauthenticityandauthorityofdifferentcasesanddataused throughthistext.Youwillfindinthisbookthatissuesrelatedtosecurityandriskwithmobiletransaction arelatestandhave2015sources.Theresearchliteratureaswellasprofessionaldetailandpublication formanimportantfoundationofourwork.

WHAT IS NEW IN MOBILE COMMERCE? Alot.Infactthereiswholeworlddoingbusinessusingmobiletechnologiesformanagingandorganizing businessoperationswhichmakesthemobilecommerceasthemostexcitingareaofstudyinschools, collegesandinprofessionalbodies.Acontinuousstreamofmobilecommerceinnovationsistransformingthetrendoftraditionalbusinessworld.Examplesincludestheemergenceofmobiletechnologyin businesswhatwesayismobilecommerce,thegrowthofdifferentpaymentmodetomaketransaction withmobiledevices,andnotleasttheuseofmobilecommerceinsatisfyingourdailyneedofservices andproducts.Mostofthesechangeshaveoccurredinlastfewyears.Theseinnovationsenabledthe businessentrepreneursandorganizationstodevelopnewandsecuremobilecommercebusinessmodel andtransformthedaytodayconductofbusiness.Inthisprocesssomeoldbusinesspracticesarebeing destroyedandnewbusinessesarespringingup. Forinstance,theonlineticketbookingforPVR,railwayorairlineshaschangedtheolderbusiness modelofgettingticketbookedbytheagentorbystandinginqueue.Similarlyonlinemoneytransaction todifferentbankaccounts,makingapaymenttoanyshowroomorbuyinganyproductlikegrocery, personalorhomedécorandmakingthepaymentonlinewithoutgoingtothephysicalstoreshasgiven anewdefinitiontomobilecommerce. 

Preface

Mobilecommerceisexpectedtoaccountfor2.5timesasmuchrevenueastherestoftheappeconomyputtogetherin2015.Mobilecommerceisnewversionofe-commerce.Whilethisiconicversion ofe-commercei.em-commerceisverypowerfulandfastestgrowingformofretailinmanycountries includingdevelopingcountriesalso,growingupalongsideiswholenewvaluestreambasedonselling servicesandgoods.It’saservicemodelofe-commerce App developers prioritizing the Mobile Browser (16%) have significantly higher adoption of ecommercethaniOS(11%)andAndroid(11%).Thisisexplainedbytheeaseofportinganexistingweb e-commerceapptomobileandleveragingthepopularityofexistinge-commerceapps. Whilecommercemaybethefutureofmobile,generally,it’sincreasinglythepresentforIndiaand otherdevelopingeconomies.Voskoglou(2015)saidthat,inIndiamobilecommerceskyrocketedfrom 10%to50%ofonlinetransactionsduringthelast12monthsandshouldtop70%in2015.That’sblisteringlyfastgrowth.Butit’salsoparforthemobilecourseinIndia,whichhasseencompanieslikeretailer Flipkart—India’sAmazon.com—andMyntra(nowownedbyFlipkart)dumptheWebentirelyformobile apps.ThereasonforthistorridmobilecommercegrowthinIndiaandthroughoutemergingeconomies everywhereisnecessity.Mostoftheworldcan’taffordalaptop.Eveniftheycan,theircountriesoften lackthecommunicationsinfrastructuretoreliablyaccesstheInternetwithit.Itcanbeseenindetail inchapterconsumerperceptiontomobilecommerceinthisbook.Ericssonestimatedthat90%ofthe world’spopulationovertheageof6willownaphoneby2020.Itthereforemakessensetoconstruct commercearoundmobiledevices.

THE CHALLENGES M-Commerceisconvergenceofmobiletelecom(includingnetworkandreceivingdevices),computingpower,internettechnologies&applicationsandcontentprovision(Lehner&Watson,2001;Mylonopoulos&Doukidis,2003)andrefersto,“anytransactionwithmonetaryvaluethatisconducted viaamobilenetwork”(Clarke,2001).Thetransactionusingmobiledeviceincludesinternetservice provider,customer,merchantandbanksthatarepartofthistransactionholdingtheirbankaccounts.So istheriskinvolvedatdifferentstepstomakeasecuretransactionwithmobiledevices.Securityinthe caseofmobilecommercehasmoresignificantimportancethanatraditionale-commerceasitisease toeavesdropintoother’smessagewithminimumdifficultyinmobileenvironment(Gururajan,2006). Thesecurityriskiscategorizedintodirectandindirectrisks.Theindirectriskornontechnicalrisk involvestrust,confidentiality,regulatory,personalinformationandgovernmentconcern.Theregulatory andgovernmentconcerncanbeseenindetailinthechapterregulatoryframeworkinthisbook.Ittalks aboutthedifferentregulationandgovernmentprotocolsimposedonnationwhilemakingmobiletransaction.MemoryprotectionisveryimportantasmostofPDAdevicesdonotprovidememoryprotection tomobileapplications(Ghosh,2002).Makingsecuretransactioninmobilecommerceisthebiggest challengesothestudyrevolvesaroundthetwophases;thefirstphaseistoidentifyvarioussecurityrisks involvedinmobiletransaction.Italsoincludesthefraudulentactivitiesoccurredinmobilecommerce, technicalandnontechnicalrisks,theftorlossofmobilephoneandlimitationattheendofgovernment, geographicalfactoretc.Thesecondphaseincludesthesolutionofvarioussecurityriskanddeveloping themodelandprotocoltomakesecuretransactioninmobilecommerce.

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Themainchallengeinmakingsecuretransactioninmobilecommerceincludesdataandinformation security.Softwareflawslikelogicofprogramanditsimplementationandusageoflowlevellanguage fordevelopmentofapplicationformobiledeviceistheoneofbiggestchallengeinmakingsecurityin mobilecommerceStuartandBawany(2001)hasdescribedafewofsuchsoftwareflaws. Mobiledevicesespeciallymobilephonesaresmallerinsizewhichraisesthechallengesinsecurity likelimitedpowerbandwidthandprocessingcyclesmayimposesecurityandperformancetradeoff. ManyadvancedlanguagelikeJavaisnotafirstchoiceofvendorformobileprogrammingbecauseof timeandcostconstraintwhichbecomesachallengeinsoftwaresecurityinmobilecommerce. It’s not only hardware and security risk as the challenge in making secure transaction in mobile commercebutsome-timescountryNationalITinfrastructure,EducationandAwarenessofcitizenhas importantroletoplayasthechallengeinbreakingthesecurityofmobilecommerce.Themajorissues relatedtouseofinfrastructureareskillsavailabilityofradiofrequency,technologyandservicecost.A minimumstandardavailabilitycanhinderdevelopment(Ross,2000). Inconclusionfourmaingroupscanbeestablishedwhichcausesthechallengesinmakingsecure transactioninmobilecommerce:firstgroupincludestechnicalsecurityriskwhichiscomprisesofdata andinformationsecurity,platformsecurityandsoftwaresecurity.Thesecondgroupisphysicalcomponentsofmobiledeviceswhichsupportsvariousworkflowrequirements.Thethirdgroupincludesnon technicalorindirectsecurityriskwhichcanbeprivacy,integrity,regulatory,accesstoinfrastructureand governmentregulations.Thefourthgroupmakesthechallengeinrealtimemeasurementandcontrolof securityandservicelevelsinrealtime.Thefirstthreegroupprovideessentialcomponentsofapplicationarchitecturewhereasfourthgroupprovidesthecontrolandmaintenancecomponentsofapplication architecture.Thisrealtimecontrolisessentialbecauseofthedifficultyindescribingcompletesecurity architectureisensuresecurityoftransactions.

THE SOLUTION M-Commercehasmanyadvantagesassociatedwithitsuchasreducedtransactioncosts,wideraccess onbothsupplyanddemandside,improvedqualityoflifethroughincreasedsecurityandautonomy, widerchoicesofentertainment,communication,shoppingwhileonmove,locationbasedservices,ease andconvenienceofuseandsoon.M-Commerceisexpectedtoplayanimportantroleineconomic and social development of a country (Krishnamurthy, 2001). Growth in M-Commerce brings down transactioncostsbesidesincreasingthereachandscopeofbusiness.ThisleadstoenhancedproductivityofrelatedindustryverticalsandinturnGrossDomesticProduct(GDP)ofanation.Usingglobal telecommunicationspaneldatafrom56countries,adynamicdemandmodelwasestimatedformobile telephony(Maddenetal.2004). Solutiontothesechallengesforsecuringtransactioninthismobileeraisacomplextask.ThesolutiontodataandinformationisobtainedbydevelopingnewtechniquesforWAP,J2MEandUSSD.Lei etal.(2004)poisedWAPgatewayactsasaninterpreterbetweenthemobiledeviceandawebserver todecodeandencodetheinformation,sothattheserverandthemobiledevicecancommunicatewith eachother.J2MEhasbuiltinconsistencyacrossproductsintermsofrunninganywhere,anytimeand overanydevice.

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BaldiandThaung’s(2002)describedi-modeanditsimpactassecuritymeasureinM-Commerceand alsoexplaineditsadoptionprocessfromculturalprospective.Okazaki(2004)conductedanempirical studyofpull-typeadvertisingplatformoni-modewhichwasbasedonusersandgratificationstheoryof Dacoffe’s(1996).Differentsecuritymodelsarerequiredtocontrolthechallengesraisedbysoftwareand platformsecurityrisks.Mouradetal.(2006)describedJ2MECLDCsecuritymodelwhichisdesigned thesetofattackscenarioandexecutethem. Thesolutionforsoftwareflawcanbemadebyusingalgorithms.Thealgorithmisrequiredtobe basedontablelookup,andimplementswhiteboxcryptographywhichwouldbemorestraightforward thanwithblockcipher,suchasDESorAES.HueYe(2010)proposedsafeandeffectivearchitectureof M-CommercebyusingJ2EEtechnologyontheserversidewithJ2MEtechnologyonthemobileclient basedonthreetiers.Thisstudyinvolvesasymmetriccryptographytosendthemessages. IfthereisanysecurityissuesthatdisturbtheM-Commercewillactuallyaffectthecustomerand organization. Therefore the solution to non-technical security risk is also an important requirement tosecuretransactioninmobilecommerce.Thesolutiontoadoptmobilecommerceandenhancesthe emergenceofmobilecommerceisverymuchrequiredingrowthandimplementationofthistechnology inourdailylife. M-CommercegrowthiseducatingsubscribersontheaddedvalueinconsumingM-Commerceservices whichinturnwillleadtomassmobileadoptions(Wong&Hiew,2005).Anotherimportantfacilitatorfor mobilecommerceisthepresenceofproperlyfunctioningpaymentsystemsthatreducetransactioncosts intheeconomyandpromotetheefficientuseoffinancialresources(BankforInternationalSettlement, 2003).VariousmodelsforpaymentsinM-domainareavailable(Salvi&Sahai,2002;Krueger,2001) buttheappropriatepaymentmechanismswouldbeinfluencedbycustomerandmerchantacceptance (Heijden,2002). Asolutiontolossandtheftofmobiledeviceisverymuchnecessaryasthissmalldevicecontainsa lotofpersonalinformation.Atheftdevicecanbeclonedandhelporetrieveinformation.AdetailsolutionisprovidebyGor(2013)describingaboutmobilephonecloningandpreventivemethodstomake themobilephonesecuresothatifitislosttherewouldnomisuseofdatastoredonit. Trustandconfidentialityofcustomerplaysanimportantroletomakeasuccessofmobilecommerce. Trustofcustomerandtheirperceptionforpurchasingandmakingpaymentthroughmobiledevicehas beenwelldocumented(RefertostudyconductedbyLinetal.,2010,Monno&Xiao,2014).Themajor catchinmobilecommerceresearchistheunknownofthefuturemobilebehaviorofconsumer.The consumerwilldriveeverythingthathappensatanykindofmassscaleinmobilecommerce. Besidesfocusingontechnicalandnontechnicalissuerelatedtosecurityriskandestablishingnew securitysolutionbytheuseofprogramminglanguageoralgorithm,itisalsoimportanttodevelopand implementthenewpoliciesandregulationstoenhancetheawarenessofpeople.Appropriatepolicy frameworksandregulatorymechanismsarenecessaryfordevelopmentandemergenceofm-commerce. Policiesrelatedtoanindustryareframedbythegovernmenttosteertheindustrygrowthindesired directionwithanaimtobenefitthestateanditscitizens.Regulationisawaytomodifybehaviorof individuals,organizationsandbusinessestoworkinadesiredway,whichisintheinterestofsociety. Thetechnologieswillcontinuetocomeandgoandit’stheuserthatwilldecidewhenandwhereeach onehitsmassscale. Afewsolutionstomobilebankingandmobilepaymentindifferentareaareimplementedindifferentnations.MONETAserviceinKoreaallowsconsumerstomakemobilepaymentsbyinsertingtheir MONETAchipintotheirmobilephones.Itservesasacreditcard,amembershipcard,aticketanda xx

Preface

discountcoupon.InJapan,withcooperationfromJCB,acreditcardcompany,AubyKDDI,amobile carrier,isgoingtopre-installsoftwareintheICchipsinmostoftheirmobiledevicessothattheycan beusedasacreditcard.NTTDoCoMostartedanewservice,calledi-modeFelica,inJuly2004.In Finland,mobilebasedbankingserviceshavebeenavailablesince1996.InBelgium,Banksys,acredit card company, in conjunction with three major mobile carriers, started its mobile banking service throughSIMcardsin2006.Mobister,thesecondlargestmobilecarrierinBelgium,hasalreadyputthe applicationsoftwareonallofitsnewSIMcards(Banksys,2005,p.18).IntheUnitedStates,avirtual paymentsolutioncompany,Vesta,hasstartedaSIM-basedmobilepaymentschemeforprepaidmobile phonessubscriberswithAxalto,asmartcardcompany.InFinland,consumerscanbuyproductsfrom 800vendingmachinesbycallingapremiumratenumber.Inaninternationalcontext,Jorudan,aJapanesemobileserviceprovider,launchedinDecember2003servicestoprovideJapanesetouristsabroad withtransportmaps,metrotransferinformation,andinformationontouristsitesinNewYork,Parisand London(pressreleasesof14November2003and7February2005). Achallengehoweverexiststoimplementmobiletechnologyindifferentbusinesssectorsandmake securepaymentandtransactionusingmobiledevices.

ORGANIZATION OF BOOK Thisbookisorganizedinto15chapters.Thebriefdescriptionofeachchapterfollows: Chapter1presentstheroleofmobilecommerceandmobilepaymentinglobalbusiness.Thischapter identifiestheimportanceofmobilecommerceandmobilepaymentinglobalbusiness.Ithasasetof discussionbydifferentauthorstoprovideatheoreticalreviewofmobilecommerce.Theauthoruses mobile commerce and technology acceptance model as a validate theoretical model in study of mcommerceadoption. Chapter2establishestherelationbetweenvariousfactorslikeperceivedusefulness,trust,perceived ease of use, demographics and adoption mobile services. The authors make an empirical study and identifythedegreeofeffectsofrelationshipdrivers.Baseonsurvey,authorssuggestthatdemographics factorscannotbejudgedasanimportantinfluentialfactorinadoptionofmobileservices. Chapter 3 addresses the strength, weakness, opportunities and threats of mobile commerce. The authorcontendsthatinordertomakeanytransactionorimplementmobiletechnologyintheirbusinessonehastohaveindepthknowledgeofstrengthandweaknessofmobilecommercefromconsumer perspectiveandbusinessperspective.Thischapteralsogivesaninfluentialimpactofthreatsinglobal businessenvironment. Chapter4addressthedifferentfraudulentactivitiesthatcanbemadewhileperformingwithmobile commerce.Theauthorsclassifythefraudsintechnologicalandnontechnologicalfraudswithabrief descriptionofmobilecommercearchitecture.Theauthorcontendsthatinordertomanagethetechnologicalrelatedfraudsoneneedstoconsidersolutionsinwidercontextandtakerelativemeasureforthe existingfraudandtheupcomingfraud. Chapter5reviewstherealityofmobilepaymentsysteminLatinAmerica.Theauthorcomparesthe mobilepaymentsysteminworldwithLatinAmerica.Thischapterdescribesthesocialinclusionand exclusionwithreferencetomobilepaymentsystem.Theauthorcomparesthedifferentmobilepayment systemandserviceprovideramongdifferentnationsofLatinAmericawithprosandconsofeachmethod.

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Chapter6presentsacasestudyofattractionofcustomerstoonlineshoppingusingmobileapps. Authorshasdescribedtheattractionbycomparingthreeleadingappofshopping.Thiscasestudyisof Indianconsumersandexaminestheorganizationaltrustfactor,apptrustfactorandpaymentrelatedissues. Chapter7reviewsthesecurityrisksmanagementanditspreventioninmobilecommerce.Theauthor examinesdeviceandapplicationrisksandtheirimpactonmobilecommerce.Thischapteralsohasdifferentpreventivemeasuresandprotocolsforsecuretransactioninmobilecommerce.Theoverallaim ofthischapteristoconsidersecurityriskspertainingtotransactionandpaymentinmobilecommerce andprovidingpreventivemethodstomakesecurepayment\ Chapter8takesthedifferentpaymentmethodsusedinmobiletransaction.Theauthordescribesthe onlinepaymentmethodswithabriefofstakeholderinvolvedinit,andlegal,technicalandoperational issuesrelatedtomobilepayment. Chapter9presentstheframeworkofmobilepayment.Theauthorcomparestheregulationandprotocols ofdifferentcountriestomakemobiletransactionwithinandoutsidetheirnation.Theauthorcontends thatinordertomakeasuccessfuluseandemergenceofmobilecommerceinbusinessprocess,thenationhastomaintainaregulatoryframeworktoresolvealltechnicalandlegalissuesofbusinessprocess. Chapter10presentsananalysisofarchitecturelayersofmobiledevicesandflowoftransaction.The authordescribesthedifferentmobiletransactionmodelsandmodeofpaymentswiththreatsandrisks involvedinmobilepaymentsystem.Thischapterdescribestheissuesinmobiledatabasetransactions ascomparedtoconventionalACIDtransactionsandsecurityissuesinmobiledatabase. Chapter11describesconsumers’perceptiontomobilecommerceandreasonsforthefastgrowth ofmobilecommerce.Theauthorsystematicallyreviewstheproblemsfacedbyconsumersinmobile commercebymakingacomparisonwithe-commerceandpresentsthe7c’sframeworktochangeand improvetheperceptionofconsumertowardsmobilecommerce. Chapter12reviewsthebarriersorhurdles that come in the way of mobile payment. The author describesthegeographical,demographical,technical,legalandotherbarrierswhichcauseahurdlein securemobiletransaction. Chapter13discussesthedifferentservicesofmobilecommerce.Theauthordescribestheservicesof mobilecommerceindifferentbusinessareasalongwithadvantagesofmobilecommerce.Thischapter reviewsthedriversofmobilecommerceintermsoflocalization,functionalityandbandwidth. Chapter14reviewstherisksinvolvedinsecurityofmobilepayment.Thischapterdescribesthesecurityriskssuchasdevice,transactionalandtechnologicalrisksandalsoprovidesecuritysolutionlike encryption,WPKI,AmalgumalgorithmandRandomLSBSteganography. Chapter15reviewsthepresentpositionofmobilecommerceindevelopedanddevelopingcountries. Theauthorpresentsthefuturisticviewofmobilecommerceindifferentapplicationandamongdifferent countries.Theauthorcontendsthatinordertomakegooduseofmobilecommerce,itshouldbeused ineffectiveandefficientlyineveryservicesector. Jyoti Batra Arora Banasthali Vidyapeeth University, India Sushila Madan University of Delhi, India

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REFERENCES Baldi,S.,&Thaung,P.P.(2002).TheentertainingwaytoM-commerce:Japan’sapproachtothemobile Internet–AmodelforEurope.Electronic Markets,12(1),6–13.doi:10.1080/101967802753433218 Heijden,H.(2002).FactorsAffectingtheSuccessfulIntroductionofMobilePaymentSystems.International Journal of Business and Management,7(23).Retrievedfromhttp://www.bledconference.org/ proceedings.nsf/Proceedings/F307589C02242840C1256E9F003528BD/$File/heijden.pdf Hua.(2010).Design and Implementation of M-Commerce System Applied to 3G Networks Platform Based on J2ME.PaperpresentedattheInternationalConferenceonElectricalandControlEngineering. InternetAssociationJapan(IAJ).(2003).Children, Mobile Phones and the Internet: The Mobile Internet and Children.PaperpresentedattheExpertsMeeting,Tokyo,Japan. Jiabao,B.(2014).Understandingtheevolutionofconsumertrustinmobilecommerce:Alongitudinal study.Information Technology Management,15(1),37–49.doi:10.1007/s10799-013-0172-y Kroda,T.,&Wihofiezki,O.(2004).MMO2bietethandyPortalI-MODE.Financial Times Deutschland, 235. Krueger,M.(2001).The future of M-payments: Business options and policy issues.BackgroundPaper 2.Retrievedfromhttp://epso.intrasoft.lu/papers/Backgrnd-2.pdf Lei,P.W.,Chalwin,C.R.,Young,R.C.D.,&Tong,S.H.(2004).Opportunitiesandlimitationsin M-Commerce.InWireless communications and mobile commerce.AcademicPress.doi:10.4018/9781-59140-184-1.ch004 Mosam,G.(2013).What is cellphone clonng everything you need to know.AcademicPress. Paul&Dazhi.(2014).Mobile commerce app adoption: Consumer Behaviour differences between Europe and Asia.(DoctoralThesis).SchoolofEconomics,LundUniversity. Raj,G.(2006).ADiscussiononsecurityRiskinMobileCommerce.e-.Business Review (Federal Reserve Bank of Philadelphia),7(2). Salvi,A.B.,&Sahai,S.(2002).Dial M for Money.Paperpresentedatthe2ndInternationalWorkshop onMobileCommerce,Atlanta,GA.doi:10.1145/570705.570723 Stuart,D.,&Bawany,K.(2001).Wireless Service: United Kingdom(operationalManagementReport No.DPRO-90741).Gartner. Voskoglou,C.(2015,April15).Where to find the next mobile gold mine.Retrievedfromhttp://www. visionmobile.com/blog/2015/04/where-to-find-the-next-mobile-gold-mine/

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Theeditorswouldliketoacknowledgethehelpofallthepeopleinvolvedinwritingthisbookand,more specifically,toallauthorsandreviewersthattookpartinthereviewprocess.Withouttheirsupport,this bookwouldnothavebecomeareality. First,theeditorswouldliketothankeachoneoftheauthorsfortheircontributions.Oursinceregratitude goestothechapter’sauthorswhocontributedtheirtimeandexpertisetothisbook. Second,theeditorswishtoacknowledgethevaluablecontributionsofthereviewersregardingtheimprovementofquality,coherence,andcontentpresentationofchapters.Mostoftheauthorsalsoserved asreferees;wehighlyappreciatetheirdoubletask. Jyoti Batra Arora Banasthali Vidyapeeth University, India Sushila Madan University of Delhi, India

 

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Chapter 1

Investigating the Roles of Mobile Commerce and Mobile Payment in Global Business Kijpokin Kasemsap Suan Sunandha Rajabhat University, Thailand

ABSTRACT This chapter aims to investigate the roles of mobile commerce (m-commerce) and mobile payment (mpayment) in global business, thus revealing the overview of m-commerce; m-commerce and Technology Acceptance Model (TAM); m-commerce and trust; the concept of m-payment; the importance of mcommerce in global business; and the importance of m-payment in global business. The operation of m-commerce and m-payment is needed for modern organizations that seek to serve suppliers and customers, increase business performance, strengthen competitiveness, and achieve continuous success in global business. Therefore, it is required for modern organizations to investigate their m-commerce and m-payment, develop a strategic plan to regularly check their practical advancements, and immediately respond to m-commerce and m-payment needs of customers in modern organizations. The chapter argues that applying m-commerce and m-payment has the potential to enhance business performance and reach strategic goals in global business.

INTRODUCTION The rapid expansion of mobile computing technology has been attributed to the fact that a wide variety of companies are increasingly capitalizing on this new innovative business channel, motivated by its unique characteristics of mobility and broad reach which break the barriers of geography and time (Faqih & Jaradat, 2015). The advancement of wireless technologies means that consumers are increasingly coming into contact with a diverse range of mobile services (Huang, Lin, & Fan, 2015). M-commerce has an important influence on business and society in the future (Chen, Li, Chen, & Xu, 2011). The potential of the Internet has been expanded by a new generation of mobile devices toward gaining the rapid growth of m-commerce (Sumita & Yoshii, 2010). In m-commerce, the electronic payment is the most important component (Yang & Chang, 2012). DOI: 10.4018/978-1-5225-0236-4.ch001

Copyright © 2016, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

 Investigating the Roles of Mobile Commerce and Mobile Payment

M-payment is predicted to be one of the future’s most successful mobile services (Slade, Dwivedi, Piercy, & Williams, 2015). Yang et al. (2012) indicated that m-payment is an essential application of m-commerce. M-payment is set to rapidly grow in the short and medium terms (Kemp, 2013). LiébanaCabanillas et al. (2014) stated that m-payment involves the completion of payments and transactions between two parties using mobile devices in a safe and simple way. Retaining m-payment users and facilitating their continuance usage are crucial for m-payment service providers (Zhou, 2013). M-payment providers should expedite a wide range of services to satisfy the m-payment users’ various needs by extending their m-payment services to the mobile environment (Lu, Yang, Chau, & Cao, 2011).

BACKGROUND As a revolutionary technology, mobile computing technology enables people to access information anytime and anyplace even in the absence of physical network connections (Li, 2005). Schierz et al. (2010) indicated that mobile technology has become increasingly common in today’s everyday life. Advanced mobile communication technologies have facilitated the development of a variety of m-commerce applications, including location-based services, mobile reading services, electronic books, mobile television (mobile TV), and mobile music (Huang et al., 2015). M-commerce has the potential of serving customers in wireless environments for both business and pleasure (Cyr, Head, & Ivanov, 2006). The term m-commerce is closely related to the term electronic commerce (e-commerce), both historically and conceptually (Veijalainen, Terziyan, & Tirri, 2006). M-commerce can be viewed as a subset of ecommerce (Kwon & Sadeh, 2004). As mobile phone technology becomes more sophisticated, new forms of payment have since emerged within the m-payment theme (Tan, Ooi, Chong, & Hew, 2014). As m-commerce continues to gain popularity, m-payment plays an important role to facilitate transactions between consumers and merchants (Ondrus & Pigneur, 2007). M-payment is recognized as a range of m-commerce services that entail the confirmed payment transactions by means of mobile phone (Weber & Darbellay, 2010) and a solution utilizing mobile devices to make transactions (Gerpott & Kornmeier, 2009). M-payment has the potential to become one of the most important services in the future mobile networks (Mallat, Rossi, & Tuunainen, 2004). The innovation within m-payment has grown over the last decade with the introduction of payment methods, such as wireless application protocol (WAP), unstructured supplementary service data (USSD), and short messaging services (SMS) (Tan et al., 2014).

INVESTIGATING THE ROLES OF MOBILE COMMERCE AND MOBILE PAYMENT IN GLOBAL BUSINESS This section reveals the overview of m-commerce; m-commerce and TAM; m-commerce and trust; the concept of m-payment; the importance of m-commerce in global business; and the importance of m-payment in global business.

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 Investigating the Roles of Mobile Commerce and Mobile Payment

Overview of Mobile Commerce Mobile commerce (m-commerce) is an emerging discipline involving the use of mobile computing technologies (Faqih & Jaradat, 2015). M-commerce refers to any shopping activities with a monetary value that is conducted via a mobile device (Clarke, 2001). M-payment is a natural evolution of electronic payment, and enables feasible and convenient m-commerce transactions (Mallat, 2007). M-commerce involves the sale of goods, services, and contents via wireless devices, without time and space limitations (Au & Kauffman, 2008). Below is the theoretical review concerning m-commerce shown in Table 1. Table 1. Theoretical review for mobile commerce Author/Authors

Findings/Suggestions

1

Triandis (1995)

The reported impact of individualism-collectivism values on individuals’ adoption behavior emerge in the literature because of its large influence on the consumers’ social behavior.

2

Helal et al. (1999)

The main driving force for the rapid acceptance of small mobile devices is the ability to get services and run applications anytime and anyplace.

3

Keen and Mackintosh (2001)

The demand side of m-commerce is a search for value so that there is a need to build an understanding of the special features of wireless electronic channels that are value-adding from the consumer’s point of view.

4

Teo (2001)

The demographic variables have a significant influence on the Internet usage activities of users.

5

Varshney and Vetter (2002)

M-commerce allows transactions to be conducted through mobile devices.

6

Barnes (2002)

M-commerce is an important area for research because of its relative novelty, rapid growth, and potential applications.

7

Pedersen, Methlie, and Thorbjornsen (2002)

Network designers, service providers, vendors, and application developers must carefully take the consideration of various users into account to provide improved services and attract them to m-commerce.

8

Bruner and Kumar (2005)

The adoption of m-commerce is dependent on consumer acceptance of new technologies.

9

Clarke and Flaherty (2003)

Four characteristics of m-commerce include ubiquity, convenience, localization, and personalization.

10

Rao and Minakakis (2003)

Positioning technology, such as the global positioning system (GPS), provides localization services for mobile devices.

11

Wu and Hisa (2004)

The hypercube innovation model explores the characteristics of m-commerce with focus on three perspectives (i.e., changes in business models, changes in core components, and stakeholders).

12

Feng, Hoegler, and Stucky (2006)

M-commerce is more than an extension of e-commerce due to its differences in interaction styles, usage patterns, and value chain.

13

Ondrus and Pigneur (2006)

As m-commerce increases in popularity, m-payment will continue to facilitate the secure electronic commercial transactions among organizations and individuals.

14

Ngai and Gunasekaran (2007)

Advanced wireless and mobile technologies facilitate e-commerce conducted from a wired network to a wireless network.

15

Sánchez-Franco, Martínez-López, and Martín-Velicia (2009)

Individualism-collectivism values at individual-level have been extensively researched at both national-level and individual-level in the adoption of the various types of information technology (IT).

16

Büyüközkan (2009)

With m-commerce, users are no longer bound by geographical constraints as those in e-commerce.

continued on following page

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 Investigating the Roles of Mobile Commerce and Mobile Payment

Table 1. Continued Author/Authors

Findings/Suggestions

17

Chen et al. (2011)

M-commerce developers and practitioners must understand the consumers’ perception of m-commerce applications in order to deliver the m-commerce service.

18

Chong, Chan, and Ooi (2012)

M-commerce is an extension of e-commerce.

19

Zhang, Zhu, and Liu (2012)

As a new stage of e-commerce, m-commerce has plenty of unique advantages over e-commerce, such as instantaneity, ubiquity, localization, personalization, and identification.

20

Kemp (2013)

M-commerce changes the place where demand is created through using the mobile handset’s unique features.

21

Chong (2013)

M-commerce is similar to e-commerce except that its transactions are conducted in a wireless network environment via a mobile device.

22

Huang et al. (2015)

Regarding m-commerce, localization and ubiquity implies that there is profound opportunity for businesses to engage consumers anytime and anyplace.

23

Faqih and Jaradat (2015)

The moderation role of individualism-collectivism at the individual-level values on the adoption of m-commerce is significant.

Mobile Commerce and Technology Acceptance Model The technology acceptance model (TAM) (Davis, 1989) is a widely applied and validated theoretical model in the area of IT adoption research for various contexts and across a variety of organizational settings. TAM was adapted from the theory of reasoned action (TRA) (Ajzen & Fishbein, 1980). TAM has been widely used to explain technology adoption (Cyr et al., 2006). TRA aims to explain that the actual behavior of an individual is determined by the individual’s behavioral intention, and that the intention is influenced by subjective norm and individual’s attitude toward behavior (Masrom & Hussein, 2008). TAM is one of the most common technology adoption models and has been applied in various studies, such as e-commerce, online banking, 3G (i.e., the third generation of mobile telecommunications technology), and m-commerce (Chong, Ooi, Lin, & Tan, 2010). TAM is oriented toward explaining the adoption and acceptance of information systems and technologies (Faqih & Jaradat, 2015). When TAM is used in the new fields of study, TAM often needs to expand its scope through the addition of new related variables to capture the characteristics of the new technology in question (Venkatesh & Davis, 2000). The benefits of TAM include the reliable instruments with excellent measurement properties, conciseness, and empirical soundness (Pavlou, 2003). TAM compares with alternative acceptance models in explaining a substantial proportion of the variance in the usage intentions (Venkatesh, 1999). TAM applies to a wide range of research questions, including wireless local area network (LAN) usage (Yoon & Kim, 2007), the adoption of Internet banking (Lee, 2009), and attitude toward self-service solutions (Dabholkar & Bagozzi, 2002). Even if TAM was originally intended to predict the IT system use in the workplace, the TAM variables can be employed to predict consumer acceptance in a variety of settings (Schierz et al., 2010). TAM should be expanded by factors concerning specific technology under investigation (Venkatesh & Davis, 2000). Integrating variables from the related theoretical perspectives can provide a better understanding of consumer acceptance (Nysveen, Pedersen, & Thorbjornsen, 2005). The traditional TAM model has been extended to TAM2 (Venkatesh & Davis, 2000), the unified theory of acceptance and use of technology (UTAUT) (Venkatesh, Morris, Davis, & Davis, 2003), and TAM3 (Venkatesh & Bala, 2008). UTAUT is used to investigate the user acceptance of mobile-based

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 Investigating the Roles of Mobile Commerce and Mobile Payment

IT artifacts (Tai & Ku, 2013). TAM3 model has incorporated the elements of context, content, process, and individual differences (Venkatesh & Bala, 2008). TAM3 is equipped with a wide variety of different characteristics and features that can be utilized to facilitate consumer behavior on the individual-level patterns of adoption and the acceptance of a new technology (e.g., m-commerce) in developing countries (Faqih & Jaradat, 2015). Jiang and Deng (2011) developed a conceptual model based on TAM and reported that the TAM is a useful theoretical approach in understanding how mobile users are motivated to adopt a wide range of mobile-based IT. The literature on m-commerce offers the insight into key features that users appreciate, namely the portability and interface design of the handheld device (Okazaki & Mendez, 2013). In prior m-commerce research, the extent of portability is recognized as one of the intrinsic factors that influence handheld device use and satisfaction (Kuziemsky, Laul, & Leung, 2005). Portability means the quality of being light enough to be carried, which relates to the physical characteristic of the mobile devices (Kim, Mirusmonov, & Lee, 2010). Portability reflects the physical perspectives of mobile devices that allow them to be carried for the long period of time (Junglas & Watson, 2006). Gao et al. (2009) indicated that ubiquity means being portable, which enables an extensive reach beyond individual’s special and temporal constraints. Jung et al. (2009) considered TAM, content and cognitive concentration in a mobile TV service for the potential users who intend to use and suggested cognitive concentration having critical impacts on consumer’s intention to subscribe the mobile TV service. Luarn and Lin (2005) extended TAM with other variables (e.g., credibility, self-efficiency, and financial cost) and examined consumer’s behavioral intention to use mobile banking. Li and Yeh (2009) identified factors affecting service quality in mcommerce context and pointed out the impact of these factors on the behavioral intention to use the 3G services through the improved level of satisfaction. Kuo and Yen (2009) explored behavioral intention to use the 3G mobile value-added services. Davis (1989) defined perceived usefulness as the degree to which a person believes that his or her job performance would be enhanced by using a particular technology. Perceived usefulness is one of the most widely studied variables in technology adoption (Jeyaraj, Rottman, & Lacity, 2006). Perceived usefulness plays an important role in determining consumer adoption decisions on m-commerce and mobile Internet activities (Lu, Yao, & Yu, 2005). Perceived ease of use is the degree to which a person believes that using the technology requires little effort. Physical features of mobile devices (e.g., its small display screen and difficulty in keying data) can serve as a constraint to the decision to adopt m-commerce (Wu & Wang, 2005). The dependent variable used in TAM is the actual usage of the technology (Lederer, Maupin, Sena, & Zhuang, 2000). The perceived ease of use has been studied in the past technologies, such as mobile gaming (Hsu & Lu, 2004), 3G (Chong et al., 2010), World Wide Web (Lederer et al., 2000), and online banking (Cheng, Lam, & Yeung, 2006). Yang (2005) validated TAM in the m-commerce setting, and explored the potential impacts of various individual characteristics (e.g., age, gender, innovativeness, and past adoption behavior) on perceived usefulness and perceived ease of use. Yang (2010) stated that perceived ease of use, perceived usefulness, utilitarian and hedonic performance expectancy, social influence, and the facilitating conditions are the critical determinants of the American consumers’ intentions to adopt mobile shopping services. Zarmpou et al. (2012) indicated that the intention to use mobile services is directly influenced by perceived usefulness and innovativeness.

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An enhanced TAM model is utilize to indicate the factors affecting the adoption of mobile services (Phan & Daim, 2011). Perceived ease of use and perceived usefulness are the most important factors that influenced the adoption of mobile services (Phan & Daim, 2011). Wu and Wang (2005) considered perceived risks, cost, and compatibility within m-commerce. Compatibility is recognized as the most important determinant of intention to use the technology (Wu & Wang, 2005). Pedersen (2005) extended TAM with subjective norms and behavioral control into a decomposed theory of planned behavior (TPB) for the early adopters of m-commerce services. Regarding empirical studies based on TAM conducted in Chinese context to explore m-commerce adoption (Lai & Lai, 2014), the perceived ease of use, perceived usefulness, social influence, cost, trust, perceived enjoyment, the facilitating conditions, and privacy perspectives are the crucial factors in the adoption of m-commerce in China. An empirical research regarding TAM implemented in both China and Malaysia (Chong et al., 2012), the study showed that perceived usefulness, perceived ease of use, trust, cost, and social influence can be used to predict the Chinese and Malaysian consumer decisions to adopt m-commerce.

Mobile Commerce and Trust The growth of m-commerce has motivated a better understanding of how trust can be built on a mobile device (Li & Yeh, 2010). Trust becomes a critical topic for research because it plays an essential role in creating expected outcome as a result of transaction (Pavlou, 2003). Gaining trust reduces fears and worries (Pavlou & Gefen, 2004). Trust is an important element which affects consumer decisions to adopt technologies, such as e-commerce (Holsapple & Sasidharan, 2005). Trust is defined as whether users are willing to become vulnerable to the m-commerce providers after considering their characteristics (e.g., security and brand name) (Chong et al., 2012). McKnight et al. (2002) defined trust in terms of ability, integrity, and benevolence. Ability is related to skills and competencies of the trustee in a specific context. Integrity concerns if the trustee follows moral and ethical principles that are deemed acceptable by the trustor. Recent research examines a variety of topics, such as the impact of interface design on trust development in m-commerce (Liu, Marchewka, Lu, & Yu, 2005) and factors affecting the adoption of m-commerce (Yang, 2005). Koufaris and Hampton-Sosa (2004) indicated that the customer perception about the website is a key determinant of gaining initial trust, followed by a development of buyer-seller relationship. Trust on m-commerce can be influenced by the culture of the consumers. Thatcher (2002) found that trust plays an important role in influencing Chinese organizations’ business-to-business (B2B) adoption. The high level of trust not only smoothes the transaction but also eliminates the uncertainty as well as perceived risks (Li & Yeh, 2010). Website with a greater level of trust is related to the higher degree of purchase intentions and the higher customer retention rate (van der Heijden, Verhagen, & Creemers, 2003). Katerattanakul and Siau (2003) emphasized the importance of website design of store image and provided the guidelines for creating a favorable store image.

Concept of Mobile Payment Mobile payment (m-payment) is any payment where mobile devices are used to initiate, authorize, and confirm an exchange of financial value for goods and services (Karnouskos, 2004). M-payment is a type of electronic payment transaction procedure in which the payer employs mobile communication tech6

 Investigating the Roles of Mobile Commerce and Mobile Payment

Table 2. Theoretical Review for Mobile Payment Author/Authors

Findings/Suggestions

1

Antovski and Gusev (2003)

Mobile devices allow the users to connect to a server, perform authorization, make the m-payment, and confirm the completed transaction.

2

Herzberg (2003)

Mobile devices include mobile phones, personal digital assistant (PDA), wireless tablets, and other devices that can connect to the mobile telecommunications networks utilized for m-payments.

3

Lee (2004)

The transactions should take place in the virtual world and in the physical world.

4

Karnouskos and Fokus (2004)

Payment includes the payment for purchases and invoices.

5

Zhang, Yin, and Li (2006)

Transaction is completed by the interactions of mobile phone and point of sale.

6

Zhang, Yin, and Zhan (2006)

The convenience of offline payment has attracted great attention both in the field of scientific research and practical applications.

7

Jorns, Jung, and Quirchmayr (2007)

The character of online payment should connect to their back-end account system to finish the payment process.

8

Lu, Claret-Tournier, Chatwin, and Young (2007)

Transaction can be completed through the process of remote back-end systems.

9

Ondrus and Pigneur (2007)

The traditional payment solutions are not easy to use.

10

Dahlberg (2008)

M-payment services involve the certain parties which perform the unique valueadding roles in the m-payment delivery chain.

11

Hassinen, Hypponen, and Trichina (2008)

M-payment is categorized into various types depending on a large number of parameters, such as the transaction settlement method (e.g., pre-paid, post-paid, and pay-now), purchase type (e.g., digital goods and real goods), and value (e.g., picopayment, micro-payment, and macro-payment).

12

Mohammadi and Jahanshahi (2008)

Regarding m-payment, a number of technology solutions have been proposed to improve cost, functionalities, scalability, and security.

13

Lei, Quintero, and Pierre (2009)

For mobile access across multiple service domains, the traditional access mechanisms require the exchange of authentication information between the home domain and the foreign domain using roaming agreements.

14

Xin and Chao-Wei (2010)

M-payment can be divided into online payment and offline payment.

15

Leavitt (2010)

Regarding traditional payment, there is the tedious process in keying credit card numbers on the limited physical keyboards.

16

Kim et al. (2010)

M-payment service includes all technologies offered to the user and all tasks conducted by the payment service providers to effectively manage payment transactions.

17

Lu et al. (2011)

Building customer trust is critical for facilitating m-payment services to become more accepted toward making the business more successful.

18

Li, Wen, Su, and Jin (2012)

Achieving the effective performance levels in m-payment is a business challenge.

19

Okazaki and Mendez (2013)

With the increasing sophistication of the smartphones, the world is becoming more ubiquitous.

20

Huang et al. (2015)

Mobile service providers seeking to deliver a superior service must understand how consumers perceive these services.

niques in conjunction with mobile devices for the initiation of payment (Turowski & Pousttchi, 2004). M-payment is one of the future payment tools (Ondrus & Pigneur, 2006) with the greatest degree of social acceptance regarding the widespread use of mobile phone. M-payment involves billing and paying for goods and services using a mobile device (Dahlberg, Mallat, Ondrus, & Zmijewska, 2008). Below is the theoretical review concerning m-payment shown in Table 2.

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Importance of Mobile Commerce in Global Business The emerging mobile services and m-commerce services receive the growing attention about identifying new applications, designing frameworks, and facilitating network solutions (Varshney, 2005). The emergence of m-commerce has gained the attention of both practitioners and researchers due to its potential impact on business and industry (Chu & Pan, 2008). Advancements in the wireless communications have increased the number of people using mobile devices, and have accelerated the growth of m-commerce (Chong et al., 2012). M-commerce technology is widely acknowledged as the next business format and its emergence has changed the business landscape at large (Faqih & Jaradat, 2015). Every company entering the mobile space leverages the mobile channel to create customer value (Kalakota & Robinson, 2001). Internet-based commerce can reduce the barriers in conducting business by lowering the cost of extending geographic reach (Kasemsap, 2015a). Connecting information systems and integrating business data can greatly increase the operational efficiency of organization (Kasemsap, 2015b). With the rapid development of communication technologies, the various kinds of mobile applications are popular (Chen et al., 2011). However, m-commerce is still in its early stage (Zhang et al., 2012) and little is known about factors that influence consumers’ attitudes and value perceptions about them (Venkatesh & Brown, 2001). Numerous studies show that mobile services have failed to attract the hearts and minds of potential consumers (AlHinai, Kurnia, & Smith, 2010). With a wide popularity of mobile devices, such as smartphones, laptops, net books, and tablet computers, as well as the increasingly powerful mobile technologies (e.g., the 3G and the Internet of Things), m-commerce has emerged as a new business phenomenon and has become a market with great potential (Zhang et al., 2012). M-commerce provides the ever-widening content and services, including mobile ticketing, mobile banking, mobile marketing, and other location-based services. Many researchers have made the effort to investigate those popular m-commerce services, such as mobile financial services (Hsu & Wang, 2011), mobile banking (Kleijnen, Wetzels, & Ruyter, 2003), mobile transaction (Khalifa & Shen, 2008), and ubiquitous commerce (Zhang & Liu, 2011). Services technology is suitable for m-commerce applications (Chen & Lian, 2011). Convenience is considered as one of the most important factors in the success of m-commerce (Xu & Gutierrez, 2006). Convenience is related to the elements generating time and place utility for users (Clarke, 2001). Research efforts in m-commerce continue to gain the great strides over the last few years (Mahatanankoon, Wen, & Lim, 2005). The advent of location-based services enables m-commerce to be further leveraged so that the mobility aspect is taken advantage of rather than repackaging old applications in a new format (Rao & Minakakis, 2003). M-commerce extends the benefits of the website and allows for unique services and additional benefits when compared to the traditional e-commerce applications (Tsalgatidou & Pitoura, 2001). M-commerce offers the extra functionality to the existing e-commerce, such as location and localization services (Junglas & Watson, 2008). M-commerce offers various entertainment, such as allowing users to utilize the social media tools, listen to music or watch videos, as well as playing mobile games (Chong et al., 2010). Social media technology can facilitate the improved organizational productivity by enhancing the communication of employees (Kasemsap, 2014). The capability of social media in building brand is significant in modern advertising (Kasemsap, 2015c). Trialability refers to whether users given free trials are more likely to accept a new technology (Chong et al., 2012). Tan and Teo (2000) found that trialability is a significant determinant of Internet commerce adoption. Brown et al. (2003) stated that trialability is able to influence the adoption of mobile phone banking. 8

 Investigating the Roles of Mobile Commerce and Mobile Payment

Importance of Mobile Payment in Global Business M-payment becomes one of the most successful mobile services, and the security of m-payment is an important requirement (Hassinen et al., 2008). For customer acceptance, both technical and perceived levels of security should be high, so that customers do not suffer the financial losses and their privacy is not compromised (Linck, Pousttchi, & Wiedemann, 2006). For businesses, effective customer authentication is recognized as the most important perspective in promoting m-payment (Mallat & Tuunainen, 2005). Major m-payment processes include the registration with the service providers, the initialization of payment transaction, consumer authentication, payment authorization, and payment settlement (Hassinen et al., 2008). Due to the advance of mobile network technologies, mobile personal devices are used to perform electronic payment (Hwang, Shiau, & Jan, 2007). M-payment is uniquely qualified to be used in all existing payment scenarios, whereas other types of payment are more or less bound to their native environment (Pousttchi, 2008). Concerning mobile technology, the unique attributes include mobility and reachability, which provide m-payments with advantages over online payments. Mobility implies that users can carry the mobile phones or other mobile devices to conduct transactions from anyplace within a mobile network area (Au & Kauffman, 2008). Reachability of the mobile devices makes it possible for people to be contacted anytime and anyplace, and provides users with the choice to limit their reachability to people and times (Au & Kauffman, 2008). There is the substantial implementation of m-payment technologies, such as the VoIP (Voice over Internet Protocol) and the near field communication (NFC), the disintegration of the international mpayment consortium, and the launching of PayPal Mobile (Shacklett, 2002). NFC is a set of standards for smartphones and similar devices to establish radio communication with each other by touching them together or bringing them into close proximity, usually no more than a few centimeters (Su, Wen, & Zou, 2013). Tan et al. (2014) stated that with the advancement of mobile devices and the emergence of NFC technology, payment is a wave-of-the-phone. NFC has been regarded as the future of m-payment services (Ondrus & Pigneur, 2007). Initially, the payment method was executed for VISA and MasterCard Paypass program (Pasquet, Reynaud, & Rosenberger, 2008). Ruijun and Yao (2010) stated that NFC can transfer data either in active or passive modes via a short-range high frequency wireless communication technology. There is a growing interest in bringing m-payments solutions to the point of sale and the vending machines (Heinkele & Pousttchi, 2004), as well as to government operations (Pousttchi & Wiedemann, 2005). Due to the complexity and dynamism of the m-payment diffusion, multiple perspectives are required to account for diffusion challenge. The market-level and behavioral facets need more attention in explaining m-payment diffusion (Ondrus, Lyytinen, & Pigneur, 2009). The m-payment industry landscape has been changing at a rapid rate, with the introduction of new technologies, new business models, new applications, and the rise and fall of business ventures (Derballa, Pousttchi, & Turowski, 2006). Schierz et al. (2010) found the empirical support for the compatibility effect, individual mobility, and subjective norms on the intention to use m-payments. Zhou (2011) indicated the determinants of pre-adoption of m-payment services and investigated the temporal evolution of these determinants across the pre-adoption and post-adoption stages from a holistic perspective including behavioral beliefs, social influences, and personal traits. Yang et al. (2012) found that behavioral beliefs in combination with social influences and personal characteristics are the significant determinants for the adoption of m-payment services (e.g., perceived risk, perceived fee, compatibility, and relative advantage). Leong et al. (2013) 9

 Investigating the Roles of Mobile Commerce and Mobile Payment

developed a model by extending the TAM framework with constructs from psychological science and behavioral control theories. Shin (2010) found that user adoption of m-payment system is affected by the perceived usefulness, perceived ease of use, perceived risk, and trust.

FUTURE RESEARCH DIRECTIONS The strength of this chapter is on the thorough literature consolidation of m-commerce and m-payment. The extant literature of m-commerce and m-payment provides a contribution to practitioners and researchers by describing the multifaceted applications of m-commerce and m-payment to appeal to the different segments of m-commerce and m-payment in order to maximize the business impact of m-commerce and m-payment in global business. The classification of the extant literature in the domains of m-commerce and m-payment will provide the potential opportunities for future research. Future research direction should broaden the perspectives in the implementation of m-commerce and m-payment to be utilized in the knowledge-based organizations. Practitioners and researchers should acknowledge the applicability of a more multidisciplinary approach toward research activities in implementing m-commerce and m-payment in terms of knowledge management-related variables (e.g., knowledge-sharing behavior, knowledge creation, organizational learning, learning orientation, and motivation to learn). It will be useful to bring additional disciplines together (e.g., strategic management, marketing, finance, and human resources) to support a more holistic examination of m-commerce and m-payment in order to transfer the existing theories and approaches to inquiry in this area.

CONCLUSION This chapter aimed to investigate the roles of m-commerce and m-payment in global business, thus revealing the overview of m-commerce; m-commerce and TAM; m-commerce and trust; the concept of m-payment; the importance of m-commerce in global business; and the importance of m-payment in global business. M-commerce is definitely a trend nowadays. The increasing use of smartphones with access to the Internet together with other circumstances (e.g., the improvement of the accessibility, secure transactions, and the multiplication of online stores) have promoted the user to prefer m-commerce as a method of saving time and money. The increase of tablet and smartphone users defines the beginning of a new market, where the users are ready to spend more money and more time in online stores. The benefits of m-commerce include the easy purchase process, instant updating of the information, improved clients’ satisfaction, cost savings, new opportunities for business, and the ability for the consumers to use it everywhere. Regarding m-commerce applications, users can be accessible through their mobile phones and at the same time be accessible online by logging on to various mobile messengers, such as Facebook, Twitter, Gmail, and other networking platforms. M-payment benefits both consumers and businesses. With m-payment option, businesses are able to speed up the checkout process and capture the business of impulse buyers who may have been less apt to buy something if a traditional transaction is required. M-payment allows customers to purchase products or services without having to physically hand over cash or swipe a card. By using m-payment, consumers no longer have to assume the security risks associated with cash or worry whether they have 10

 Investigating the Roles of Mobile Commerce and Mobile Payment

enough cash in their physical wallets. For businesses, m-payments reduce theft risks of having cash on hand. Most m-payment applications can integrate loyalty programs. Consumers simply register for the business-related loyalty programs and earn points, credits, and rewards for every purchase. The solutions allow consumers to view their payment history, special offers, and rewards. Incorporating m-payment into a business model offers cash flow benefits to both customers and merchants. For business owners, m-payment can expedite the process of turning customer sales into the liquid cash flow required to support financial stability. M-payment empowers users to eliminate unnecessary waste in traditional invoicing processes with vendors. Unlike a hard copy-based invoicing system that involves hard costs and time delays, m-payment equips users to process accounts receivable as soon as transactions are deemed complete and ready to bill. Adopting m-payment can help distinguish businesses from their competition. Having a branded mobile application with the flexibility of m-payment and a loyalty program will allow businesses to get ahead by increasing customer loyalty and revenue. The operation of m-commerce and m-payment is needed for modern organizations that seek to serve suppliers and customers, increase business performance, strengthen competitiveness, and achieve continuous success in global business. Therefore, it is required for modern organizations to investigate their m-commerce and m-payment, develop a strategic plan to regularly check their practical advancements, and immediately respond to m-commerce and m-payment needs of customers in modern organizations. Applying m-commerce and m-payment has the potential to enhance business performance and reach strategic goals in global business.

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KEY TERMS AND DEFINITIONS Electronic Commerce: The business conducted through the use of computers or other electronic appliances without the exchange of paper-based documents. Information Technology: The set of tools, processes, methodologies, and associated equipment employed to collect, process, and present the information. Internet: The worldwide computer network that provides information on many subjects and enables users to exchange the messages. Mobile Commerce: The business that is conducted on the Internet through the use of mobile phones or other wireless, handheld electronic devices. Mobile Computing: The technology that allows transmission of data via a computer without having to be connected to a fixed physical link. Mobile Payment: The point of sale payment made through the wireless devices, such as a mobile phone and personal digital assistant. Technology Acceptance Model: The most widely utilized model to predict and explain the user acceptance of information technology. Transaction: The exchange of goods or services between a buyer and a seller.

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Chapter 2

Mobile Services Behavioral Intention:

Theoretical Background and Empirical Research Vaggelis Saprikis Technological and Educational Institute of Western Macedonia, Greece Maro Vlachopoulou University of Macedonia, Greece Theodora Zarmpou University of Macedonia, Greece

ABSTRACT This chapter presents a review of literature concerning behavioral intention theory and research models, focusing on the factors driving consumer adoption intention of mobile services. Based on this theoretical background a conceptual framework that combines perceived ease of use, perceived usefulness, innovativeness, trust, demographic characteristics and relationship drivers in order to examine their influence on the mobile services’ adoption intention has been proposed. Furthermore, the proposed framework is empirically tested using data collected from a survey in Greece. The collected data are analyzed through factor analysis, stepwise regression analysis and ANOVAs. According to the results of the study, individuals’ innovativeness, their educational level, and the relationship ties between the users and the mobile services are key factors to encourage m-services’ adoption. The outcomes provide interesting insights and useful hints to practitioners and researchers.

INTRODUCTION The transition from the cabled Internet and the electronic services to the wireless Internet and the mobile services is a fact. Thanks to the progress of the wireless communication technologies and devices (smartphones, PDAs, Palmtops, etc.), there is an increasing interest from both the industry and the public DOI: 10.4018/978-1-5225-0236-4.ch002

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 Mobile Services Behavioral Intention

sector in exploring their expanding possibilities. The numerous advantages of mobile Internet technologies (i.e. ubiquity, mobility, personalization, Internet access convenience, flexibility, and dissemination of information) increase the level of mobile services, which can be provided for customers’ support and satisfaction (Wang & Lin, 2012). The mobile data services mainly refer to the communication services (e-mails, SMS, MMS, etc.), web information services (weather information, sports, banking information, news, etc.), database services (telephone directories, map guides, etc.), entertainment (ringtones, videos, games, etc.) and commercial transactions through the mobile devices (buying products, making reservations, banking, stock trading, etc.) (Lu et al., 2005). The mobile devices, customers satisfy their m-commerce needs anywhere and anytime (Yu & Buahom, 2013). A basic research question is whether these services are worth being used by the wide part of the population or not. Nowadays, young adult population have become an essential group of mobile technology related industries, due to their high usage of mobile devices and services and their future strong purchasing or spending power (Kim & Hahn, 2012). Thus, the aim of the research study is to find out users’ reaction towards different parameters that would influence the individuals’ intention to use the mobile services. So, the question still remains: What are the factors that affect their adoption? There have been several studies investigating the drivers of mobile service adoption and mobile shopping behavior based on different behavioral intention theories from a variety of perspectives. The objective of this study is to construct an instrument in order to provide an explanation of the determinants of mobile data services acceptance. The study suggests a conceptual framework, based on the Technology Acceptance Model (TAM) that shows how its different constructs influence the individuals’ adoption towards the above services. In the current study, we keep the basic variables of TAM -perceived ease of use, perceived usefulness and behavioral intention- and through literature research we contribute with new variables -trust, innovativeness, relationship drivers and demographics- which are expected to have influence on the mobile services adoption intention, tested in Greece. All these constructs in this paper, are defined in a strict mobile context. The chapter is organized in five sections. Section 2 presents the theoretical background concerning behavioral intention theory and research models, focusing on the factors driving consumer adoption and usage intention of mobile services and mobile shopping. In section 3, there is an explanation of the hypotheses formed based on literature review and the description of the constructs that are included in the proposed framework. It is followed by Section 4, which describes the applied methodology and presents the survey’s results. Section 5 presents the analysis and discussion commenting on the survey’s outcomes and recommends some ideas for the proposed framework. The final section concludes this chapter by providing the implications and limitations of the study, along with future research directions.

THEORETICAL BACKGROUND A literature review on information systems, innovative technology, e-commerce and m-shopping highlights a number of theories or conceptual models, which are commonly used or extended with other variables for investigating various contexts of technology adoption and especially the users’ intention to adopt m-services. Therefore, there are several behavioral intention theories, and the most popular and widely used are following.

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 Mobile Services Behavioral Intention

The Diffusion Of Innovations (DOI) perspective is introduced by Rogers (1995) investigating a variety of factors which are considered to be determinants for the actual adoption and usage of Information Systems. According to DOI, potential adopters evaluate an innovation based on innovation attributes (relative advantage, compatibility, complexity, trialability and observability) (Rogers, 1995). The Theory of Reasoned Action (TRA) was first proposed by Fishbein and Ajzen (1975), suggesting that users’ intention to adopt a technology is determined by two factors: personal in nature (attitude) and social influence (social or subjective norm). TRA was later evolved to the Theory of Planned Behavior (TPB) by adding perceived behavioral control to the initial determinants (Ajzen, 1991). Ajzen (1991) has proved that “perceived behavior control” has a direct effect on behavior and desire through an empirical study, and proposed the Theory of Planned Behavior (TPB) based on the Rational Behavior Theory (TRA). TPB emphasized the adopters’ attitudes towards technology, expressed social influence factors via the subjective regulated variables, and expressed the adopters’ personal characteristics via perceived behavior control. The TPB was also enriched with stable, decomposed beliefs structures for the TPB model and proposed the Decomposed Theory of Planned Behavior (Taylor & Todd, 1995). The Expectancy Confirmation Model (ECM) or the Expectancy Disconfirmation Model (EDM) has been used to explain the continuance behavior in electronic commerce. It is important for the m-shopping providers to understand the determinants of m-shopping continuance (Bhattacherjee, 2001; Hung et al, 2012). Furthermore, the Technology Acceptance Model (TAM) indicates that perceived ease of use and perceived usefulness are the two main beliefs that determine one’s intention to use technology (Davis, 1989). TAM has been the mostly constantly used or extended model regarding m-service adoption and m-shopping, comparing favorably to TRA and TPB (Schierz et al., 2010; Wu et al., 2011). When deeper explanation of user adoption intention is desired, it allows other factors to be incorporated easily into its basic model (Hong et al., 2006). Since the original proposal, TAM has been used and adapted extensively, and is seen as a leading model in explaining and predicting system use. In the context of mobile commerce, Wu & Wang (2005) used a revised TAM to explore the factors that determine user mobile commerce (including banking, shopping, investing, and online services) acceptance in Taiwan. They identified the following as factors affecting behavioral intention to use: perceived risk, cost, compatibility, and perceived usefulness. Wang et al. (2006) used TAM, with the objective to predict consumer intention to use mobile services. Lu & Su (2009) also used a revised TAM model to explore the factors affecting purchase intention on mobile shopping websites. Furthermore, Petina et al. (2011) identified the availability of a mobile interface as a contributing factor to satisfaction with the online shopping experience. Additionally, Wu et al. (2011) explored an integrative perspective, related to the adoption of mobile healthcare by hospital’s professionals. Finally, the Unified Theory of Acceptance and Use of Technology (UTAUT) combined eight models, based on the above theories plus a few of their extensions, in a unified technology acceptance concept. The proposed unified model contains five determinants: performance expectancy, effort expectancy, social influence, facilitating conditions, and behavioral intention (Venkatesh et al., 2003). It is used so far for a number of technology types such as e-government (Alawadhi & Morris, 2008), wireless LAN (Anderson & Schwager, 2003) and m-commerce (Yang, 2010). A review of the recently published literature, concerning behavioral intention theory as well as research models focusing on the factors driving consumer adoption and usage intention of mobile services and mobile shopping is presented in Table 1. As indicated in Table 1, TAM has been the mostly used theory to examine the issues of users’ intention to adopt m-services. In response to criticism related to its focus on the technological perspective, there is an effort to incorporate individual and marketing factors for 26

 Mobile Services Behavioral Intention

further investigating m-service adoption. The proposed framework presented in the next session uses perspectives from the marketing area for a technology acceptance issue by including the relationship drivers construct.

CONCEPTUAL FRAMEWORK AND RESEARCH HYPOTHESES A survey research is conducted using a questionnaire to examine the factors that affect the users’ behavioral intention to adopt mobile services. Based on the literature review, a conceptual framework is formulated (Figure 1) with the initial hypotheses. The framework includes the following variables (Table 2): M-Services’ Adoption Intention, Perceived Usefulness, Perceived Ease of Use, Demographics, Innovativeness, Trust and Relationship Drivers. In this section, the variables are explained, as well as, the related hypotheses. Table 1. M-services and m-shopping behavioural intention representative literature review Research Objectives

Research Area/Context

Conceptual Model

Representative Literature

• Drivers of mobile commerce acceptance; • Success factors of mobile marketing; • Behavioral intention to use mobile services; • Trust in mobile commerce; • Adoption intention; • Intention to use; • Actual use behavior

• User mobile commerce acceptance in Taiwan & Malaysia (including banking, shopping, investing, and online services); • Predicting consumer intention; • Mobile marketing; • Mobile services in libraries; • Mobile payment services; • Mobile banking; • Mobile shopping for fashion products; • Mobile-technology-enabled tasks (design aesthetics); • Mobile shopping services; • Mobile short message services; • Mobile healthcare services; • Brand equity perspective

TAM

Aharony, 2013; Hanafizadeh et al., 2014; Kumar & Mukherjee, 2012; LiébanaCabanillas et al., 2014; Lu & Su, 2009; Moorty et al., 2014; Scharl et al., 2005; Schierz et al., 2010; Wang & Li, 2012; Wang et al., 2006; Wu et al., 2011; Wu & Wang, 2005

Satisfaction; continued usage intention; m-shopping continuance

Mobile Internet services continuance; Examination of the determinants of m-shopping continuance by incorporating trust

EDM / ECM (extended)

Hung,et al., 2012; Thong et al., 2006

Mobile shopping adoption Consumer traits (i.e., technology self-efficacy, technology innovativeness, and level of experience of use); critical factors influencing the adoption of mobile phone shopping from the dimensions of information technology and societypsychology

• Predicting consumer adoption behavior • Designing favorable mobile shopping environments compatible with the consumer characteristics; research (China) and practice by advancing our understanding of mobile online shopping adoption behavior

TPB

Yang, 2012; Zhong, 2013

Critical determinants of US consumers’ intentions to use mobile shopping services; Mobile shopping adoption

• Implications for retailers and mobile marketers in order to offer mobile shopping services that meet consumers’ quality expectations; • Determinants of mobile shopping adoption/ • Facilitating conditions; Social influences; Technology anxiety

UTAUT (modified model)

Yang, 2010; Yang & Forney, 2013

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 Mobile Services Behavioral Intention

Table 2. The conceptual and operational definitions of the research variables Research Variables

Conceptual Definition

Operational Definition

M-services’ Adoption Intention

“A person’s subjective probability that he or she will perform some m-services” (Fishbein & Ajzen, 1975).

AI1: I intend to use m-services in the near future AI2: I believe my interest towards m-services will increase in the future AI3: I intend to use m-services as much as possible AI4: I recommend others to use m-services

Perceived Usefulness

“The degree to which a person believes that using m-services would enhance his or her job performance” (Davis, 1989).

PU1: I think using m-services makes it easier for me to conduct transactions PU2: I think using m-services makes it easier for me to follow up my transactions PU3: I think using m-services increases my productivity PU4: I think using m-services increases my effectiveness PU5: I think using m-services increases my efficiency

Perceived Ease of Use

“The degree to which a person believes that using m-services would be free of effort” (Davis, 1989).

PEU1: I think using m-services is easy PEU2: I think learning to use m-services is easy PEU3: I think finding what I want via m-services is easy PEU4: I think becoming skillful at using m-services is easy

Trust

The security in mobile payments, the confidentiality of personal data, the trustworthiness in the results of the m-services and the integrity of the terms of use of the m-services.

TR1: I think using m-services in monetary transactions is safe TR2: I think my personal data are in confidence while using m-services TR3: I think the terms of use are strictly followed while using m-services TR4: I think using m-services for my transactions is trustworthy

Innovativeness

“The willingness of an individual to try out any new information technology” (Midgley & Dowling, 1978).

INN1: I am usually among the first to try m-services INN2: I am eager to learn about new technologies INN3: I am eager to try new technologies INN4: My friends and neighbours often come to me for advice about new technologies and innovation

Relationship Drivers

The time and location personalization of the m-services, their adaptation to the consumers’ profile, the consumers’ dynamic permission option and the consumers’ reward by the use of the m-services.

RLDR1: I think using m-services should reward me with sales, coupons, etc. RLDR2: I think m-services are customized to my profile RLDR3: I think m-services are customized to the location and time I am, when I use them RLDR4: I think using m-services gives me the opportunity to control the start, the continuation and the end of my transactions

M-Services Adoption Intention In most of the well-established aforementioned models of behavioral intention theories, there has been an attempt to examine the factors that affect the consumers’ decision on using a technology studied (Wu & Wang, 2005). Fishbein and Ajzen (1975) first defined the term “Behavioral Intention” to depict “a person’s subjective probability that he will perform some behavior”. Davis, also, follows up with this idea to give shape to TAM (Davis, 1989), which finally concludes to the “Actual System Use”. M-services’ intention has been examined in various studies (Hung et al., 2012; Moorty et al., 2014; Wang & Li, 2012; Yang, 2012; Zhong, 2013). Based on these concepts, in this paper herein, there is a construct included in the proposed framework entitled “m-services adoption intention” to describe a person’s subjective probability that he or she will perform mobile data services.

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 Mobile Services Behavioral Intention

Figure 1. Initial conceptual framework

Perceived Usefulness “Perceived usefulness” has been a vital concept in many of the technology adoption models that have been proposed since 1989, when Davis first used this term. It is defined as “the degree to which a person believes that using a particular system would enhance his or her job performance” (Davis, 1989). Perceived usefulness has been included as a construct in a number of surveys for different types of technologies and systems, such as mobile payments (Chen, 2008), mobile commerce (Hanafizadeh et al., 2014; Kumar & Mukherjee, 2012; Min et al., 2008; Moorty et al., 2014), mobile data services (Aharony, 2013; Qi et al., 2009), application frameworks (Polančič et al., 2010), and generally, technology adoption models (Im et al., 2008; Shiau & Chau, 2012; Wang et al., 2008; Wu & Wang, 2005). In all these studies, the perceived usefulness of the technology concerned influences positively individuals’ adoption intention of this technology. Thus, it is reasonably expected that the same relationship between the framework’s constructs could also be applied to the present study. Therefore: H1: Perceived Usefulness will have a positive effect on m-services adoption intention.

Perceived Ease of Use Additionally to perceived usefulness, “Perceived Ease of Use” has been an instrumental construct in many of technology adoption models, as well. It is defined as “the degree to which a person believes that using a particular system would be free of effort” (Davis, 1989). It has been included as a construct in a 29

 Mobile Services Behavioral Intention

number of studies for different types of technologies and systems, such as mobile data services (Aharony, 2013; Qi et al., 2009), application frameworks (Polančič et al., 2010), mobile commerce (Hanafizadeh et al., 2014; Moorty et al., 2014), and generally new technologies (Im et al., 2008; Wang et al., 2008; Wu & Wang, 2005). In all the above studies, the perceived ease of use of the technology concerned has a direct positive effect on the behavioral intention to use each technology studied every time. Thus, regarding the behavioral intention to use the mobile services, it is hypothesized that: H2: Perceived Ease of Use will have a positive effect on m-services adoption intention. In the literature studied, there is also a relationship between the perceived ease of use and perceived usefulness as influential factors on consumers’ behavioral intention. Researchers proposing adoption intention models verify the positive influence of perceived ease of use on perceived usefulness concerning various technology topics: mobile commerce (Aldas-Manzano et al., 2009; Liébana-Cabanillas et al., 2014; Wu & Wang, 2005), mobile data services (Qi et al., 2009) or technology acceptance models in general (Im et al., 2008; Polančič et al., 2010; Walczuch et al., 2007; Wang et al., 2008; Yi et al., 2006). Hence, it is reasonable to hypothesize that the same relationship is valid for our research regarding the mobile services: H3: Perceived Ease of Use will have a positive effect on perceived usefulness.

Demographics Based on the available literature, there is a noticeable relationship between the consumers’ demographics and the technology acceptance studied. Li et al. (2008) studied the differences between males’ and females’ attitude towards mobile commerce, as well as Min et al. (2008) verified the user’s demographics relationship with m-commerce’s acceptance in Japan. Regarding m-services, which is our area of interest, there are studies that investigate the influence of the consumers’ demographics on adoption intention (Choi, 2010; Hasan, 2010; Hwang, 2010; Lee, 2011). For example, Liébana-Cabanillas et al. (2014) examined the impact of gender towards the adoption intention of an m-payment system. Commonly, there are findings which prove that individual differences -age, gender, educational background, occupation and income- do affect the adoption of mobile banking services (Crabbe et al., 2009; Sulaiman et al., 2007). Additionally, Mylonakis (2004) published his research conclusions around the m-commerce services in Greece. The results showed that Greek men have a higher percentage of contact with the Internet, compared to women. Thus, we hypothesize that demographics in the current study have a significant impact on the research goal: H4: Demographics will have a significant effect on m-services adoption intention.

Trust In previous studies, trust has been a significant factor in influencing consumers’ behavior towards a specific technology, especially when it comes to cases of uncertain environments, such as e-commerce (Gefen & Straub, 2003; Lu et al., 2011; Pavlou, 2003; Wei et al., 2009). It is strongly recommended that trust 30

 Mobile Services Behavioral Intention

should also be examined as a driving factor in the area of mobile commerce (Min et al., 2008). Mobile commerce is exposed to greater danger of insecurity than e-commerce and therefore the importance of trust is relatively higher in m-commerce (Wei et al., 2009). Characteristically, Chong (2013), Hanafizadeh et al. (2014) and Moorty et al. (2014) found that trust has a positively impact on m-commerce adoption. In order to define and measure trust, there have been many suggestions in literature attributing it to meanings like privacy protection permitting a user to choose how his or her personal information is used (Bhattacherjee, 2002), or perceived credibility showing that one partner believes that the other partner has the required expertise to perform a job effectively and reliably (Cho et al., 2007; Crabbe et al., 2009). Pavlou (2003) stated that “trust in e-commerce is the belief that allows consumers to willingly become vulnerable to the online retailers after having considering the retailers’ characteristics” including goodwill trust (benevolence) and credibility (honesty, reliability, and integrity). Min et al. (2008) divided the entity of trust in two sub-entities: trust in technology and trust in service providers. Trust in technology redirects to technical protocols, transaction standards, regulating policies, and payment systems (Min et al., 2008), whereas, according to Bhattacherjee’s analysis for e-commerce services (2002), trust in service providers refers to ability -the user’s perception of provider’s competencies and knowledge salient to the expected behaviour, integrity -the user’s perception that the service providers will adhere to a set of principles or rules of exchange acceptable to the users during and after the exchange, and benevolence -the service provider is believed to intend doing good to the users, beyond its own profit motive. In this study, by trust we refer to the security in mobile payments when needed, to confidentiality of personal data (such as sending credit card details while using mobile services), to trustworthiness in the results after a mobile service is conducted and to the integrity of the terms of use of the mobile services. Min et al. (2008) studying mobile commerce, Pavlou (2003) examining consumers’ acceptance of electronic commerce, Hanafizadeh et al. (2014) investigating m-banking adoption, Chong (2013) and Wei et al. (2009) analysing the m-commerce adoption, Suh & Han (2002) contributing to e-banking, and Gefen & Straub (2003) talking about B2C e-Services detected a positive influence of trust on consumers’ behavioral intention. In specific, Pavlou (2003) said that: “trust reduces behavioral uncertainty related to the actions of the Web retailer, giving a consumer a perception of some control over a potentially uncertain transaction. On the other hand, Ha & Stoel (2009) proved that there is an influence of trust on intention to e-shop through its influence on usefulness. This sense of overall control over their on-line transactions positively influences consumers’ purchase intentions.” Thus, it is reasonable to assume that there is, also, a positive relationship between trust and behavioral intention when it comes to the adoption of mobile commerce services in Greece. So the following hypotheses can be stated: H5: Trust will have a positive effect on consumers’ m-services adoption intention. H6: Trust will have a positive effect on perceived usefulness.

Innovativeness Innovativeness in Information Technology is the “willingness of an individual to try out any new information technology” (Flynn & Goldsmith, 1993; Midgley & Dowling, 1978). In free interpretation in the field of technology acceptance, innovation refers to the degree of interest in trying a new thing, new concept, or innovative product or service (Rogers, 1995).

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Innovativeness as a personality trait has been correlated with technology adoption in previous studies as an integrated factor along with optimism, discomfort and insecurity in the framework of the Technology Readiness Index (TRI) theory (Walczuch et al., 2007). Individuals, who are respected by their peers for their first-hand knowledge of an innovation and are considered as competent technically, consider the complexity of technology less troublesome suggesting a direct positive effect on perceived ease of use (Yi et al., 2006). Walczuch et al. (2007) concluded that innovativeness has a positive impact on perceived ease of use and negative impact on perceived usefulness regarding the adoption process of IT from service employees. Commonly, Kumar & Mukherjee (2012) confirmed that innovativeness positively influences perceived ease of use. Kuo & Yen (2009) also examined the relationship of innovativeness with perceived ease of use and perceived usefulness. Their study showed that innovativeness has a positive impact on perceived ease of use of 3G mobile value-added services, whereas the influence on perceived usefulness of 3G mobile value-added services is insignificant. Lu et al. (2005) studied the influence of personal innovativeness and social influence on wireless Internet services and found that they do not have a direct significant effect on user intention to adopt the wireless Internet services via their mobile devices. Innovativeness has also been examined as a factor influencing the use of Internet (Lam et al., 2008). Chen & Tong (2003) discussed the importance of innovation for the mobile telecom industry, as well as, Aharony (2013) confirmed the positive impact of personal innovativeness on behavioral intention to use mobile services in libraries. Sulaiman et al. (2007) also showed that personal innovativeness reflects on the adoption intention of m-banking in Malaysia. The positive results of studies around the direct effect of innovativeness on mobile commerce in Singapore (Yang, 2005) and on mobile shopping (Aldas-Manzano et al., 2009) have aroused the curiosity of the writers to examine the effect that innovativeness has on the adoption and perceived usefulness of mobile services in the Greek market. Based on the above literature, the following hypotheses can be stated: H7: Innovativeness will have a positive effect on consumers’ m-services adoption intention. H8: Innovativeness will have a positive effect on perceived usefulness.

Relationship Drivers Modern marketing indicates that relationship building between the customers and the brand is recommended to earn customers’ loyalty and hence, increase the purchase interest for this brand’s products. Striving towards this direction, one of the rules for a firm to build successful relationships with its customers is to have distinctive competencies (Morgan, 2000). Among other potential sources of such distinctive competencies, Lacey (2007) referred to customized services, which can reflect superior value or psychological benefits to the customers. More precisely, his research work concluded to the fact that preferential treatment, as a variable of resource drivers, has a direct positive influence on customer’s commitment to the firm, which finally leads to increased purchase intentions. Since 1988 Edvardsson studying the service quality, has pointed out the importance of adapted services to the individuals’ special requirements. Until today, though, individualization is a determining user requirement (Büyüközkan, 2009). Experts in the marketing field have recognized some unique features of the mobile technology, which can help exclusively with the relationship building between the customers and the brand. Mobile services, mainly due to the functions of SMS and MMS exchange, have the exclusiveness of ubiquitous and universal information accessibility, of information personalization and information dissemination (Nysveen et al., 2005). Mobile and wireless technology do not set information access restrictions regarding time 32

 Mobile Services Behavioral Intention

and space (Balasubramanian et al., 2002). Consumers can reach the information and use the applications from everywhere (Nysveen et al., 2005; Yu & Buahom, 2013) and anytime (Chang & Kannan et al., 2003; Nysveen et al., 2005; Yu & Buahom, 2013). This gives a strong advantage for time-sensitive and location-based content and services to be received by the consumers at the point accustomed to their personal identity (Doyle, 2001; Kannan et al., 2001; Nysveen et al., 2005). Thus, personalized information and/or services are able to be achieved. Because of these features, the marketing experts seized the chance to exploit the mobile services as an adding channel to the existing line of channels in order to promote specific products, give new buying medium opportunities and, finally, increase consumers’ intention to use these products (Nysveen et al., 2005). In this study, however, we change the roles and view the mobile services as the final product. Borrowing the aforementioned marketing ideas, we make the hypothesis that the characteristics of personalization and preferential treatment that the mobile services can offer might increase their own adoption, as they do with any kind of products. Scharl et al. (2005) examining the success factors of mobile marketing referred again to personalization as an influential factor. They gave examples, such as SMS advertising campaigns that will be sent preferably to phone numbers kept into categorized databases according to the customers’ previous actions; examples of such actions are past leisure activities, music interests or occupation (preferential treatment). Taking advantage of mobile services’ location and time personalization people can ask for directions to the nearest gas station open at the time of request or can receive alerts and flight delay notices through their mobile devices. Deeper study dwelling on parameters, which lead to successful mobile services implementation, includes another significant characteristic of m-services: individuals need to decide when to respond to a mobile transaction, if at all (Scharl et al., 2005). Consumers need to have the access control (Geser, 2004) and freedom to give permission for their participation in mobile marketing activities (Barwise & Strong, 2001). And the permission needs to be dynamic; it does not only refer to the consumers’ “optin” agreement, but also to the opportunity to change their preferences or stop their participation in the mobile transaction (Barnes & Scornavacca, 2004) whenever they feel to do so. Among other factors that contribute to successful mobile advertising, Scharl et al. (2005) concluded to the fact that some common mobile applications urge the recipients to act on the spot. An example of such an application is the mobile couponing. Mobile coupons are stored in the mobile phone’s memory (they are hard to get lost or forgotten) and so, they are easy to redeem. If consumers are subject to get “rewarded” with mobile coupons, discount prices, prizes, newsletters, free call time, etc. when they participate in a mobile transaction, they would be motivated to use the mobile services more frequently (Androulidakis, N. & Androulidakis, I., 2005). We organize all the above mobile services usage indicators into one factor entitled Relationship Drivers. To sum up, relationship drivers is a term used in our study to declare the time and location personalization of the m-services, their adaptation to the consumers’ profile, the consumers’ dynamic permission option and the consumers’ reward by the use of the m-services. They are teamed up in one construct, since we hypothesize that these dimensions have a common characteristic; they create a relationship between the consumers and the m-services. This relationship, finally, influences the consumers’ mobile services adoption intention. Thus in our framework: H9: Relationship Drivers will have a positive effect on the Adoption Intention.

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 Mobile Services Behavioral Intention

After a relationship is evolved between the consumers and the mobile services, it is reasonable to assume that the individuals might view the mobile services as an integrated part in their lives as they do with the mobile phones (IST Lab, 2007). They are expected to be emotionally attached to the mobile services and, hence increase their actual use. After the frequent use, though, people are getting used to fulfill their transaction needs via the mobile services and finally find them more useful. So, we hypothesize that: H10: Relationship Drivers will have a positive effect on the Usefulness.

METHODOLOGY AND RESULTS Data were collected through a questionnaire both in a hard-copy form and in an electronic version of it. The electronic questionnaire was uploaded on a website for one month - January 15th to February 15th 2010. Additionally, an e-mail was sent to members of various lists (students and non-students) asking to respond to the questions and it was, also, posted on two popular social networks, Facebook and Twitter. Regarding applied questions, they are based on prior surveys approved for their validity and reliability. The questionnaire was pretested before being widely distributed, whereas a pilot study using a sample of thirty responses helped to identify possible problems in terms of clarity and accuracy. Thus, comments and feedback from respondents improved the final presentation of the items. Fifty-seven participants gave incomplete answers and their results were dropped from the study. Finally, a total of 445 consumers from Greece provided data for the study. In order to test the conceptual framework, a data analysis was conducted in three stages. The first step employed factor analysis using principal component analysis (PCA) and orthogonal rotation (VARIMAX) in order to test the data validity and reliability, followed by two separate stepwise regression analyses and ANOVAs in order to examine the ten hypotheses.

Demographic Characteristics and Descriptive Statistics The demographic profile of respondents presented in Table 3 indicates that 51.5% are (229) male and 48.5% (216) are female. The vast majority of them (88.1%) are between 18-34 years old, whereas only 2.9% are above the age of 44. In terms of their educational background, 80.4% have received higher education studies, whereas with respect to their occupation, about one out of four (40.1%) are students, followed by private employees (18.9%) and freelancers (17.6%). Finally, regarding respondents’ monthly income, 67.1% of them get paid up to 1,500€, whereas about one out of five (19.1%) preferred to avoid revealing his/her wages. The comprehensive demographic characteristics of the sample are presented as follows.

Operationalization of the Variables Operational definitions of the study constructs are shown in Table 2. For each variable, a multiple-item scale was developed where each item was measured based on a 5-point Likert scale, ranging from 1-“Completely Disagree” to 5-“Completely Agree”. In specific, four items were used to measure perceived ease of use, trust, innovativeness, relationship drivers and m-services’ adoption intention, whereas five items were used to measure perceived usefulness. 34

 Mobile Services Behavioral Intention

Table 3. Demographic characteristics of the respondents Demographics

Frequency

Percent (%)

229 216

51.5% 48.5%

157 235 40 13

35.3% 52.8% 9.0% 2.9%

4 83 213 145

0.9% 18.7% 47.9% 32.5%

178 84 48 78 24 33

40.1% 18.9% 10.8% 17.6% 5.4% 7.2%

Gender Male Female Age 18-24 25-34 35-44 >44 Education Elementary school High school University/Tech. Col. Master/PhD Occupation Student Private Employee Public Servant Freelancer Unemployed Other

Monthly Income (€) 2400 I don’t answer

102 80 55 62 23 20 18 85

22.8% 18.0% 12.4% 13.9% 5.2% 4.5% 4.1% 19.1%

Data Validity and Reliability Factor analysis was applied to test the validity of the variables, classify and reduce questions into subvariables when possible, and calculate factor loadings. Specifically, the principal component analysis (PCA) using orthogonal rotation (VARIMAX) was firstly performed to assess the underlying structure of the data (Hair et al., 2006). Nevertheless, in order to test the appropriateness of the data for factor analysis, several measures were applied to the entire population matrix. Specifically, Bartlett’s test of sphericity (p = 0.000) confirmed the statistical probability that the correlation matrix has significant correlations among the variables, whereas the result of Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy was 0.898, which is meritorious. Additionally, the measures of sampling adequacy (MSA) values all exceed 0.50 for both the overall test and each individual variable (Hair et al., 2006). All the aforementioned measures indicated the suitability of factor analysis. By applying the Kaiser eigenvalues criterion, six factors extracted that collectively explained (with eigenvalues 8.160, 2.117, 2.080, 1.747, 1.681 and 1.239 respectively) 68.099% of the variance in all items. Regarding construct validity, which testifies how well the results obtained from the use of the

35

 Mobile Services Behavioral Intention

measure fit the theories around which the test is designed (Crabbe et al., 2009), it was tested by the use of two broadly applied tests, convergent and discriminant validity. In specific, “convergent validity is demonstrated if the items load strongly (>0.50) on their associated factors, whereas discriminant validity is achieved if each item loads stronger on its associated factor than on any other factor” (Hair et al., 2006). Table 4 shows that all items have loading greater than 0.50 and load stronger on their associated factors than on other factors. Thus, convergent and discriminant validity are demonstrated. The six factors (perceived usefulness, trust, innovativeness, relationship drivers, perceived ease of use and m-services’ adoption intention) proved to be relatively easy to interpret, owing to the strong variable loadings. Finally, construct reliability was assessed using Cronbach’s alpha. Table 4 also shows that values ranged from 0.650 to 0.913. According to Hair et al. (2006), “the generally agreed upon lower limit for Cronbach’s alpha is 0.70, although it may decrease to 0.60 in exploratory research”. Table 4. Rotated component matrix Items

PEOU1

Factors Perceived Usefulness

M-Services’ Adoption Intention

Trust

Innovativeness

Perceived Ease of Use

Relationship Drivers

0.109

0.070

0.047

0.103

0.791

0.116

PEOU2

0.030

0.000

0.040

0.054

0.815

0.064

PEOU3

0.167

0.207

0.112

-0.044

0.664

0.141

PEOU4

0.199

0.091

0.104

0.243

0.674

0.051

PU1

0.653

0.275

0.138

0.121

0.311

0.113

PU2

0.797

0.169

0.184

0.190

0.108

0.026

PU3

0.852

0.147

0.216

0.141

0.131

0.053

PU4

0.824

0.205

0.155

0.064

0.087

0.060

PU5

0.841

0.148

0.183

0.162

0.075

0.079

TR1

0.211

0.202

0.777

0.112

0.065

-0.002

TR2

0.103

0.058

0.835

0.076

-0.016

0.109

TR3

0.161

0.057

0.791

0.113

0.144

0.103

TR4

0.285

0.143

0.685

0.119

0.147

0.060

INN1

0.204

0.326

0.306

0.587

0.020

0.080

INN2

0.166

0.172

0.119

0.827

0.143

0.033

INN3

0.112

0.181

0.108

0.856

0.121

0.081

INN4

0.131

0.163

0.038

0.794

0.062

0.019

RLDR1

-0.003

0.276

-0.067

0.007

-0.148

0.583

RLDR2

0.091

0.180

0.117

0.094

0.118

0.734

RLDR3

0.059

0.057

0.095

-0.010

0.184

0.781

RLDR4

0.068

-0.072

0.089

0.067

0.175

0.617

BI1

0.194

0.787

0.161

0.199

0.123

0.112

BI2

0.215

0.797

0.124

0.187

0.077

0.072

BI3

0.215

0.841

0.119

0.185

0.123

0.112

BI4 Cronbach’s alpha

36

0.208 a = 0.913

0.748 a = 0.894

0.097

0.228

0.100

0.154

a = 0.836

a = 0.838

a = 0.771

a = 0.650

 Mobile Services Behavioral Intention

Hypotheses’ testing Factors Affecting M-Services’ Adoption Intention An inter-item correlation analysis (Table 5) revealed moderate positive correlation, but significant relationships between m-services’ adoption intention and all of the predictors at the 0.01 level. Specifically, innovativeness has the highest correlation coefficient (r = 0.526), followed by perceived usefulness (r = 0.511), trust (r = 0.363), relationship drivers (r = 0.325) and perceived ease of use (r = 0.312) in correspondence. The results substantiates hypotheses H2, H5, H1, H7 and H9 that 99 out of 100 times there will be significant positive relationship between m-services’ adoption intention and these variables. A stepwise regression analysis was conducted to assess the best predictors among the independent variables believed to impact on m-services’ adoption intention. Additionally, it revealed which of the five hypotheses were supported. According to Hair et al. (2006), stepwise regression is considered as the most popular sequential approach to variable selection. The results presented in Table 6 indicate that 41% of the variance in m-services’ adoption intention is explained by three predictors in the model. Innovativeness has the highest explanatory value of 27.7% (b = 0.355, t = 8.715, p = 0.000), followed by perceived usefulness 10.0% (b = 0.317, t = 7.749, p = 0.000) and relationship drivers 3.3% (b = 0.189, t = 4.999, p = 0.00). From the five hypotheses only two, namely H2 and H5 (the impact of perceived ease of use and trust on m-services’ adoption intention), were not supported.

Table 5. Results of correlations analysis for all variables Factors

BI

PU

TR

BI

1

PU

0.511**

1

TR

0.363**

0.473**

1

INN

PEOU

INN

0.526**

0.428**

0.370**

1

PEOU

0.312**

0.379**

0.267**

0.284**

1

RLD

0.325**

0.219**

.214**

0.189**

0.275**

RLDR

1

** p = 0.001

Table 6. Results of the stepwise regression analysis for adoption intention towards m-services Model

1 2 3

R

0.526 0.614 0.640ª

R Square

0.277 0.377 0.410

Adjusted R Square

Std. Error of the Estimate

0.275 0.374 0.406

0.72875 0.67740 0.65973

Change Statistics R Square Change

F Change

df1

df2

Sig. F Change

0.277 0.100 0.033

169.710 70.706 24.994

1 1 1

443 442 441

0.000 0.000 0.000

ª Predictors: (constant), innovativeness, perceived usefulness, relationship drivers

37

 Mobile Services Behavioral Intention

Factors Affecting Perceived Usefulness The correlation analysis (Table 5) indicated that perceived usefulness significantly correlated positively with all variables (p = 0.01). Thus, the results substantiates hypotheses H3, H6, H8 and H10 that 99 out of 100 times there will be significant positive relationship between perceived usefulness and relationship drivers, innovativeness, ease of use and trust. A second stepwise regression analysis was conducted in order to assess the best predictors among the independent variables believed to impact on perceived usefulness, as well as, to reveal which of the four hypotheses were supported. The results presented in Table 7 indicate that 34.2% of the variance in perceived usefulness is explained by three predictors in the model. Trust has the highest explanatory value of 22.4% (b = 0.323, t = 7.633, p = 0.000), followed by innovativeness 7.4% (b = 0.245, t = 5.759, p = 0.000) and perceived ease of use 4.4% (b = 0.224, t = 5.465, p = 0.00). From the four hypotheses only one, namely H10 (the impact of relationship drivers on perceived usefulness), was not supported.

Influences of the Demographic Factors on M-Services’ Adoption Intention ANOVA was conducted to examine the influence of demographics on adoption intention. In specific, age, gender, educational level, occupation and monthly income were tested. Of particular interest was to find whether significant differences in adoption intention towards m- services can be attributable to demographic groupings, as well as, to establish whether sample’s variances differ from each other. Regarding age, it was tested by the use of independent-samples t-test in order to statistically compare male and female respondents. As shown in Table 8, there are no significant differences in m-services’ adoption intention as a result of age, occupation, monthly income and gender, whereas educational level reveals significant differences. Thus, with the exception of educational level, all the demographic hypotheses were not supported.

DISCUSSION The studied framework consists of seven constructs: m-services’ adoption intention, the perceived usefulness of m-services, the perceived ease of their use, the demographics of the survey’s participants, innovativeness, trust, and relationship drivers. Based on published literature, possible relationships between all the constructs and the m-services’ adoption intention are examined, as well as the influence of trust, innovativeness, perceived ease of use and relationship drivers on perceived usefulness. The initial hypotheses form the framework in Figure 1. After testing these hypotheses through stepwise regression analyses and ANOVAs we conclude to the conceptual framework, which is designed in Figure 2. Table 7. Results of the stepwise regression analysis for perceived usefulness Model

1 2 3

R

0.473 0.546 0.585ͥ

R Square

0.224 0.298 0.342

Adjusted R Square

Std. Error of the Estimate

0.222 0.295 0.338

0.65581 0.63398 0.61424

ͥ Predictors: (constant), trust, innovativeness, perceived ease of use

38

Change Statistics R Square Change

F Change

df1

df2

Sig. F Change

0.224 0.074 0.045

127.708 46.591 29.863

1 1 1

443 442 441

0.000 0.000 0.000

 Mobile Services Behavioral Intention

Table 8. Results of ANOVA for demographic variables Demographic Variables Age

Categories 18-24 25-34 35-44 >44

F value (p) Gender

Male Female

t value (p) Educational level

Elementary school High school University/Tech. Col. Master/PhD F value (p)

Mean (SD) 3.46 (0.82) 3.67 (0.88) 3.61 (0.84) 3.73 (0.79)

Demographic Variables Occupation

1.545 (0.188) 3.60 (0.83) 3.58 (0.89)

0.251 (0.268)

Monthly income (€)

Categories

Mean (SD)

Student Private Employee Public Servant Freelancer Unemployed Other

3.55 (0.83) 3.61 (0.87) 3.68 (0.76) 3.65 (0.93) 3.43 (0.76) 3.59 (1.02)

F value (p)

0.441 (0.82)

2400 I don’t answer

3.48 (0.84) 3.69 (0.88) 3.71 (0.82) 3.57 (0.86) 3.58 (1.07) 3.73 (0.77) 3.95 (1.13) 3.45 (0.78)

F value (p)

1.579 (0.129)

3.06 (0.52) 3.38 (0.81) 3.58 (0.87) 3.76 (0.86) 4.163 (0.006)

Figure 2. Final framework

39

 Mobile Services Behavioral Intention

As it is obvious from the final figure, not all of the initial hypotheses are verified. So, the literature regarding other types of technology, which we followed as an example from pre-studied acceptance models, does not always apply the occasion of mobile data services adoption in Greece. More specific, the analysis of the studied relationships gives the following remarks: •

•

• • •

The impact of perceived usefulness, innovativeness and relationship drivers on m-services’ adoption intention is verified. Among these approved hypotheses, innovativeness has the strongest effect on adoption intention. Perceived usefulness and relationship drivers, in response, are following. The mobile data services are expected to be successful, if they provide new technology or new ideas; trivial services might not be intriguing to adopt. In addition, they are expected to succeed, if they provide something that makes people’s routine transactions easier and increase their productivity, effectiveness and efficiency. If mobile services are personalized, provide preferential treatment and their use gives discount or coupons in return are likely to be adopted. It is noteworthy that trust and perceived ease of use do not affect directly the adoption intention. Both of them, however, have a significant indirect effect on adoption intention through perceived usefulness. Perceived ease of use and trust were expected to influence positively the users’ adoption intention. This initial belief, however, comes in contrast to the findings. It seems that Greeks are not skeptic about non-secure m-payments or losing confidential personal data, and do not doubt about the trustworthiness of the m-services’ results or the integrity of their terms of use. At least, these are not what they think about, when it comes to the usage of a mobile service. The impact of perceived ease of use, innovativeness and trust on perceived usefulness is verified. Trust has the strongest effect, followed by innovativeness and perceived ease of use. Relationship drivers construct do not seem to have a significant effect on perceived usefulness. With the exception of educational level, demographic characteristics cannot be judged as an important influential factor towards the m-services’ adoption intention. The statistics showed that the more educated the people are, the more they intend to use m-services.

CONCLUSION Prior studies show an intense interest in exploring the factors that influence people’s behavior towards the adoption of a variety of new technologies and systems. In order to accomplish this goal, there are multiple behavioral theories introduced suggesting conceptual models and recommending different influential factors. This research contributes with new dimensions to these theories adding a marketing perspective and concluding to the variables that form people’s perception about mobile services adoption. Consequently, the contribution of this chapter is threefold: First, it contributes to the development of a general theoretical and conceptual framework for examining the effects of a number of variables on mobile services adoption intention, building on the growing literature at the technology acceptance models. Second, it explores the factors that impact on the users’ decision to adopt a new service, which is essential for gaining a holistic view on the consumers’ reaction to technology trends. Researchers and practitioners can get empirical insights to predict the acceptance in the market, and especially in Greece, where scarce research has been conducted around the topic. Third, the chapter uses perspectives from the marketing area for a technology acceptance issue by including the relationship drivers as a construct in the model. It combines ideas from the relationship marketing sector with the unique characteristics 40

 Mobile Services Behavioral Intention

of the mobile technologies. The idea of correlating the adoption intention of the m-services with the relationship ties that are possible to be created while using such services is quite innovative and very specialized in the mobile features. Furthermore, the survey’s results could be a strong tool at the hands of companies and organizations involved in the mobile services development, mobile commerce investment and mobile marketing. We could mention some real-life ideas the m-services are likely to succeed. First of all, mobile services firms or governmental organizations, which adopt mobility, should take advantage of the relationship ties that m-services are able to create with their users. A pregnant woman, for example, would trust in buying a mobile subscription to a baby center, which could notify her with SMS of new products and birth consultancies in the different stages of her pregnancy giving her the chance to withdraw from the service whenever she likes; it is a useful service, personalized to each woman offering the opt-in/out decision. In addition, airline companies trying to avoid the long check-in queues at the airports could motivate the travelers to use mobile check-in by giving them in return m-coupons for a coffee/food at the airports; this useful service includes users’ reward. Despite the fact that results provide meaningful implications, the research has three limitations. First, it is restricted to the examination of six factors. Second, it is limited to the Greek territory. Third, the hypotheses refer only to the impact of the factors on the adoption intention and perceived usefulness; more correlations between the factors are worth being examined. For future research, more influential factors can be added to the proposed conceptual framework, so that we gain a more holistic view of the incentives to adopt mobile services. Examples of such factors are cost -especially defined for the mobile expenses (equipment, subscription, transaction costs etc.) and mobile functionality in specific places or countries (enough access points, net speed, etc.). The results are going to be compared with non-Greek similar studies. Such a comparison and taking into consideration the different cultural notions could be beneficial for the mobile industry targeting to multicultural services and global utilities. Finally, another data analysis method, such as Structural Equation Modeling, can be applied, in order to develop an even more concrete framework/model including the relationships of the factors with each other.

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Mylonakis, J. (2004). Can mobile services facilitate commerce? Findings from the Greek telecommunication market. International Journal of Mobile Communications, 2(2), 188–198. doi:10.1504/ IJMC.2004.004667 Nysveen, H., Pedersen, P., Thorbjornsen, H., & Berthon, P. (2005). Mobilizing the Brand: The effects of Mobile Services on Brand Relationships and Main Channel Use. Journal of Service Research, 7(3), 257–276. doi:10.1177/1094670504271151 Pavlou, P. (2003). Consumer Acceptance of Electronic Commerce: Integrating Trust and Risk with the Technology Acceptance Model. International Journal of Electronic Commerce, 7(3), 101–134. Petina, I., Amialchuk, A., & Taylor, D. G. (2011). Exploring effects of online shopping experiences on browser satisfaction and e-tail performance. International Journal of Retail & Distribution Management, 39(4), 742–758. doi:10.1108/09590551111162248 Polančič, G., Heričko, M., & Rozman, I. (2010). An empirical examination of application frameworks success based on technology acceptance model. Journal of Systems and Software, 83(4), 574–584. doi:10.1016/j.jss.2009.10.036 Qi, J., Li, L., Li, Y., & Shu, H. (2009). An extension of technology acceptance model: Analysis of the adoption of mobile data services in China. Systems Research and Behavioral Science, 26(3), 391–407. doi:10.1002/sres.964 Rogers, M. (1995). Diffusion of innovations. New York: Free Press. Scharl, A., Dickinger, A., & Murphy, J. (2005). Diffusion and success factors of mobile marketing. Electronic Commerce Research and Applications, 4(2), 159–173. doi:10.1016/j.elerap.2004.10.006 Schierz, P. G., Schilke, O., & Wirtz, B. W. (2010). Understanding consumer acceptance of mobile payment services: An empirical analysis. Electronic Commerce Research and Applications, 9(3), 209–216. doi:10.1016/j.elerap.2009.07.005 Shiau, W. L., & Chau, P. Y. K. (2012). Understanding blog continuance: A model comparison approach. Industrial Management & Data Systems, 112(4), 663–682. doi:10.1108/02635571211225530 Suh, B., & Han, I. (2002). Effect of trust on customer acceptance of Internet banking. Electronic Commerce Research and Applications, 1(3-4), 247–263. doi:10.1016/S1567-4223(02)00017-0 Sulaiman, A., Jaafar, N. I., & Mohezar, S. (2007). An overview of mobile banking adoption among the urban community. International Journal of Mobile Communications, 5(2), 157–168. doi:10.1504/ IJMC.2007.011814 Taylor, S., & Todd, P. A. (1995). Understanding Information Technology Usage: A Test of Competing Models. Information Systems Research, 6(2), 144–176. doi:10.1287/isre.6.2.144 Thong, J. Y. L., Hong, S. J., & Tam, K. Y. (2006). The effects of post-adoption beliefs on the expectationconfirmation model for information technology continuance. International Journal of Human-Computer Studies, 64(9), 799–810. doi:10.1016/j.ijhcs.2006.05.001

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Venkatesh, V., Morris, M., Davis, G., & Davis, F. (2003). User acceptance of information technology: Toward a unified View. Management Information Systems Quarterly, 27, 425–478. Walczuch, R., Lemmink, J., & Streukens, S. (2007). The effect of service employees’ technology readiness on technology acceptance. Information & Management, 44(2), 206–215. doi:10.1016/j.im.2006.12.005 Wang, C., Lo, S., & Fang, W. (2008). Extending the technology acceptance model to mobile telecommunication innovation: The existence of network externalities. Journal of Consumer Behaviour, 7(2), 101–110. doi:10.1002/cb.240 Wang, K., & Lin, C. L. (2012). The adoption of mobile value-added services: Investigating the influence of is quality and perceived playfulness. Managing Service Quality, 22(2), 184–208. doi:10.1108/09604521211219007 Wang, W. T., & Li, H.-M. (2012). Factors influencing mobile services adoption: A brand equity perspective. Internet Research, 22(2), 142–179. doi:10.1108/10662241211214548 Wang, Y. S., Lin, H. H., & Luarn, P. (2006). Predicting consumer intention to use mobile service. Information Systems Journal, 16(2), 157–179. doi:10.1111/j.1365-2575.2006.00213.x Wei, T., Marthandan, G., Chong, A., Ooi, K., & Arumugam, S. (2009). What drives Malaysian mcommerce adoption? An empirical analysis. Industrial Management & Data Systems, 109(3), 370–388. doi:10.1108/02635570910939399 Wu, I. L., Li, J. Y., & Fu, C. Y. (2011). The adoption of mobile healthcare by hospital’s professionals: An integrative perspective. Decision Support Systems, 51(3), 587–596. doi:10.1016/j.dss.2011.03.003 Wu, J., & Wang, S. (2005). What drives mobile commerce?: An empirical evaluation of the revised technology acceptance model. Information & Management, 42(5), 719–729. doi:10.1016/j.im.2004.07.001 Yang, K. (2005). Exploring factors affecting the adoption of mobile commerce in Singapore. Telematics and Informatics, 22(3), 257–277. doi:10.1016/j.tele.2004.11.003 Yang, K. (2010). Determinants of US consumer mobile shopping services adoption: Implications for designing mobile shopping services. Journal of Consumer Marketing, 27(3), 262–270. doi:10.1108/07363761011038338 Yang, K. (2012). Consumer technology traits in determining mobile shopping adoption: An application of the extended theory of planned behavior. Journal of Retailing and Consumer Services, 19(5), 484–491. doi:10.1016/j.jretconser.2012.06.003 Yang, K., & Forney, J. C. (2013). The Moderating Role of Consumer Technology Anxiety in Mobile Shopping Adoption: Differential effects of facilitating conditions and social influences. Journal of Electronic Commerce Research, 14(4), 334–347. Yi, M., Jackson, J., Park, J., & Probst, J. (2006). Understanding information technology acceptance by individual professionals: Toward an integrative view. Information & Management, 43(3), 350–363. doi:10.1016/j.im.2005.08.006

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Yu, Y., & Buahom, K. (2013). Exploring factors influencing consumer adoption on mobile commerce services. The Business Review, Cambridge, 21(1), 258–265. Yunos, H. M., Gao, J. Z., & Shim, S. (2003). Wireless advertising’s challenges and opportunities. IEEE Computer, 36(5), 30–37. doi:10.1109/MC.2003.1198234 Zhong, C. (2013). Critical factor analysis of mobile online shopping adoption: from mobile phone users’ perspectives.In proceedings of the 2013 International Conference on Computational and Information Sciences (pp. 1667-1670). doi:10.1109/ICCIS.2013.436

KEY TERMS AND DEFINITIONS ECM: Expectancy Confirmation Model. EDM: Expectancy Disconfirmation Model. TAM: Technology Acceptance Model. TPB: Theory of Planned Behavior. UTAUT: Unified Theory of Acceptance and Use of Technology.

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Chapter 3

SWOT Analysis of M-Commerce Ramandeep Kaur Institute of Information Technology and Management, India Harmeet Malhotra Institute of Information Technology and Management, India

ABSTRACT M-Commerce is availing services online without physically going to geographical locations such as banks, shopping malls etc. It is a customer-driven approach offering convenience of personalized marketing, selling and purchasing goods and services on mobile phones. From selling home-made chocolates to selling apparels online, it has invaded all. Smartphones has widen its reach and has introduced innovation in information exchange and transactions through mobile applications. Certain challenges and threats posed by M-commerce, which are faced by business organizations and customers, are analyzed via SWOT to aid decision making of organizations before shifting their focus on M-commerce, at the same time, of customers prior to sharing their sensitive information via smartphones. This chapter focuses on the feasibility and acceptability of M-commerce with the help of SWOT analysis amongst existing and prospective stakeholders. Detrimental factors leading to growth in business revenue, challenges for implementing technology, challenges faced by end-users etc. has been discussed in detail.

1. INTRODUCTION The developments in the field of information technology has fuelled immense growth in the digitization of products and services.It has made the adoption of e-commerce as a widely accepted field. E-commerce is trading of products and services by means of supporting hardware, software (computer) and internetwork tools together contributing as a computer network.The trading is carried out with the help of wired and wireless media. The benefits of e-commerce such as efficiency, 24X7 services, competitive pricing, variety in item selection etc. has outnumbered the resources required in the initial setup of the e-commerce websites. The advances in modern Internet EC, including advertising, shopping, investing, banking andother online services (e-mail, information seeking, etc.) has made facilitated people to interact with the Internet in their daily lives (Wu & Wang, 2005). The increasing number of internet users and their pressing needs for service-on-the-move has led to an advancement of e-commerce. This advanceDOI: 10.4018/978-1-5225-0236-4.ch003

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 SWOT Analysis of M-Commerce

ment can be seen in the form of m-commerce. M-commerce refers to any transactions, either direct or indirect, with a monetary value implemented via a wireless telecommunication network (Barnes, 2002). Ovum defined M-commerce as “The core of mobile e-commerce is the use of a terminal (telephone, PDA, PC device, or custom terminal) and public mobile network (necessary but not sufficient) to access information and conduct transactions that result in the transfer of value in exchange for information, services or goods.” Many factors contribute in the inclination of society towards m-commerce such as wireless communication technology, coupled with the increasingly high penetration rate of the Internet (Pascoe, 2002; Rupp, 2002), smart phones within the purchasing power of a common man, availability of internet over mobile phones, availability of services at economical rates etc. Mobile devices allow people and businesses to stay in touch around the clock. They have enabled new forms of learning, health care, economic development, and governance innovations (West, 2014). Mobile telephony offers the potential platform for unprecedented penetration of the Internet and services for supporting m-commerce (Barnes, 2002). 9% Indians are using smartphones for the purpose of rapidly consuming contents such as gaming, videos, songs and entertainment on their smart devices and this leads to steady growth in mobile advertising and apps industry (Batra, 2013). Inspite of the above factors, perceptions of people regarding mobile commerce and their acceptance are, sometimes, detrimental for the growth of m-commerce. Some users consider m-commerce as immature technology while others vacillate against m-commerce based transactions. Form some people, without m-commerce, their daily life shall be so chaotic that their survival without it can’t be imagined. It becomes all the more difficult to trade-off between the pros and cons of this rapidly increasing technology over mobile phones. Hence, it is obligatory to conduct a SWOT analysis of m-commerce to understand the concerns and needs of the user with respect to their expectations from the technology. SWOT analysis conducted in this research aims to identify the strengths, weaknesses of m-commerce society and the opportunities and threats that persists in this technocrat society. A detailed SWOT analysis has been conducted in the further sections so as to understand the direction where m-commerce is proceeding and the expectation of the customer from it.

2. LITERATURE REVIEW The origin of mobile commerce can be related to late 1990s, where in it was used for traditional purpose of calling and sending SMS. Later, with the inception of e-commerce, there was a drift change in purchasing goods online with a decline services availed by the customers from brick-and-mortar setup. This state-of-art technology faced a setback with the emergence of m-commerce, as a challenge for the industries, while a blessing for the customer. Several researchers studied the reasons indicating the reasons for the origin of m-commerce. A major factor in the adoption of any technology is the human social factor. Fulk (1993); Schmitz and It was suggested that information passed through individuals’ social networks (Fulk, 1991) as well as the beliefs of users (Cheon (2012)) influences their perception of a target technology. Typical in wireless mobile environment, for an individual to use the data services of a mobile device, a certain number of members of the subject’s social network need to be users of the same features (Sarker and Wells, 2003). Dholakia (2004) proposed some preconditions leadingto the emergence of m-commerce identifying the main dimensions of m-commerce which distinguished itfrom e-commerce. Lu (2005) proposed models to study the relationships in non-work settings among several latentconstructs such as intention to adopt wireless mobile technology, social influences, and 49

 SWOT Analysis of M-Commerce

personal innovativeness. Kim(2007) examined the adoption of Mobile Internet (M-Internet) as a new Information and Communication Technology(ICT) from the value perspective. The use of m-commerce has empowered the customers with online payment. Kim (2010) proposed an m-payment research model which consists of two user-centric factors (personal innovativeness and m-payment knowledge) and four m-payment system characteristics (mobility, reachability, compatibility, and convenience). Further, studies were conducted to examine various factors such as convenience of Mobile devices and WAP/ GPRS enabled handsets etc. as well as consumer perceptions and service qualityto have any influence on the adoption of M-commerce (Islam (2011), Chen (2011), Bouwman (2012), Nikou (2013), Ozer (2013), Shieh (2014)). Nikou (2014) revealed that factors such as ease of use, use context with reference to mobility and critical mass in concert with social influence impact users’ behavioural intentionand usage significantly. Based on the dearth of the literature of a consolidated picture of m-commerce, a SWOT analysis was carried out in a reputed institute in India and the findings have been interpreted.

3. EVOLUTION OF M-COMMERCE More and more consumers are adopting and incorporating mobile devices in their daily lives. They are using mobile phones for communication with family and other business or service partners thereby increasing their importance to much extent. The way of doing business has also changed a lot, starting from physical stores and outlets to e-commerce applications and now m-commerce. Ecommerce became possible in 1991 when the Internet was opened to commercial use. With inventions in technology the business organizations moved to the web enabled work through online websites and through smart phones thereby leading to the development of concept of M-commerce. The phrase mobile commerce was originally coined in 1997 by Kevin Duffey at the launch of the Global Mobile Commerce Forum, to mean “the delivery of electronic commerce capabilities directly into the consumer’s hand, anywhere, via wireless technology.” Earlier these mobile phones were used only for sending SMS or for calling purposes. These days users not only do transactions and search for information online or through ecommerce but also through their mobile phones. Besides creating e-commerce websites, these days’ developers are moving towards mobile optimized sites. In 1981 first business to business online shopping system was installed by Thomas Holidays in UK and in April 1984, CompuServe launched the first comprehensive electronic commerce service named Electronic Mall in USA and Canada. Mobile commerce services were first delivered in 1997, when the first two mobile-phone enabled Coca Cola vending machines were installed in the Helsinki area in Finland. The machines accepted payment via SMS text messages. This work evolved to several new mobile applications such as the first mobile phone-based banking service was launched in 1997 by Merita Bank of Finland, also using SMS. After this in 1999, two major national commercial platforms for mobile commerce were launched, Smart Money (http://smart.com.ph/money/) in the Philippines, and NTT DoCoMo’s i-Mode Internet service in Japan. After this there was no looking back and all countries started adopting the m-commerce technology usage making the m-commerce applications the key component of the interaction between consumers and businesses. Moreover, in order to make maximum use of the potential mobile commerce market, mobile phone manufacturers such as Nokia, Ericsson, Motorola, Qualcomm, etc. are working with carriers such as AT&T Wireless and Sprint to develop WAP-enabled smart phones offering all the Internet facilities with minimum cost, time and effort.

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4. NEED FOR M-COMMERCE M-commerce is growing at a faster pace than e-commerce these days. A company’s ability to optimize the customer experience across all channels will drive its m-commerce success. Mobile e-Stores and mobile apps have come such a long way in the last couple of years that the implementation process has become simple, fast and affordable. It has attracted many shopaholics. •

•

• •

• • •

• •

Expanded Reach: It is very difficult to carry laptops or have computers at all the places you travel. But smartphone goes along with you whenever and wherever you commute. Customers can access the information through these mobile apps irrespective of the location or any other barrier. Thus, digital era has helped in reaching out the widest audience. To Remain Ahead of Competitors: In case your competitors are using mobile applications to market their product and you are not, then in coming time you might not be able to retain your regular customers also. So the business organizations must try to adopt and grab this opportunity to reach out more customers in less time, effort and cost. They can make use of digital marketing to promote their products and services to extremes. Low Cost of Maintenance: A mobile application takes very less cost for development. Moreover updations can also be done very easily. Ease of Usage Thereby Saves Time and Money: With smart phones in pocket it becomes much easier and convenient for customers to do shopping or browse the information as and when required. The mobile apps have been customized as per the mobile phone settings. The user doesn’t have to travel to get the product thereby reducing the cost and time of travelling also. Provides Consumers with Mobile Friendly Service Experience: The concept of push-notification is followed where in customized messages and offers can reach the potential customers depending upon their previous responses, orders and feedback. Instant Response: There is fast and direct communication between the users and the business organizations as the mobile applications also enables live chat, embedded web links and toll free numbers to contact the sender immediately. Secure Payments: The main focus of customer is whether the payments and other information like account details, credit card details, etc are secure or not irrespective of the mode. Now a days, mobile phones In-app payment transactions doesn’t require third-party payment gateways and are hosted by the platform itself. For instance Android users can pay via Google Wallet, while iOS users can pay via Apple Pay. The new emerging concept of mobile wallet is also gaining popularity which allows the customers to maintain a pre-paid account from which the amount can be debited whenever a purchase is made. All types of products can be sold through m-commerce. Flexibility of Accessing the Information: In current era customer feels very comfortable in accessing the information on their smart phones. The flexibility of viewing the apps as per the mobile configuration, Internet access speed and various other parameters.

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5. M-COMMERCE IN NATIONAL AND INTERNATIONAL MARKET As a revolutionary technology, mobile computing enables has enabled to access information 24X7even without the presence of physical network connections (Li, 2005). It was indicated in 2003 that there were 94.9 million m-commerce users worldwide and expected the segment to propagate to 1.67 billion by 2008 (Yang, 2005) with a simultaneous increase in internet users to 1.4 billion. As an integral part of m-commerce, the development of mobile apps has resulted in more sales of smartphones, thereby substituting PCs for online shopping. A comparative study over the years was carried out to study the inclination of users to m-commerce. The users of m-commerce via smartphones were only 10% in 2013 with not more than 5% of transactions via mobile phones. The following year witnessed an increase of more than double users of m-commerce with over 13% transactions completed via mobile (IMAI, 2015). In 2015, m-commerce has been selected as the mostfavouredchannel of payment with mobile wallet occupying the topmost place. The unveiling of 4G services in 2015 has turned the mobile industry upside down while providing the internet facility at an unimaginable speed, at the same time providing a boost to mobile commerce. India has also witnessed a paradigm shift in the mobile subscription of users. From 261 million in 2007-2008 to 910 million in 2013-2014, from penetration in rural areas to various services in urban areas such as internet telephony.This has created a ripple effect in an increase of 58% annually in the number of internet in rural areas. Increases in the number of smartphones and 3G subscriptions are further driving this growth. Indeed, the number of smartphone users is expected to grow at a CAGR 91% from 2012 through 2016, jumping from 29 million to 382 million. Similarly, the number of 3G subscribers could expand at a CAGR of 84%—from 23 million to 266 million—during the same period (IMAI, 2015).

5.1. M-Commerce Trends in Indian Market Figure 1 shows the yearly subscription rate as released by TRAI in their Indian Telecom subscription report. The above analysis clearly depicts that 2015 has seen the maximum mobile subscriptions as compared to 2013 and 2014. There is a decrease in subscription rate in the Year 2014 but this year with the innovations in services provided through mobile applications has seen a drastic uplift.

Figure 1. Yearly mobile subscription rate

Source: India Mobile Subscriber Stats. 976M Total, 869M Active, 160M MNP Requests (May 2015).

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Figure 2. E-Commerce revenues via handsets in US Source: Coda Research Consultancy, 2015.

5.2. M-Commerce Trends in Global Markets E-commerce and mobile commerce revenues are growing at a faster pace. Almost 65 percent growth is seen annually reaching $24 billion by 2015 as predicted by Coda Research Consultancy situated in U.K (Refer Figure 2). The increasing sales of physical goods, apps, videos and music downloads, digital games, etc through mobile phones through mobile phone applications is the main driving force behind the growth seen from 2010 to 2015. The Coda Consultancy estimates 194 smartphone subscribers in 2015 which is nearly three times of 78 million subscribers in 2010 Figure 3 depicts the mobile retail commerce revenue estimation worldwide from 2012 to 2018. There has been growth seen every year and reaching to $626 by 2018. The consumers throughout the world are spending a lot on purchases made through mobile phones as it is more convenient and easy to use. According to Goldman Sachs 686 million consumers around the globe will make a purchase on their mobile devices this year; that figure will increase 21% to 830 million in 2016, jump 16% to 961 million in 2017, and rise 13% to 1.09 billion in 2018.

6. RESEARCH TOOLS This chapter incorporates three research tools to understand the impact of m-commerce and the frequency with which the users utilize the services rendered by m-commerce companies. These tools enables to ascertain the potential value-adding features of m-commerce. The proposed research tools provide some findings which act as stimulators for users to adopt m-commerce.

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Figure 3. Global mobile retail commerce revenue from 2012 to 2018 (in billion U.S. dollars)

Source: Statista.

These tools are as follows: 1.

2.

3.

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SWOT Analysis: SWOT analysis aims to identify the strengths and weaknesses of an organisation and the opportunities and threats in the environment (Dyson, 2004). After ascertaining the strengths and weaknesses of the technology, the improvements can be made to deal with the flaws, at the same time taking benefits from the strengths. Internal and the external environment of the organization is analysed to discover the opportunities for expansion and the threats which might lead to undermining of the technology under study. In this chapter, SWOT analysis from the perspective of consumers as well as m-commerce service providers was conducted, which has been given in detail in the next section. SPSS tools was used to record and analyse the data. Survey through Questionnaire: A questionnaire comprising of 50 questions was mailed to 150 respondents belonging to three different institutions. The questionnaire was carefully designed keeping in mind various hindrances that prevent the users from adopting m-commerce as well as the motivators which divert the users from e-commerce towards m-commerce. Data was collected through a national mail survey to understand the perception of academic community towards services offered by the mobile commerce industries. Secondary Data: Past literature was studied to analyse the impact on innovation in technology in the field of e-commerce with specific reference to m-commerce. A comparison between ecommerce and m-commerce was undergone carefully on the basis of various parameters such as time to transact, on-the-go services, consumer requirement, data security etc.

 SWOT Analysis of M-Commerce

7. ANALYSIS AND INTERPRETATION OF CONSUMER AND INDUSTRY PREFERENCES The advancement in wireless technology has changed the mindset of people both the customers as well as business organizations. With the availability of Apps on the playstore, similar applications of varying sizes from different vendors performing almost equivalent functions has attracted more users to switch to m-commerce. The success and failure of m-commerce applications depends on various issues such as Internet connectivity, location sensitivity, service and support, security issues and so on (Felicitta, 2009). The user centric mobile application has paved the way for the new era. The survey has been conducted and based on that the SWOT analysis has been done. The details of the same are as follows:

SWOT Analysis from M-Commerce Provider’s Perspective Strengths •

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Can Reach out More Customers Irrespective of Geographical Barriers: The Internet facility have made communication easier and faster leaving behind all geographical barriers. Now it is much easier to deal with cross boundary customers and provide them all the services as if provided locally. Provide Location Based Services Due to GPS: Customized and location specific services help in attracting and retaining more customers. Overcome Language Barriers: Business firms are launching various Multilingual mobile apps and websites so that language constraints does not hold them from reaching out customers globally. Receive direct payments from smartphones: E-Banking and online Money Transfer applications have further made it easier for the firms to send and receive payments within few milliseconds. Besides B2C and C2C transactions, B2B transactions can also take place in no time using online websites such as Paypal, PayTm, etc. Boost Sales and Productivity of Products: As the business firms can market their products and services globally the sales and production obviously will take a boost. Since most of the geographical and language barriers have been removed so orders can be received from anywhere throughout the world. Easy to Maintain and Access Data: A lot of effort was required to maintain all the data related to customers, orders, payments, etc. But these days MIS systems can handle huge amount of information very easily and systematically so that the updations and retrievals becomes easier. Easy to Take Control Stock: Inventory management has also become very easier. All the details regarding the stock and its availability can be fetched in no time. The tedious task of maintain the details of the stock to be ordered, availability, etc can be done without any hassles now. Better Campaigns and Promotion of Products: Online promotional strategies are being designed very meticulously keeping in mind the preferences of individual customers based on their previous purchases. New Streams of Generating Revenue: Besides doing business by establishing the outlets at various places, ecommerce and mcommerce are new modes of generating business leading to increased revenue.

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• • • • •

High Rate of Consumer Retention: The customer retention is much higher in case of mcommerce because if the customer is satisfied with the offered product and services, he/she get more attracted towards the customized promotional schemes offered to them. Increased Sale of Digital Products like Games, Music, Videos, etc.: Not only clothes, electronic items, watches, etc are being sold through mcommerce but purchase of online games, music and video downloads are also gaining popularity. Promotes Brand Recognition: The concept of e-commerce and mcommerce had helped the firms in Brand Building and now the their products can be globally recognized by the customers. Higher Customer Satisfaction and Loyalty Ratio: Due to the provision of huge discounts, customized products with no constraint the customers feel more satisfied and remain loyal to the firms. Higher Return on Investment: Conducting business online or through mobile and smart phones requires very less investment. All that is required is a good marketing strategy of doing business through this new stream. Thus, high return on investment is there in doing business through this mode.

Weakness • • • •

• •

Low Bandwidth of Current Mobile Phones: The data to be transferred through the mobile phones includes images, videos, text, documents; etc so high bandwidth is required for easy transfer of data which is still a constraint. Lesser Speed: Speed of Internet connection is also one of the major hurdle in mcommerce applications. Lack of Standards: Every firm is following a different standard for doing business through smart phones. Thus, a common standard is required to make the applications compatible to interact with one another. Device Configuration Constraints such as Limited Memory, Weak Processors, etc.: Every individual has a different mobile handset with different configuration. One mobile app that works faster on one handset may not work that efficiently on other. So configuration problems might lead to success or failure of an app but most of the mobile application development firms are trying to take care of these issues at the time of development only. Easy Supply Chain Integration: It is very easy to integrate various suppliers and vendors through these apps. Inconvenience to the customers because of unavailability of the requested order.

Opportunities • •

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To Know More about Customer Preferences and Provide Them Personalized Services: The business firms easily come to know about the requirements and preferences of customers as they are maintaining all the order history of each and every customer. To Provide after Sale Services Like Shipment Tracking, etc.: Mobile apps provide facility to track the shipment status anytime which was not possible otherwise.

 SWOT Analysis of M-Commerce

• • • • • • •

Opportunity of Providing Value Added Services: Mcommerce have given a boost to business firms as now they can provide customers with easy to avail value added services thereby increasing their retention rate. Easy Interaction and Coordination among Suppliers and Partners: As there are no geographical barriers so two or more business firms, suppliers, vendors can easily communicate and increase their business by collaborating with other firm having expertise in various fields. Keep Pace with the Competitors: There is hard competition going on between various firms providing online products and services. So keeping pace with the changing way of doing business is very much necessary and mcommerce gives such an opportunity to the firms. Approaching More Customers World Wide: Technological innovations has made it easy for firms to reach the customers worldwide. New Mode of Product Advertising and Marketing: Besides the traditional methods of promoting the products through television, radio and newspapers, mcommerce has provided a new and more effective method of product promotion and marketing. Opportunity to Predict Sales and Production: Since the statistical tools and data analysis tools are available so they can be easily applied on the customer and other data available and from there they can predict the demand of the products in the market. Reduction in Administrative Cost: The cost as compared to other modes is very less in this mode of doing business.

Threats • • • • •

Customer Loyalty. Competitors offering similar products and services. Security and reliability of wireless network. Copyright issues. Website compatibility with wireless technology.

The SWOT analysis can be understood pictorially in the form of Figure 4 and Figure 5. The research revealed (Refer Figure 4) that 60% of the e-commerce service providers are targeting the customers through mobile apps. 40% of the service providers had to restrict their product sales to brick-and-mortar due to unavailability of the mobile phones supporting internet or unwillingness to incorporate online facilities. In majority of the cases, the ROI from mobile transaction are 30% higher than the transactions from e-commerce website. Out of 60%, approximately 25% providers have shifted from e-commerce completely to m-commerce, while the remaining shall continue providing both the services.65% of the m-commerce service providers faces problems due to incompatibility of mobile phones as well as slow internet connections (Refer Figure 5). 15% providers face problems in synchronizing the transactions with the vendors for delivery and returns.48% service providers are facing stiff competition with the opponents while 25%had an upper hand in the market due to lack of awareness amongst the opponents of m-commerce benefits. Rest of the providers are trying to locate suitable opportunities to shift to mcommerce.

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Figure 4. Comparison of m-commerce and e-commerce service providers

Figure 5. M-commerce implementation issues

SWOT Analysis from M-Commerce Customer’s Perspective Strengths • • • •

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High Quality Services: Customer can purchase and avail high quality goods and services from anywhere throughout the world. The geographical barriers are not a constraint now for reaching out the companies that were not possible before ecommerce and m-commerce. Location Specific Services: M-commerce has made it easier to have location specific services available at their doorsteps by just selection an option on the mobile applications. Convenient and Customized Services: The customers can easily opt for their preferences and requirements and get their customized products ready and delivered in very less time. Language Friendly Interfaces: Business companies are launching mobile apps in different languages so now language is also not a constraint for customers. They can download the app in their preferred language and take the advantage of it.

 SWOT Analysis of M-Commerce

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Personalization: With m-commerce, user can customize the profiles on apps, apply filter as per their requirement to narrow down their search, personalize messages to different strata of people, at different geographical locations and at selected time. Easy access to M-vouchers, shopping, e-ticketing, etc. Information Sharing: Large amount of information can be shared through smartphones, tablets, etc irrespective of the location of the mobile holder. The beneficiaries can take full advantage of required information both in rural as well as urban areas. Portability and Mobility Features of Mobile Devices: Small, light weight, portable, easily accessible are the main advantages of mobile devices. They can be carried anywhere without any major overhead. Availability of High Speed Internet Connections: The Internet connections are available at a very low cost and provide a very good bandwidth. This is the reason behind the success of mcommerce on mobile held devices. Economic Data Plans: With the launch of 3G and 4G services, the speed and data capacity has attracted the customers to switch to m-commerce platform, thereby, providing them ease of selection and purchase of goods and services. Easy to Make Financial Transactions: Customer can do easy transactions as many bank are also providing various services through the mobile apps. The businessmen can easily send and receive payments with their business partners, suppliers and customers.

Weakness •

• • •

•

Lack of Data Security and Digital Identity Threat: This is the major issue to be addressed while doing transactions online. The customer has to enter its personal details, credit card and net banking passwords, etc on their mobile apps. So it becomes important that the confidentiality is kept to avoid fraud and misuse. Low Control over Product Quality: Since the products are being ordered online the look and feel of the product is only seen as displayed on the mobile apps. So there is no way to control or look into the quality of products before ordering them. Inconvenience because of Unavailability of the Requested Order: Many a times the product ordered is not available. After few days of placing the order customer might get the response that product is unavailable. Limited Memory and Computational Power: The speed, performance, etc of the applications totally depends upon the memory and computational power of the mobile devices. The slow connection and speed of a particular phone might prevent the customer from placing orders through these devices. Dependency on Proprietary Solutions by Business Organization: The business firms are largely dependent upon the proprietary solution for the success of their m-commerce business implementation strategies.

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Opportunities • • •

•

Opportunity of Receiving Mobile Coupons that Can Be Redeemed through Mobile Apps: Customers can receive discount coupons of different brands on their mobile phones and take the benefit of it. Easy to Compare Products as and when Required: It becomes very to compare the products and prices of various firms and then select the best possible product/service available in the market. Combining Variety of Services for Availing Benefits: Various services can be clubbed together through mobile based Internet solutions. Companies try to retain their customers for long by sending them various schemes available for them and customers can avail these to get the maximum benefit. Availing Services on the Go using Mobile Phones: Easy portability of mobile phones helps the customers in availing services wherever and whenever required.

Threats • • • • •

M-Commerce Suitability of Small Screen Applications: Bigger the screen size, better is the resolution and ease of locating the products as well as feasibility of availing the services. Mobile Application Security Threat: Since m-commerce does not imply heavy investments, developers tend to ignore the security measures which has severe implications on customer. Information disclosure threat. Perpetuation of fraudulent activities. Rising competition in the market targeting same customers with competitive pricing.

The SWOT analysis can be understood pictorially in the form of Figure 6. The research conducted reveals that approximately 62% customers feel that the services offered by the m-commerce provider suits them best due to their hectic schedules. The services such as online transfer, online shopping apps, instantaneous cab bookings, e-grocery stores etc. has eased off their burden due to their busy life schedules. Out of these around 58% customers prefer cash on delivery services for availing various facilities while 40% tend to pay either by internet banking, or credit and debit cards. Rest of the customers have inhibitions towards using internet and online facilities. 85% of the respondents belonging to the age group of 20-35 had negligible problems in availing m-commerce services on their mobile phones while rest 15% complained about the memory requirements of the m-commerce apps and the speed of access of items from these apps. 68% of the respondents believe that the services offered by m-commerce providers are good value for money, while 12% were not satisfied with the quality of the product delivered to them. Rest 20% gave an average response over the products ordered and delivered by the vendors. 40% respondents remain loyal to the service provider and avail the services frequently or whenever places order they restrict to the same provider. 30% of the respondents lost their confidence on the provider due to several reasons such as late delivery of product, inferior quality product, problems in return/ exchange of products and inconvenience caused in case of money back/ refund. Rest 20% were the opportunist who avail services from no particular vendor. 75% of the respondents had either never faced any fraudulent attacks or security threats while 25% were hesitant in availing services due to fraudulent transactions and other phishing attacks.

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Figure 6. Customer’s perception of m-commerce app

8. M-COMMERCE TECHNOLOGY DEPENDENT (VIS-A-VIS SMART PHONES) The emergence of smart phones has changed the way business is conducted these days. It helps in connecting customers, partners, suppliers and various business organizations throughout the world. It enhances the productivity and efficiency of the work. Smartphones have helped the users in keeping themselves updated about the latest information, news and other information as per their requirement. The smartphone technology is growing at a faster pace thereby increasing the scope of m-commerce applications( mobilecommercedaily, 2015). India’s largest online shopping company Flipkart is going mobile-only, as the bulk of its consumers are doing so on their smartphones(ibtimes, 2015). The smartphone boom has made Internet users to use mobile phones to a greater extent as compared to desktop PCs and laptops. Moreover, mobile phones are no more out of reach for common people. They are easily available in the market at a reasonable rate which everyone can afford these days. In India, out of all the Internet traffic, 65 percent is due to access via mobile phones, according to a Statcounter survey, and around 41 percent of all Indians who made online purchases did the same on their mobile phones only in 2014 as per the report of Morgan Stanley Research (ibtimes, 2015). Tablets are driving much of this consumer spending growth. This year the majority of m-commerce sales will be made on tablets, compared with the 35% of m-commerce sales expected to be made on smartphone devices (Refer Figure 7). The tablets’ share of US retail m-commerce sales will rise to 71.5%, vs. 27% for smartphones by 2017 (emarketer, 2015). According to the prediction of Goldman Sachs (Sachs (2009)), the number of smartphone and/or tablet users making purchases on their mobile devices will increase considerably in the forthcoming years. 535 million consumers around the globe make paymentsthrough mobile devices in 2014.This figure will grow 28% to 686 by the end of 2015, increase 21% to 830 million in 2016, jump 16% to 961 million in 2017, and rise 13% to 1.09 billion in 2018, as per the investment bank (Refer Figure 8). Mobile is driving the ecommerce sales in various ways such as customers prefer to purchase and access information on their mobiles instantly and they buy more impulsively as compared to other modes of shopping. Not only shopping of products but also applications for games, banking services, music, ebooks,etc. are gaining popularity in this mobile era. Moreover various options available for finding

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Figure 7. M-commerce sales comparison & prediction (in billions)

Figure 8. Prediction of purchases via mobile devices Source: Sachs.

mobile location in smartphones help in filtering the information and deals required by the user. It becomes very to track the stores and other offers prevailing nearby you. The applications such as Google Maps help us in reaching our destinations in no time. At the time of purchasing a product also we user can review it online and read the comments that helps them in taking decisions instantly. Thus it is clear that smartphones are hub of providing business opportunities. Business organizations investing in mobile app and customized website as per the device configurations is likely to be more successful than the others that are not moving ahead in this field. A drastic behavioural change has been seen in the consumers due to this innovation in mobile commerce technology. Lastly, smartphones are easy to use, provides faster and customized service related to various fields be it banking applications or shopping websites.

9. M-COMMERCE VS E-COMMERCE: FUTURE TRENDS It is likely that m-commerce shall overtake e-commerce in the subsequent years, spurred by the continual uptrend in online shopping and growing use of mobile apps (Forbes, 2015).The timeline in Figure 9 shows the B2C e-commerce revenue in India from 2014 to 2017 in billion US dollars. B2C e-commerce 62

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Figure 9. Revenue forecast of e-commerce vs m-commerce in Indian market (in U.S. billion $)

revenue in India amounted to approximately 20 billion US dollars in 2014 and are expected to grow to 32.17 billion US dollars by 2017. M-commerce revenue, on the other hand, is expected to grow to $18.56 in 2017 from $2.40 in 2014. The statistics in Figure 10 depicts the mobile retail commerce and e-commerce revenues worldwide from 2014 to 2018. In 2014, global mobile retail revenues amounted to 204 billion U.S. dollars and are projected to reach 626 billion U.S. dollars in 2018. On the contrary, the revenue from e-commerce shall increase to $2356 bn in 2018 from $1,471 bn in 2014. KPMG forecasted a six-fold increase in mobile app downloads by the end of 2015 to 9 billion apps, thereby, making the country as the fastest growing mobile app market in both 2014 and 2013. India contributed to 7 per cent of the global app downloads ranking fourth behind Indonesia, China and the US (PTI, 2015). A study was conducted by Pani (2015) to understand the perspective of business organizations for rendering their service by switching to M-Commerce. It is evident from Figure 11 that approximately 78% business organizations agree with developing Figure 10. Revenue forecast of e-commerce vs m-commerce in international market (in U.S. billion $)

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Figure 11. M-commerce apps for business organization Source: Pani, 2015.

M-commerceApp as opposed to 22%. 93% agree for E-commerce requirement while 7% disagree, 70% agree for the increased in sale of general products while 30% disagree for the same. 40% business organizations responded positively for the increase in sale of customized products while 60% opposed it. With the launch of 4G services recently in India, it is expected that m-commerce shall sweep away most of e-commerce services and by the end of 2017, every common man shall be in a position to utilize the services provides by m-commerce, thereby, becoming the largest hub of all the services.

10. CONCLUSION The second largest cellular market in the world after China is banged by India, with a gigantic subscriber base of 981 million, as of June 2015. M-Commerce is availing services online without physically going to the geographical location of the centers such as banks, shopping malls, marts etc. This monumental advancement in technology has changed the perspective of various business sectors completely. One-toOne marketing and personalized selling is the main motto of the business organization behind endorsing M-commerce. From a small scale industry for selling home-made chocolates to a large scale industry selling apparels online, M-commerce has invaded all the industries. All types of businesses like B2B, B2C, C2C, etc. can be promoted through this mode. The m-commerce sale takes a leap every year with forecasted sales to be increased fourfold in the forthcoming years. All the business organizations and commercial sellers are considering the m-commerce platform as the best source of promotions and sales. At the same time, the consumers are preferring 24X7 services provides by m-commerce. It becomes obligatory to identify various strengths, weaknesses, opportunities and threats by the business organizations before shifting their focus on m-commerce as well as the customers prior to depending in totality upon services rendered by M-commerce before sharing their sensitive information. A SWOT analysis was conducted from the customers’ and sellers’ perspective. As a result, it could be concluded that undoubtedly shifting from brick-and-mortar and e-commerce to m-commerce shall be a profitable venture, certain challenges need to be dealt with care. Likewise, relying on m-commerce shall reap huge benefits to customers with On-The-Go services availability, but at the same time certain security

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precautions have to be brought into practice, as a prevention against fraudulent activities. In addition to that, the true potential of the M-commerce can be comprehended by mutual contribution of all the stakeholders including Banks, Aggregators and online merchants while constructing a conducive environment. After carefully analysing the statistical data, it can be inferred that in the forthcoming years the brick-and-mortar architecture and e-commerce store shall be completely swept away by the m-commerce, provided the e-governance tightens its grip on the loose ends of implementing m-commerce or availing the services rendered by m-commerce. There remains certain limitations in our research which need to be addressed. The current research was conducted via a sample consisting of young-adult individuals mainly students in an institute of India. Therefore, our sample may not be the representative of the entire Indian population. In future sample size can be extended to institutes of major cities. Also the research can be stretched to m-commerce apps of different operating systems as well.

REFERENCES Barnes, S. J. (2002). The mobile commerce value chain: Analysis and future developments. International Journal of Information Management, 22(2), 91–108. doi:10.1016/S0268-4012(01)00047-0 Batra, S., & Juneja, N. (2013). M-Commerce in India: Emerging Issues. International Journal of Advanced Research in IT and Engineering, 2(2), 54–65. Bouwman, H., Bejar, A., & Nikou, S. (2012). Mobile services put in context: A Q-sort analysis. Telematics and Informatics, 29(1), 66–81. doi:10.1016/j.tele.2011.04.001 Chen, Z.-S., Chen, R. L., & Xu, H. (2011). A Survey Study on Consumer Perception of Mobile-Commerce Applications. Procedia Environmental Sciences, 11, 118–124. doi:10.1016/j.proenv.2011.12.019 Cheon, J., Lee, S., Crooks, S. M., & Crooks, J. (2012). An investigation of mobile learning readiness in higher education basedon the theory of planned behaviour. Computers & Education, 59(3), 1054–1064. doi:10.1016/j.compedu.2012.04.015 Coda Research Consultancy. (2015). $24 Billion Mobile Commerce, $2.2 Billion Mobile Advertising in 2015. Retrieved August 23, 2015 from: http://mobilemarketingandtechnology.com/2010/05/ 31/24-billionmobile-commerce-2-2-billion-mobile-advertising-in-2015/ Dholakia, R. R., & Dholakia, N. (2004). Mobility and markets: Emerging outlines of m-commerce. Journal of Business Research, 57(12), 1391–1396. doi:10.1016/S0148-2963(02)00427-7 Dyson, R. G. (2004). Strategic development and SWOT analysisat the University of Warwick. European Journal of Operational Research, 152(3), 631–640. doi:10.1016/S0377-2217(03)00062-6 eMarketer. (2013). Smartphones, Tablets Drive Faster Growth in Ecommerce Sales. Retrieved April 24, 2013, http://www.emarketer.com/Article/Smartphones-Tablets-Drive-Faster-Growth-EcommerceSales/1009835 Felicitta, J., & Jayanthi, J. G. (2009). The Impact of M-Commerce in Global Perspectives- A Swot Analysis. Proceedings of the 8th Wseas Int. Conf. on Electronics,Hardware, Wireless and Optical Communications.

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Forbes. (2015). The Mobile Commerce Revolution In India. Retrieved August 12, 2015, from http://www. forbes.com/sites/eladnatanson/2015/06/17/the-mobile-commerce-revolution-in-india/ Fulk, J. (1993). Social construction of communication technology. Academy of Management Journal, 36(5), 921–950. doi:10.2307/256641 IMAI. (2015). Mobile Internet Users To Reach 213 Mn by June15. Internet and Mobile Association of India. Retrieved from http://www.iamai.in/PRelease_detail.aspx?nid=3528&NMonth=1&NYear=2015 International Business Times. (2015). India Tops The World For M-Commerce As Smartphones Drive Net Traffic. Retrieved May 29, 2015 from http://www.ibtimes.com/india-tops-world-m-commercesmartphones-drive-net-traffic-1943642 Islam, M. A. (2011). The Adoption of Mobile Commerce Service among Employed Mobile Phone Users in Bangladesh: Self-efficacy as A Moderator. International Business Research, 4(2). Kim, C., Mirusmonov, M., & Lee, I. (2010). An empirical examination of factors influencing the intentionto use mobile payment. Computers in Human Behavior, 26(3), 310–322. doi:10.1016/j.chb.2009.10.013 Kim, H. W., Chan, H. C., & Gupta, S. (2007). Value-based Adoption of Mobile Internet:An empirical investigation. Decision Support Systems, 43(1), 111–126. doi:10.1016/j.dss.2005.05.009 Li, X. (2005). Buddy-finding in the mobile environment. Technovation, 25(9), 1017–1023. doi:10.1016/j. technovation.2004.02.006 Lu, J., Yao, J. E., & Yu, C.-S. (2005). Personal innovativeness, social influencesand adoption of wireless Internet servicesvia mobile technology. The Journal of Strategic Information Systems, 14(3), 245–268. doi:10.1016/j.jsis.2005.07.003 Mobile Commerce Daily. (2015). Product research via smartphones more than doubles: report (2013). Retrieved October1,2013 from http://www.mobilecommercedailycom/product-research-via-smartphonesmore-than-doubles-report Pani, P. (2015). Survey: 78% online companies believe a mobile app is a must (2015), Retrieved September 23, 2015 from http://www.bloncampus.com/news-wrap/survey-78-online-companies-believe-amobile-app-is-a-must/ Pascoe, J. S., Sunderam, V. S., Varshney, U., & Loader, R. J. (2002). Middleware enhancements for metropolitan area wireless Internet access. Future Generation Computer Systems, 18(5), 721–735. doi:10.1016/S0167-739X(02)00037-7 PricewaterhouseCoopers (PWC). (2015). eCommerce in India Accelerating growth. Retrieved August 12, 2015, from https://www.pwc.in/en_IN/in/assets/pdfs/publications/2015/ecommerce-in-india-accelerating-growth.pdf PTI. (2015). Mobile commerce may overtake e-commerce soon: Report. The Economic Times. Retrieved August 12, 2015 from http://articles.economictimesindiatimes.com/2015-03-29/news/60602971_1_mobile-apps-mobile-commerce-e-commerce

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Rupp, W. T., & Smith, A. D. (2002). Mobile commerce: New revenue machine or black hole? Business Horizons, 45(4), 26–29. doi:10.1016/S0007-6813(02)00223-9 Sachs, G. (2014). Mobile commerce will be nearly half of e-commerce by 2018. Retrieved August 23, 2015 from: https://www.internetretailer.com/2014/03/10/mobile-commerce-will-be-nearly-half-ecommerce-2018 Sarker, S., & Wells, J. P. (2003). Understanding: Mobile handheld device use and adoption. Communications of the ACM, 46(12), 35–41. doi:10.1145/953460.953484 Schmitz, J., & Fulk, J. (1991). Organizational colleagues, media richness, and electronic mail: A test of the socialinfluence model of technology use. Communication Research, 18(4), 487–523. doi:10.1177/009365091018004003 Shieh, L.-F., Chang, T.-H., Fu, H.-P., Lin, S.-W., & Chen, Y.-Y. (2014). Analyzing the factors that affect the adoption of mobileservices in Taiwan. Technological Forecasting and Social Change, 87, 80–88. doi:10.1016/j.techfore.2013.11.004 Statista. (2015). Global mobile retail commerce revenue from 2012 to 2018 (in billion U.S. dollars). Retrieved August 23, 2015 from: http://www.statista.com/statistics/324636/mobile-retail-commercerevenue-worldwide/ West, D. M. (2014). The State of the Mobile Economy, 2014:Its Impact and Future. Center for Technology Innovation at Brookings. Wu, J.-H., & Wang, S.-C. (2005). What drives mobile commerce? An empirical evaluation of the revised technology acceptance model. Information & Management, 42(5), 719–729. doi:10.1016/j.im.2004.07.001 Yang, K. C. C. (2005). Exploring factors affecting the adoption of mobile commerce in Singapore. Telematics and Informatics, 22(3), 257–277. doi:10.1016/j.tele.2004.11.003

KEY TERMS AND DEFINITIONS E-Commerce: Exchange of services and conducting transactions on-line. M-Commerce: Any transactions, either direct or indirect, with a monetary value implemented via a wireless telecommunication network. SWOT: Conducting an in-depth analysis of an organization for internal factors( strengths and weaknesses) and external factors (opportunities, and threats) to understand the favorable and unfavorable conditions to achieve an objective.

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Understanding Fraudulent Activities through M-Commerce Transactions Rajan Gupta University of Delhi, India Sunil Kumar Muttoo University of Delhi, India Saibal Kumar Pal DRDO, India

ABSTRACT Technology changes its facet quicker than anything else. Every few years there is a revolution that changes the way we perceive technology and the way it impacts our lives. Mobile commerce industry has been swiftly bringing about an alteration in how we access the wireless network and marks a shift from personal computers to mobile devices. This chapter gives an outline of mobile commerce and will discuss about the various frauds prevalent on the internet and on mobiles specifically, and ways in which it can be curbed. The purpose of this chapter will be to make readers aware of the different types of fraudulent activities that can occur due to m-commerce transactions and their possible solutions will be elaborated at the end. The work will be beneficial for the students as well as researchers to form a basic background about m-commerce, various risks associated with it and their possible solutions.

1. INTRODUCTION 1.1 Background According to Muller Versee (2000) mobile commerce can be defined as “any transaction with a monetary value conducted via a mobile telecommunications network”. This definition contains two main terms - monetary value and mobile network (Coursaris et al, 2002), which are both discussed in detail DOI: 10.4018/978-1-5225-0236-4.ch004

Copyright © 2016, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

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in this chapter. This chapter also deals with the security issues and financial issues that occur in the m-commerce environment. The various sections of this chapter are organized as follows - Section 2 discusses the understanding of m-commerce along with its architecture and different point of occurrence of frauds; Section 3 illustrate various kinds of frauds in m-commerce which is categorized into mobile network related fraud and Mcommerce payment system related fraud; Section 4 presents solution to various frauds in m-commerce; and Section 5 & 6 discusses recommendation and conclusion of this chapter.

1.2 Features of M-Commerce M-commerce comes with two major characteristics that are ‘mobility’ and ‘easy reach’ (Ngai et al., 2007). Mobility means portability, with the mobile device user can be reached anytime anywhere and consumer can use this feature for the transactions & purchasing. Wide usage of m-commerce includes applications in banking and brokerage, shopping, reservations and ticketing, entertainment, event management and Education. The major features of m-commerce includes Ubiquity, services can be availed anywhere, localization, positioning of the system, authentication, personalization and light weight of the devices (Fong & Yang, 2008; Data Monitor, 2001).

1.3 Merits of M-Commerce in India Gupta and Vyas (2014) proposed various benefits and drawbacks related to m-commerce in India which are as follows-User friendly environment, easily carried device, works even on slow internet connections too and have secured transactions, as shown in Figure 1. Nowadays, specific mobile applications are being designed or the websites are becoming responsive since devices accessing these websites are changing pretty fast. Because of the small size of mobile devices, it is easy to carry it anywhere by user. This easy to carry mobile devices feature help user to avoid travelling in return of goods and services. Secure form of transaction is also another added advantage which is getting breached day by day. Low internet connectivity area are a boon for mobile users as at such places Mobile devices can work very well as compared to desktops or laptop as it uses less data thereby makes it economical and smoothly accessible. Figure 1. Mobile commerce benefit in India (Source: Gupta &Vyas, 2014).

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1.4 Demerits of M-Commerce in India Although, M-commerce have lot of merits associated with it, but it also has certain demerits. Many business organizations don’t want to invest big amount in m-commerce because of transactional security and data hacking risk associated with it. Connectivity is also a major issue with m-commerce where it has to be very much dependent on mobile networks to provide the internet connectivity which is sometimes not available as compared to the normal broadband option. There are many hurdles and challenges faced by M-Commerce specifically in India, as shown in Figure 2 (Gupta and Vyas, 2014). One of them is the Lack of Internet connectivity; in India the internet connection is still not accessible at many places. Broad band connections are inadequate in some parts of the country. India also face a low literacy rate problem, though literacy rate of India is developing fast, but still major chunk of India is not much literate and as a result people have little knowledge of online purchasing and are afraid to adopt it. Language Barrier is another concern which becomes a major issue while interacting with internet for purchasing goods and services from mobile devices. Another problem is Graphic resolution problem in which Mobile devices have less resolution in comparison to computer’s and laptops, because of which user doesn’t get to see an exact picture of goods/services. And this makes consumers less interested in the products. Also there are low connectivity problems and mobile network issues in many remote parts of the country. Thus, there are lots of positive and negative features associated with mobile commerce activities but rising risks and security related concerns are becoming the major hindrances for the organizations to promote mobile commerce.

2. UNDERSTANDING MOBILE COMMERCE M-commerce can be defined as any information exchange and electronic transaction which uses mobile device and wireless networks between two parties. M-commerce comes with security issues which in general are considered as fraud (Yazdanifard, 2011). Apart from the financial troubles that frauds invite for businesses, they can also drastically damage its credibility. For example, if a transaction via an online gateway such as PayTm is intersected by a fraudster, PayTm would be liable for the loss of the customer. Before we attempt to curb the issues that arise due to these frauds, it is important to assess the areas that give rise to them. To better understand the structure of M-commerce, one needs to understand the components behind the concepts of M-Commerce. The subsection below highlights these components. Figure 2. Drawbacks of M-commerce in India (Source: Gupta and Vyas, 2014).

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2.1 Handheld Devices Mobile commerce applications are used by the mobile users through the small wireless devices for example pocket PC, Palms, Tabs, Phablets, Smart phones, etc. These are battery powered computers and are different from desktop PC. Some of the features of these handheld devices range from limited network bandwidth, small screen, Mobility to fast speed and any time access facility. Battery backup and constant network connectivity are the two major concerns with the handheld devices as a limited accessing and browsing can be done through them. Although the memory storage is increasing with each passing year, but still these handheld devices have restricted memory storages and that’s why their computational speed is restricted as compared to regular PCs and Desktops. Thus, memory and time efficient algorithms and applications run best with them rather than computationally extensive approaches.

2.2 M-Commerce Architecture M-commerce architecture is a 3 tier structure (Sonwabile, 2006). The different layers, depicted in Figure 3, are as follows. • • •

Client or Front End: The information or application which is run on the mobile device to avail any information or performing the transaction. Server or Middleware: The software that runs on the server end which has all the information related to business logic. This is the actual software workstation on which server software is installed. Backend or Database: This is the physical storage which can be on shared servers, standalone servers or cloud servers.

Figure 3. Architecture for m-commerce (Source: Sonwabile, 2006),

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In Figure 3, overall architecture of m-commerce is depicted. Part 1(a), 1(b) and 1(c) shows the front end of the architecture where mobile device are using the m-commerce system. Part 2(a), 2(b) and 2(c) are the base stations whose function is to route the signals and forward them to the destination node. SMS gateway is shown in Part 3 which is used to communicate SMS platform with the mobile devices and is used for mainly text messages. Wireless Application Protocol (WAP) is shown at part 4 and is used to convert cell phones WAP request to HTTP request. The Web server shown at part 5 is the middleware for the m-commerce architecture, and it contains all the information related to any particular business logic. Part 6 is the database server which serves as the backend in the architecture. Mobile middleware transfers request from mobile device to host computers and from host computers to mobile devices. The two widely used internet middleware are WAP and i-mode (Hu et al, 2005).Wireless application protocol (WAP) is a set of communication protocol that describes the rules and regulations for the mobile devices and other devices to access the internet. The Wireless application protocol is based on a client server approach. The typical WAP architecture can be described as a combination of different protocols, the first one being the Wireless application environment which is the software platform environment for software application. Wireless application environment consists of Wireless markup language (WML), WML script and Wireless technology application (WTA). The next is the Wireless session protocol which is a type of request response protocol; in this protocol the client makes a request to the server and server answers that request which is also known under HTTP terminology. Wireless Transaction Protocol is the middle level protocol between the session protocol and the security protocol and is responsible for delivering high layer messages. The next protocol under WAP is Wireless transport layer security protocol which provides the security related services and is responsible for all the cryptographic features on WAP. It carries out encryption-decryption and also provides user authentication features with the help of digital signature. The last one is the Wireless Datagram Protocol (WDP) which transfers datagram from upper layer to different physical data path. It works as a transport layer on WAP.

2.3 M-Commerce Payment Mobile commerce is electronic transaction which is done through mobile device over a wireless network. These transactions are sometimes monetary transactions or may be for exchanging personal information through wireless medium. WAP/HTML is secured protocol which is used to transfer payment detail in any end to end protocol. M-commerce enterprise provides customers a high quality services. Basically 3 models are described by Chen Xin (2009) - B2E model (Business to employee), B2B model (Business to business) and B2C model (Business to customer). In B2E model for m-commerce all the internal management of any enterprise is carried out with other office application, for the purpose of enhancing the management level, so this model is mainly used for business and office purpose. B2B model reflects that logistic enterprise construct vehicle monitoring based on GSM/GPRS network. The position and state of vehicle can be found by real time logistic enterprise. B2C model provides information related to customer service to obtain better effect of m-commerce application. Fong and Yan (2008) gave situation application for mcommerce which can help the user to perform any type of task. They are as follows. • • • • 72

Payment at merchant level. Consumer to Consumer mobile payment. Mobile survey or advertising. Purchasing through web store.

 Understanding Fraudulent Activities through M-Commerce Transactions

Payment at merchant level is the activity where customer and merchants are equipped with mobile station, and are in the process of buying the goods/services from merchant. Consumer to consumer mobile payment defines a scenario where two mobile users or customer perform some kind of transaction on their account money. An example of this is transferring money from parents to child account.

2.4 Occurrence of Frauds Internet consists of many types of frauds and the most emerging types of frauds on internet are identity theft and scams (Rofiq, 2012). Identity theft refers to stealing someone’s personal identity and using it for carrying out transaction under the original user’s name without his permission. This fraud can be carried out in various ways like phishing, hacking, pharming and skimming of credit card. Scamming involves defrauding a person and misleading him by fetching the financial and personal information of any person. Even though banks are continuously evolving their security features, online fraud is simultaneously increasing. According to Economic Times, domestic banks in India lost INR 172.84 billion on account of fraud in 2012-2013. During the same time a total of 26,598 cases related to online frauds were filed by 62 banks. Since then, the figures have only increased. A report by McAfee on economic impact of cyber-crime issued in June 2014 pointed out that cyber-crime equaled to 0.21% of India’s GDP. The frauds in m-commerce can be categorized based on the point of occurrence that involved system level fraud, consumer level fraud and agent level fraud, as shown in Figure 4.

2.4.1 Consumer Level Fraud This type of fraud is commenced by fraudsters who act as the customer (Mudiri, 2013). The main area of target of this fraud could be original customer, financial service provider or any business organization. This is the most common type of fraud in today’s market. It is more noticed in transaction of business where consumer trust the financial service provider more and unable to identify many of the risk associated with the service. One way to manage consumer based fraud is emphasizing on consumer education. Some consumer driven fraud are counterfeit or fake money, phishing and cloned customer building relationship with agent. In counterfeit (fake) money, the fraudster deposit fake money with agents and Figure 4. Different point of occurrence of fraud

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withdraws all the e-money at the other outlets. Phishing is an activity of sending fake e-mails or SMS by their own mobile or with the help of computer which looks exactly genuine. The third is building relation with customer – in this type the fraud customer build a relation with agent for doing frauds with employee cash and electronic money.

2.4.2 Agent Level Fraud This type of fraud is initiated from within the network agent (Mudiri, 2013). The fraud could be agent defrauding another agent, customers or financial service provider. Some types of agents defrauds are - Employee defrauding his agents where employee makes fraud with his agent; Split deposits where customer money is split into batches by agents in order to gain more profit; Master agent defrauding is junior agents example master agent distributing less commission to his sub agents which thereby makes sub agents less interested to invest in business.

2.4.3 System Level Fraud System fraud occurs through the weakness in system and process that affect deployment in mobile money. This type of fraud is highest when transaction process is inadequately controlled. Some of the frauds in system fraud are - PIN/password sharing, when the password is shared between employees and they are supposed to work with the same password; Weak password strength for withdrawal of money with easy guessing of the weak password; Creation of fake user where any person having administrative rights of any organization can make fraud by creating fake account and transferring the money to that account. Another type of system level fraud is service financial provider (Mudiri, 2013). This fraud is done without business authorization. Some frauds of this type of fraud are - Collision between mobile users for unauthorized SIM swaps, which is a condition where mobile phone balance is withdrawn because of unauthorized swapping of SIM card; Access to financial records in unauthorized way, where a person can get access to any other account and all the private information is used for personal gain.

2.5 Impact of Fraud 2.5.1 Consumer Level Identity theft is the main impact at consumer level in which a person’s user identity is used by another person without former ones knowledge and approval. In this way, Mobile devices could lead to personal loss because of identity theft and data breaches. Sacco (2011) gave an example in which HTC phone software installed an application for the collection of user’s sensitive information such as account information, e-mail address, SMS information, user’s phone number, history of visited location, or any other such critical data. This could lead to privacy risk through theft and thus leading to monetary and data loss to the user (Ghosh and Swaminatha, 2001). The second impact is loss of Personal saving where Consumer has to face loss of money that may vary from small amount to their whole life savings (Jörg, 2006). Several consumers invest all of their money in various policies without knowing the fraud aspect and have to face catastrophic losses.

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2.5.2 Agent Level Agent level frauds are the frauds that initiated at the organization point, agents level frauds cause a loophole in the organization and can lead to various types of impact (Mudiri, 2013). The first Impact is on organization’s name, the Brand name and its reputation which are very critical in any business environment. If the products associated with the brand are found to be involved in any type of fraud activity the customer will relate the fraud to the brand name and thereby decrease the market value of other types of product of that organization. And this may lead to deployment of brand name. The second impact could be low investment in mobile financial services, the agents are the one who invest and provide money to the financial system of mobile, if the system is corrupted by any type of fraud then these agents will fear in investing their money in mobile financial system. Increasing service cost after fraud is also another type of impact on Finance. Fraud comes with loss of money which ultimately leads to an expansion in universal transaction cost of an organization. A Negative impact on new innovation can also be faced due to fraud activity. Agents will not invest to the new systems as the whole ecosystem is connected with fraudulent activities. Due to emerging of fraud activities, negative perception on global basis about mobile financial services can also develop. This perception leads to critical adoption of the mobile services on global basis because of negative impact like “payment through mobile are prone to fraud and leads to fraudulent activity” only.

2.5.3 System Level Fraud System level fraud is the frauds that occur due to system failure or the system weakness. The system also has to face the impact of fraud, the first impact will the cost of fraud associated, the system will be the accountable for all the financial damage and therefore the system is responsible for all the recompensation to all those who are associated with the fraud like consumer or agent. Moreover the system will itself face problem like financial loss, and loss of system name. The consumer and organization lost confidence on system, and thereby system has to face problem of public trust. The consumer generally builds a perception that the system is prone to fraud.

3. VARIOUS KINDS OF FRAUDS IN MOBILE COMMERCE There are number of fraud detection technologies to detect and prevent various kinds of frauds. The main frauds that could occur in m-commerce environment are categorized as mobile phone fraud, mobile network fraud, and fraud on m-commerce transaction process (Nambiar & Lu, 2005). The mobile phone frauds is discussed in study by Cahill et al (2002), where a signature based system has been proposed which is based on event driven fraud detection. The other 2 types of frauds are discussed in following subsection section i.e fraud with mobile network and fraud with m-commerce payment system.

3.1 Fraud with Mobile Network Mobile network is known to be more vulnerable because of its open medium and dynamic changing network topology (Brockett et al, 2012). Many techniques are there to prevent mobile networks from various attacks such as MAC, secure routing and encryption. Intrusion detection system is a system in 75

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which the system monitors network and activities for malicious data and policy. The intrusion detection can be classified into two types- Misuse and Anomaly detection. In misuse detection, the gathered information is compared against a large database of attack signatures. Misuse attack observes previous attacks of intrusion and monitors the occurrence of any patterns from the database. Examples include any attempt to read the password file or any frequent changes in the directory. In Anomaly Detection, a baseline is established in the network and system monitors the network segment to compare their state to the normal baseline to detect any anomalies. Notare et al (n.d.) presented a system in intrusion detection for the wireless communication network where security services are proposed in order to avoid violation in particular mobile cloning phones. Samfatet et al(1994) proposed architecture of intrusion detection for mobile networks where user’s profile features like location was used as basis for performing intrusion detection. There are two security protocols presented as per 802.11 standards in which for secure access control shared key authentication protocol is designed and for confidentiality WEP encryption protocol is designed. These two are sometimes turned off by access point as they are optional which in turn allow the hackers to fraud. These networks are mostly of the corporate internet and hackers can get the direct access to these networks by firewall bypassing. There are some more security problem with the wireless that are theft of nodes, battery powered operation and tampering vulnerability.

3.1.1 Several Attacks on WLAN • •

• •

Denial of Service (DoS) or Flooding Attack: In denial of service attack access to network resources is prevented. DoSis very difficult to protect against and it works by flooding the network and chocking the transmission, by which other user are prevented to have access to the network. Hijacked Network: In this, hackers pretend themselves as the actual host of the network and gather all the important information from the user. Sometimes they also send response of a known host. They also take useful information from the mobile stations by pretending to be a rough AP (access point). MAC/IP address can be used as a measure to detect network hijacked problem. Spoofing or Unauthorized Access: In this type, attacker knows the plain text and the encrypted text, so he can easily crack the encrypted message in order to find the encryption key and create a malicious message. Sniffing: Sniffing is a practice that captures network packets. Sniffing is used by the hackers. In this if the network is not encrypted, the data packets within the network are sniffed and the sensitive network information is reveled such as passwords and account information.

3.1.2 Attacks on Cellular Network • • •

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Man in Middle Attack: In this type of attack, intruder enters between the target node and the host node and delete/modify all the information available while spoofing the data in the network. This type of attack is resolved by foolproof anti-phishing technique. Eavesdrop: Eavesdropping is a type of network attack in which packets containing sensitive information like session token or password are captured from network transmitted by other’s computer; network sniffers can be used for doing this type of attack. User Impersonation: This is the fake source address in which intruder sends data to some other user and makes him believe that he is the genuine user.

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• •

Network Impersonation: In this intruder attempt to send signals or other user data to target user and try to make target user believe that it is coming from genuine network. Reply Attack: This is a particular type of network attack in which original data is fraudulently transmitted in a repeated manner or transmission of data is delayed.

He and Zhang (2003) suggested that to access internet m-commerce services, mobile devices should satisfy few security requirements. Firstly, there should be a mutual authentication process be followed between the service provider and mobile user. Secondly, a secure key establishment must be enabled between the service provider and mobile user. Thirdly, all the messages sent in authentication process must ensure that the assisted party is accountable for the messages. Based in the above requirements, a model was proposed by the authors shown in Figure 5.It describes the wireless network infrastructure in which Mobile Station (MS), Service Provider (SP), Home Location Register (HLR) and Home network (HN) are the main components. An MS is a user device which consists of mobile terminal and the User Service Identity Module (USIM). There is one unique identity to these mobile stations which is International Mobile User Identity (IMUI). The Home network has overall responsibility for the supply of set of services to the user. The Service provider provides services, tools and system to m-commerce like e-shop & e-bank.

3.1.3 Some Other Types of Attack: Phishing, Pharming, Spear Phishing The two techniques, Pharming and Spear Pharming, are used for stealing information which could adversely affect both the individual and the business company. In wireless communication medium, these two are prominent activities as they can be carried out easily. Before understanding the concepts behind these two techniques, one needs to understand the basics of phishing technique. In phishing, a large number of unsolicited messages are sent by attacker who claims to be the original source and usually ask the user for their personal information for some verification purpose. They ask user to click Figure 5. Network infrastructure for authentication (He & Zhang, 2003).

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on some links to gain information (password, account number) in return of some verification for their account. Both, the link and email, are fraud and if somebody enters the personal information, then this it is used by frauds to commit crimes like cash withdrawals from banks, identity theft, or modification to the credit card access. But phishing has decreased a lot as more numbers of email users are getting aware of this kind of fraud on internet. Pharming is a technique in which users are directed to a malicious website and where malware are downloaded for hacking account numbers and passwords in bulk (Norton, 2011). In pharming all the traffic which goes through the hijacked network nodes is harvested, while in phishing an individual email or phishing line is set in order to catch the fishes. There is a perfect mechanism of how pharming is done. The websites which are used on daily basis actually have a particular sequence of number. A translation mechanism is used to translate the website name like http:/www.xxx.com into the unique number like 12.89.56.35 and the software recognize the website through this number. This translation mechanism have DNS server that receives the input to convert it into the unique number. The DNS server is sometimes hacked by the attackers and they change this translation directory. So that when any user types website name it automatically sends the user to some other website. This fake website looks like an exact copy of original website and therefore user unknowingly enters his id/password and gets trapped. Hacker use this id and password for illegal activities and also through accessing these fake websites, malwares are automatically downloaded through which business privacy is compromised big time (Nortan, 2011). Spear phishing is a refined act of phishing in which hacked information of some social media websites, cell phones or corporate computers are used instead of setting out random e-mails. Attackers use only a small group of people and their relevant information, and from this they develop an e-mail which is more specific to this group only. If even one of the group member is logged on, all the security breaches through various computer programs can be performed. This allows access to the company’s IT system and various computers with a purpose of financial fraud, malicious use of data & identity theft (FBI, 2009).

3.2 Fraud with M-Commerce Payment System M-commerce payment transaction requires a well-protected environment for secure transaction. Hackers can guess sensitive information through the wireless medium, information could be guessed related to the passwords, loss of message can take place or even spoofing can be done on the card holders (Nambiar & Lu, 2005). For understanding fraud in m-payment, its lifecycle and basic requirement needs to be understood as well.

3.2.1 M–Payment Lifecycle M-payment is quite similar to the payment system of e-commerce but with a difference of the payment transaction which involves wireless medium such as WAP/HTML protocol in mobiles and for transferring the information blue tooth or infrared technologies might be used (mobile payment forum, 2002). The MPF (mobile payment forum) has given a mobile payment lifecycle with following phases: registration and configuration, payment initialization, user authentication and payment settlement, as shown in Figure 6 (Nambiar & Lu, 2005). These stages are discussed as follows.

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Figure 6. M-payment life cycle (Source: Nambiar & Lu, 2005).

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Registration and Configuration: Customer, who wants to access mobile services with their mobile devices, must open an account initially and set up a payment environment to avail all the services. Set up could be easily initiated with the mobile network. Customer pays for the services through this particular method of payment for which he has been registered for. Initializing Payments and Authentication: All the information related to payment is transmitted to merchant. Customer decides the service to purchase and send the SMS (short message service) using mobile device. This message is forwarded to the payment service provider by content provider, where trusted third party is requested for doing authentication and authorization. Then the status of authentication and authorization is informed to the content provider by the payment service provider. If the user is found authenticated then the content provider delivers the purchased content to the customer. Settlement for Payment: Payment settlement is done after the completion of authentication process for payment. Payment settlement is done through 3 modes - real time mode, postpaid mode and prepaid mode (Xiaolin and Chen 2003). In real time mode an exchange of electronic money is done in return of services. In prepaid mode, customer has to pay in advances for services by using smart cards. In postpaid mode, trusted third party is involved which send the billing information to the customer.

3.2.2 Fraud with M-Payment Life Cycle •

Fraud during Authenticating Payment: During the payment transaction, authenticating a user is the first and the most important step. Authentication means connecting some unique identity of any individual. If the person is not authenticated properly it may result into fraudster activities. Authentication process are mainly categorize into two that are personal knowledge and token based. The personal knowledge is based on the knowledge for example PIN number or password. While token based works on something a person is assigned with like unique credit card number, or voter identification card. Both of the process can be subjected to fraud activity if these are lost or stolen (Miller, 1994). Moreover m-commerce mainly works on wireless devices and therefore it demands more secure identity verification.

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•

Fraud during Transaction of Payment and Its Settlement: A fraudster can use the password to commence the fraudulent transaction along with some response message that he send to payment service provider. Generally fraud during payment transaction and its settlement involves repudiation of data through mobile networks. A mobile commerce environment consists of mobile gateway through which SMS messages are send to mobile network with the help of short message switching center. If this switching center is accessible to user, they can modify or read the SMS message. Therefore, a secure transaction mechanism is much needed to avoid such frauds.

3.2.3 Basic Requirements for M-Commerce Payment • • • •

Confidentiality: The information shared must be kept private and should not be revealed to any unauthorized person or devices. Authentication: Authentication ensures that the transaction is done between trusted parties and no other person is involved between the transactions being performed. Integrity: The information is not being altered by any other third party. Non-Repudiation: Ensures user that the transaction performed by him is not denied.

All these types of requirement are fulfilled by 2D bar technique, pay-box technique & synthetic data log generator. Frauds specific to e-payment system are Merchant Fraud, Customer Fraud and Third Party fraud.

4. PREVENTION ACTS AND SOLUTION FOR FRAUDS There are various protocols and algorithms which have been suggested by different researchers and authors in the past to combat frauds and privacy within mobile systems. Based on the various types of problems identified in the previous section, the prevention acts can be categorized into two different aspects – Prevention from Mobile Network Frauds and Prevention from Mobile Payment frauds. Since payment and mobile networks are the two major areas of concern for the m-commerce user, so all the prevention acts are dedicated towards these two core issues. They are discussed as below.

4.1 Prevention from Mobile Network Frauds 4.1.1 NAETEA (Network Assisted End to End Authentication) An authentication protocol called NAETEA (Network Assisted End to End Authentication) was proposed to fulfill mutual authentication, secure key establishment and assured transmission like security requirement (He and Zhang, 2003). This protocol had properties related to the Home Network (HN) which are - HN can’t access the session key between mobile station & service provider and No confidential information is exposed in HN. In the protocol design Home Network (HN) and Mobile Station (MS) have supplier subscriber relation i.e. HN provide services to MS network. The main responsibility of HN is to manage on-line interaction to ensure that the provided services are used by only authenticated user. The protocol describes a three way authentication process i.e. MS-HN authentication, HN-SP authentication, MS-SP authentication as shown in Figure 7 for performing end to end authentication. 80

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Figure 7. Three -way authentication process (He& Zhang, 2003).

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MS-HN Authentication: A Mutual authentication between the MS and HN is defined (National Institute of Standards and Technology, 1995) first. The authentication process allows HN to authenticate MS and vice versa. After the MS –HN authentication, they both share a secret key K along with one secret temporary identity (TMUI) for user, which is the unique identity of the user during this communication channel. And thus the message is transmitted securely between the MS-HN channels. HN–SP Authentication: The authentication between HN and SP can be done using many existing authentication protocol like TLS (Allens & Dierks, 1999) and Kerberos (Neuman &Ts, 1994). These protocol allow HN-SP to authenticate mutually and also develop a shared secret key K which is used as a session key for the establishing a secure communication channel between HN and SP. MS-SP Authentication: The MS-SP authentication is done in a wireless access domain. The authentication process is described in Figure 8. The process is initiated by sending the MS request to HLR at HN. The HLR then forwards this request of MS to SP with a hashed TMUI and its signature together. The SP then replies to MS request with a random number and its signature. A session key K is also computed by SP. The HLR then forward this this random number to the MS with hashed value which is used to authenticate SP to MS. The MS then computes session key K using a secret key X and the random number obtained by SP and send this session key to SP; this verifiable authentication is used to verify MS to SP. If this verification authentication completes the SP sends MS a verifiable authentication hash function. Lastly if SP verifies the hash function then authentication process gets completed.

4.1.2 Biometric-Based Digital Identity Authentication Protocol (BDIA) To avoid the reply attack of mobile network, Han & Van Schyndel (2012) proposed a biometric based authentication protocol which uses digital identity of mobile user for providing security in m-commerce application. A reply attack is a particular type of network attack in which original data is fraudulently transmitted in a repeated manner and transmission of data is delayed.

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Figure 8. Mobile station & service provider authentication protocol

(Source: He & Zhang, 2003).

A secure user identity authentication is needed which comes with various security threats of mcommerce which could be unauthorized access to data stored on mobile devices. Mainly two entities are used which can be assumed as User X and the mobile device Mx. In this, user X can authenticate himself to any verifier Y using his mobile device, as particular user is bound with a unique m-device. For secure identity authentication, biometrics (like fingerprints & face recognition) is one of the most effective solutions (Li et al, 2012). M-identity is used to authenticate the user and his mobile device where m-identity contains user’s biometric identity and his m-device. For the authentication of m-identity, Biometric-based digital identity authentication protocol (BDIA) is used. A digital watermark is used for the security and is embedded into the biometric information taken by user from his mobile device which provides uniqueness to the user. BDIA is a method for secured m-commerce transmission. Here data integrity is a major concern while transmitting the private information. This algorithm is used to block fake fingerprint used in reply network attack. The algorithm works using following steps. • • • • • • •

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The first step is M-identity capturing. The embedded camera of the mobile device captures the fingerprint image of the user X. Inside the captured image, digital watermark is added which is a unique code. This is embedded with the SIM card and IMEI(International mobile station equipment) numbers Mobile Trust Module Processing is followed. The captured image embedded with watermark is sent to the authentication server for providing authentication. Authentication process is carried out. The watermark is detected correctly at the server end ensures that the m-device involved in the transmission is genuine. And also the fingerprint is verified with the client’s identity.

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4.1.3 Phoolproof Anti-Phishing System This system protects from man in the middle attack and also prevent user from modifying or viewing account of user (Parno et al, 2006).A shared secret key must be established between user and server to enable this system to ensure that user is the same person as they claim and the file information of their existing customer is accurate. This shared secret key could be utilized at out of bound channels. For example a bank can use the mechanism of shared secret key at various ATM’s and can display this shared secret key as barcode which user cans can using his mobile phone. With the help of any of these mechanisms, the server can send a random secret password to the user. To prevent brute force attack this secret password must be of adequate length (80-128 bits). The user initiates the communication by navigating the server’s website. The server then responds back to user with a html tag of secure connection which confirms the browser that a secure account setup has been initiated. The browser then make a contact to cell phone via Bluetooth, and transmit all the server information necessary ex: domain name & site name. The cell phone confirms the user about the account creation (to avoid stealing of information from any malicious sites). This verifies MAC on server certificate and also if verification fails it aborts the protocol. The cell phone then creates a key pair public or private as per the situation. A secured bookmark entry is designed for the site with help of site name and domain name. The user sends public key and authenticates with MAC to the server using a shared secret key. The server then combine public key with user account so that user can access his online account.

4.1.4 WAP Based Secure Mobile Payment Method Technologies like PKI (Public key infrastructure) and SSL (secure socket layer) protect user from eavesdropping, tampering and impersonation. Meng & Ye (2008) proposed the method which uses SET (Secure electronic transaction).It includes mainly three participants i.e. cardholder, payment gateway and merchants. A dual signature method is used for transaction of messages between two recipients. When a user purchases any service/goods, all the information related to its purchase is divided into 2 parts payment instruction and order information. The order information of cardholder is only shared with the merchant and not with payment gateway, whereas payment information is only shared with bank and not with the merchant. The customer uses two hashes during the process. One hash is for the PI (payment information) and the other hash is for the OI (order information). Then the customer concatenate these two hash values and performs encryption process on the final hash value with a secret key (private signature key), thereby creating a dual signature. Through this way, both PI and OI are encrypted as well as protected. And both the merchant and payment gateway gets a chance to check the validity of message with dual signature. The transaction follows the bridge CA authentication model. When any customer purchases any item with WAP browser, a transaction identity number is generated by merchant to start the transaction. The following are the steps followed during m-commerce transactions. • • •

Sending of Purchase Information: All the information of card holder like encrypted PI, OI, URL of user, and dual signature are encrypted using WAP certificate and is sent to WAP gateway. Forwarding of Message to Merchant: WAP gateway transfer the message to merchant. Purchase Information Is Processed by Merchant: At the merchant end the information is decrypted from WAP gateway and verification is done with the help of card holder certificate. 83

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• • •

Sending Payment Request: A request is sent to the payment gateway by the merchant with encrypted PI, TID and digest of OI. Processing of Request at Payment Gateway: Payment gateway receives merchant TID and cardholder’s PI. A verification process is done on the message and the authorized request is sent to the bank. Bank Sends Token: After all the transfer, the bank sends a token to payment gateway. A digital signature is performed on the token by payment gateway. Finally this token and signature is forwarded to merchant by payment gateway.

4.1.5 WPKI Based Security Solution for Mobile Commerce Wireless Public Key infrastructure (WPKI) has proved to be the best Mobile Internet security services. Tiejun & Leina (2012) proposed a security system for mobile commerce which is based on Bluetooth earphone. This Bluetooth earphone becomes the medium for storage of digital certificate, encryption algorithm and asymmetric encryption so as to provide better WPKI security service between mobile server and user (Can-ju and Zu-kuan, 2007). The WPKI based security solution is divided into three entities, as shown in Figure 9. First is Registration authority, in which registration of user and works like certificate authority. Second is Certification authority in which certificate is revoked, suspended or activated. Third is Trust provider in which the transaction from service provider are authenticated and signed and sent to mobile user. The WIM (Wireless Identity Module) Bluetooth security used here provides hardware encryption which proves to be better than the software encryption. ESAM (Embedded Secure Access Module) is the security component of WIM Bluetooth. The proposed solution by Tiejun & Leina (2012) is considered to be good for iPhone having micro SD cards for safe information exchange in mobile business.

Figure 9. Bluetooth based WPKI for mobile commerce (Source: Tiejun & Leina, 2012).

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4.2 Mobile Payment Fraud 4.2.1 2-D Barcode Chang (2014) presented a secure payment model for monetary transaction in mobile commerce which ensures the security of payment made through mobile devices. The business scenario in Mobile Payment is discussed in this payment model. The model consist of customer and vendor who wants to initialize the payment for any service, authorization server which checks whether the customer is authorized for the service, a payment service provider’s server, transaction server, and a bank for settlement process of payment transaction. As shown in Figure 10, customer sends his authentication details like account name, password and IMEI (International Mobile Equipment Identity) to the authorization server. This information is further sent to the payment service provider’s server which provides verifying services for validating the user to be authenticated to have an access to use the 2-D bar code service or not. After access permission is granted, the payment service server sends the authentication details to the authentication server and the customer. The customer sends the 2-D barcode to the vendor, where a 2-D barcode encoder generates a 2-D barcode which acts as a payment certificate. The vendor decrypts the data stored in 2-D bar code for verification of the data and then sends an authorization number with check out system to the payment service server (Chang, 2014). This whole payment certification is bounded by a time limit and if the bar code is not used by the customer within that time limit, then the validity of bar code get expired. Moreover this bar code is only one time usable so as to prevent multiple usages. To enhance the security requirement the data is encrypted and also signed before encoded. For transferring the data for end to end communication (from server to mobile stations) a secure communication protocol called HTTPS (Hyper Text Transfer Protocol Secure) could be used. Figure 10. 2D barcode authentication protocol (Source: Chang, 2014).

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4.2.2 Activity Event System for Intrusion Detection in E-Payment System Activity Event System (AES) is used to control third party attack in mobile payments system (Venkataramet al, 2007). AES model observes various kinds of events/transaction which occurs in mobile commerce activities and detect fraud and intrusion attack while performing m-transactions. This model computes event attributes, fraud attributes and with help of these suspicious factors intrusion or fraud is detected. This is a real time based fraud detection model, and is based on IFDS (Intrusion and fraud detection system).The IFDS was designed for e-commerce because heterogeneous mobile devices are used in m-payment transactions. Since IFDS model is not applicable to m-commerce directly, therefore AES model is proposed which is based on IFDS MODEL. The model consist of various entities like Mobile commerce service provider(MCSP), Detection support system (DSS), Activity database, Event data and System database. The MCSP offer services to m-commerce customers like identifying all the genuine vendors offering the services and maintains all the records regarding vendor index. In Activity database, all the identified activities of m-commerce are stored like e-shopping and purchase order placing is an activity. DSS is a gateway between all the entities and IFDS (Intrusion and fraud detection system). The AES model is shown in Figure 11. This model is divided into 3 main parts - Activity monitor, Event analyzer and System monitor. These three entities together form a system for fraud and intrusion detection and are attached to the DSS which interacts with customer and vendor to make them authorize and cautions them from any kind of fraud activity. •

Activity Monitor: This module interacts with DSS (Detection support system) and takes request to authorize all the activities in mobile commerce. This maintains database for all the activities which take place in the location based m-commerce and captures attributes of different events which occurs in activity execution. All the events and attributes are then passed to the event analyzer.

Figure 11. AES model for fraud detection (Source: Venkataram et al., 2007).

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Event Analyzer: This module is used to perform event analysis on the various events and their attributes which are taken from activity module. The profile database of customers and vendors are used in this event analyzer. These 2 modules consist of different pattern of service usage, network pattern and patterns of service provided to both the customers and vendors. With the help of analytical rules, the event analyzer detects the deviation between profile attribute and current event attribute and generates the suspicious factor. Symptoms Database: This module maintains symptoms database which is used for detecting suspicious activities. The symptoms are the basic qualities which are allotted with weights for checking any suspicious activities

4.2.3 Synthetic Data Logs Generator Gaber et al. (2013) proposed a synthetic data log generator to detect and avoid the crimes occurring in fraud field of mobile transferring services. Fraudulent transactions can be evaluated by generating and evaluating a log which is based on comparison between synthetic/artificial log with real based log. A system called mobile based money transfer (MMT) is used here (Gaber et al, 2013) which allows end user to buy the services and transfer the money related to that services from merchants. This model consist of a (1) front office from which user make all interaction and requests, (2) Account management system which controls all types of financial services, (3) log server, and (4) data warehouse which maintains history of front office and data warehouse. This model is developed with the methodology given by Lundin et al (2002). When any person carries out different kind of transactions, the logs are created. A user behavior model is also described under this, in which an assumption (A1) is described and is known as basis for generating logs. Various actors are associated with the system viz., a legitimate user and a fraudster. The legitimate user is categorized under three parts viz., the end user who accesses MMT platform with the help of mobile device, the service provider who provides services to end user and the channel user who is responsible for distribution of e-money in whole transaction. The model described here is based on few assumptions that the user habits are related with what transaction they perform and with respect to which medium. This means that a specific type of transaction is performed by the user. The fraud detection method uses this type of assumption (Kokkinaki, 1997). Any type of fraud can be detected easily with the help of difference in normal transaction of legitimate user according to his habits and the fraudulent transaction. Frauds can be checked easily as outliers.

4.2.4 P2P Paid Mobile Payment Protocol P2P paid mobile payment protocol (Gao et al, 2005) is used to provide secure and convenient communication with the Bluetooth communication protocol for carrying out monetary transaction. Some of the examples of this type of transaction are mobile payment between merchants of supermarket and its customer, and the Mobile payment done by customer for parking fees. This service includes all the security measures in mobile payment method. This basic P2P protocol consists of four steps viz., Requesting the service by user, Discovering Bluetooth services which gives standards and checks for the services supported by Bluetooth device, Authentication for the users, and Transaction settlement for the payment.

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Figure 12. Part a (Mean Amount) and b (Mean Frequency) shows change in transaction habits (Source: Gaber et al, 2013)

Some of the security features associated with P2P protocol areas follows. •

• • •

Registration of Service: A user must initiate a registration process done under P2P system. This registration can be carried out via online registration and mobile registration. On successful completion of online registration, a key is distributed between client and server, and a voice print is generated for user with the mobile registration completion. Controlling Access: A mobile user must first log into the system through any of the available modes: weblog in and mobile login. Web login demands password and user ID and mobile login demand voiceprint, user PIN, and user ID. Attachment of Security Code: For transmitting data over wireless network a security header is attached to the message sent. A public key algorithm for encryption is used to reduce encryption & decryption overhead (Potlapally et al, 2002) Speaker Verification: This is a process of verification of speech with respect to individual requirements and with the help of this an individual is able to verify his mobile device and the person who is using the mobile device.

4.2.5 Pay Box Pay box is one of the most widespread mobile payment applications (Paybox.net, 2002). In May 2000 it was launched in Germany. This service helps a user to make transaction with mobile devices in return of goods and services. The main components used in Pay box are bank account number, Pay box registration id and a mobile phone, as shown in Figure 13. The mobile phone number of customer is sent to merchant. The merchant send this mobile phone number and the price to the Pay box. The Pay boxes then calls the customer and validate the authentication of user. Customer then authorizes themselves by using Pay box pin. And finally after the entire authentication is being done, Pay box informs the settlement of transaction to the trusted third party.

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Figure 13. Work flow AND process architecture of Paybox (Source: paybox.net).

Pay box is one of the easy and simple payment methods. M-payment done using pay box is independent, and it only provides services to those customers who have a bank account and a mobile phone. The independency term of Pay box means that any mobile user can avail the services upon registration only irrespective of their mobile service provider. Pay box is a fraud protected system and also a cost effective system.

5. RECOMMENDATIONS Based on the various issues and concerns related to the M-Commerce activities, the two major areas emerged are Network Fraud and Payment Fraud. So, all the stakeholders needs to strengthen the payment process through more secured protocols and networking companies needs to handle the channel in more stringent way. An important point in mobile payment system that majorly influence the consumer end is the authentication of payee, which authenticates the other end of transaction that the payee is the one who it claims to be. An authentication protocol called BDIA (biometric based digital identity authentication protocol) is proven successful for the mobile payment system, and this protocol combined with some other secure protocol can be used in future as an improved solution to m-payment system, which will be based on the unique identity of consumer for providing authentication. Variation in the authentication process is an absolute mandatory option to have with different applications involving M-Commerce. Various mobile secure payment system had already been developed these are pay box, iPIN, mpay, Jalda, Vodafone m–pay Bill (Nambiar and Lu, 2005). Similar to these payment systems more such systems could be developed for performing safe transaction in Mobile Commerce. Future work can be carried on classifications of various types of threats and concerns specific to mobile sets and a comparative approach can be explored.

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6. CONCLUSION The increasing interest of consumer in mobile device services is bringing lot of upward movement in the m-commerce market. M-commerce offers purchasing via mobile devices with anywhere anytime feature. In today’s world telecommunication sector is rapidly changing which requires extensive use of wireless network. But this wireless network is a great threat to consumers as it is prone to lots of security concerns as seen in various sections above. The Wireless security and mobile payment system are the major security areas that require a great level of attention. This chapter discussed the architecture of m-commerce transaction, their merits and demerits as faced by m-commerce users and vendors. A brief review on various technical issues related to network and m-payment system was also discussed. Various prevention acts were described which were considered to resolve the technical issues. Researchers have worked upon some of security related issues and also proposed certain solution to these problems. The chapter surveyed these solutions which majorly deal with network fraud and m-payment fraud. Mobile commerce is the exponentially growing technology based service and a major revolution is predicted for payment system in future. But still this technique is not adopted widely because of the security issues. Majority of the population have security concerns with this technology and due to this, Mobile commerce heavily requires an adequate security mechanism so that trust can be developed in this system. Some of the strategies that must be adopted for the success m-commerce market are security threat identification and providing related security measures to these threats. Also educating consumer to the security measures is also a need of the hour. Therefore a Fraud management system is needed which can detect the fraud by monitoring it and also could take relative measure for the existing fraud and the upcoming fraud in m-commerce.

REFERENCES Allen, C., & Dierks, T. (1999). The TLS protocol version 1.0. Accessed from http://tools.ietf.org/html/ rfc2246 Brockett, P. L., Golden, L. L., & Song, A. (2012). Managing risk in mobile commerce. International Journal of Electronic Business, 10(2), 167–184. doi:10.1504/IJEB.2012.051118 Cahill, M. H., Lambert, D., Pinheiro, J. C., & Sun, D. X. (2002). Detecting fraud in the real world. In Handbook of massive data sets (pp. 911-929). Springer US doi:10.1007/978-1-4615-0005-6_26 Can-ju, Y. I. N., &Zu-kuan, W. E. I. (2007). Design of PKI-based mobile bank security system. ISTIC, 19(3). Chang, T. K. (2014). A Secure Operational Model for Mobile Payments. The Scientific World Journal, 2014. PMID:25386607 Coursaris, C., & Hassanein, K. (2002). Understanding m-commerce: a consumer-centric model. Quarterly Journal of Electronic Commerce, 3, 247-272. Data Monitor (2001). Wireless Advertising: Opportunities and Challenges. Author.

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FBI. (2009). Spear Phishers: Angling to Steal Your Financial Info. The FBI, Federal Bureau of Investigation. Available at http://www.fbi.gov/news/stories/2009/april/spearphishing_040109 Fong, S., & Yan, Z. (2008). Comparative study on m-commerce applications in various scenarios. In Web Intelligence and Intelligent Agent Technology, 2008. WI-IAT’08. IEEE/WIC/ACM International Conference on (Vol. 1, pp. 943-946). IEEE. doi:10.1109/WIIAT.2008.416 Gaber, C., Hemery, B., Achemlal, M., Pasquet, M., & Urien, P. (2013). Synthetic logs generator for fraud detection in mobile transfer services. In Collaboration Technologies and Systems (CTS), 2013 International Conference on (pp. 174-179). IEEE. doi:10.1109/CTS.2013.6567225 Gao, J., Edunuru, K., Cai, J., & Shim, S. (2005). P2P-paid: a peer-to-peer wireless payment system. In Mobile Commerce and Services, 2005.WMCS’05. The Second IEEE International Workshop on (pp. 102-111). IEEE. doi:10.1109/WMCS.2005.16 Ghosh, A. K., & Swaminatha, T. M. (2001). Software security and privacy risks in mobile e-commerce. Communications of the ACM, 44(2), 51–57. doi:10.1145/359205.359227 Gupta, S., & Vyas, M. A. (2014). Benefits and Drawbacks of M-Commerce in India [Review]. International Journal of Advanced Research in Computer and Communication Engineering, 3(4), 6327–6329. Han, F., & Van Schyndel, R. (2012). M-Identity and its authentication protocol for secure mobile commerce applications. In Cyberspace Safety and Security (pp. 1–10). Springer Berlin Heidelberg. doi:10.1007/978-3-642-35362-8_1 He, L. S., & Zhang, N. (2003). An asymmetric authentication protocol for M-Commerce applications. In Computers and Communication, 2003. (ISCC 2003). Proceedings. Eighth IEEE International Symposium on (pp. 244-250). IEEE. http://www.us.norton.com/cybercrimeindex/pharming.jsp. Hu, W. C., Yeh, J. H., & Lee, C. W. (2005). Handheld Devices and Computing and Payment Methods for Mobile Commerce. In Proceedings of the 38th Annual Midwest Instruction and Computing Symposium. Kokkinaki, A. I. (1997). On atypical database transactions: identification of probable frauds using machine learning for user profiling. In Knowledge and Data Engineering Exchange Workshop, 1997. Proceedings (pp. 107–113). IEEE. Li, H., Toh, K. A., & Li, L. (2012). Advanced topics in biometrics.World Scientific. Accessed from http://www.worldscientific.com/doi/pdf/10.1142/9789814287852_fmatter Lundin, E., Kvarnström, H., & Jonsson, E. (2002). A synthetic fraud data generation methodology. In Information and Communications Security (pp. 265–277). Springer Berlin Heidelberg. doi:10.1007/3540-36159-6_23 Meng, J., & Ye, L. (2008). Secure mobile payment model based on WAP. In Wireless Communications, Networking and Mobile Computing, 2008. WiCOM’08. 4th International Conference on (pp. 1-4). IEEE. doi:10.1109/WiCom.2008.2121 Miller, B. (1994). Vital signs of identity [biometrics]. Spectrum, IEEE, 31(2), 22-30.

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Molva, R., Samfat, D., & Tsudik, T. (1994). Authentication of mobile users. IEEE Personnel Communication. Mudiri, J. L. (2013). Fraud in mobile financial services. Rapport technique. MicroSave. Accessed from http://www.microsave.net/files/pdf/RP151_Fraud_in_Mobile_Financial_Services_JMudiri.pdf Muller-Versee, F. (2000). Mobile Commerce Report. Durlacher Corporation. Retrieved from the World Wide Web on 10 December 2002, www.durlacher.com/downloads/mcomreport.pdf Nambiar, S., & Lu, C. T. (2005). M-Payment Solutions and M-Commerce. Advances in Security and Payment Methods for Mobile Commerce, 192. Neuman, B. C., & Ts, O. T. (1994). Kerberos: An authentication service for computer networks. Communications Magazine, IEEE, 32(9), 33-38. Ngai, E. W., & Gunasekaran, A. (2007). A review for mobile commerce research and applications. Decision Support Systems, 43(1), 3–15. doi:10.1016/j.dss.2005.05.003 Norton. (2011). Online fraud: pharming. Symantec Software. Available at http://www.us.norton.com/ cybercrimeindex/pharming.jsp Parno, B., Kuo, C., & Perrig, A. (2006). Phoolproof phishing prevention. Springer Berlin Heidelberg. Potlapally, N., Ravi, S., Raghunathan, A., & Lakshminarayana, G. (2002). Algorithm exploration for efficient public-key security processing on wireless handsets. In Proc. Design, Automation, and Test in Europe (DATE) Designers Forum (pp. 42-46). Rofiq, A. (2012). Impact of cyber fraud and trust of e-commerce system on purchasing intentions: analysing planned behaviour in Indonesian business. (Doctoral dissertation). University of Southern Queensland. Sacco, A. (2011). Major Android security flaws spotlight growing mobile threat. CIO Mobile Workhorse. Available at http://www.blogs.cio.com/smartphones/16535/major-android-secrurity-flaws-spotlightgrowing-mobile-threat?source=CIONLE_nlt_mobile_2011-10-05 Schiller, J. (2006). The impact of insurance fraud detection systems. The Journal of Risk and Insurance, 73(3), 421–438. doi:10.1111/j.1539-6975.2006.00182.x Sonwabile, N. (2006). What is mobile commerce. (Doctoral dissertation). University of Johannesburg. Accessed from https://ujdigispace.uj.ac.za/bitstream/handle/10210/790/CHAPTER%202.pdf?sequence=7 Tiejun, P., & Leina, Z. (2012). New mobile commerce security solution based on WPKI. In Communication Systems and Network Technologies (CSNT), 2012 International Conference on (pp. 485-488). IEEE. doi:10.1109/CSNT.2012.110 Venkataram, P., Babu, B. S., Naveen, M. K., & Samyama Gungal, G. H. (2007). A Method of Fraud & Intrusion Detection for E-payment Systems in Mobile e-Commerce. In Performance, Computing, and Communications Conference, 2007.IPCCC 2007. IEEE Internationa (pp. 395–401). IEEE. doi:10.1109/ PCCC.2007.358919 Xiaolin, Z., & Chen, D. (2003). Study of mobile payment systems. IEEE International Conference on E-commerce (pp. 24-27). Retrieved September 14, 2003, from the IEEEXplore Online Delivery System.

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Xin, C. (2009). Business Models and Application of M-Commerce. In Intelligent Information Technology Application Workshops, 2009.IITAW’09. Third International Symposium on (pp. 98-100). IEEE. doi:10.1109/IITAW.2009.79 Yazdanifard, R., & Elkhabir, M. S. A. (2011). Mobile Commerce and Related Mobile Security Issues. In Proceedings of International Conference on Software and Computer Applications (ICSCA 2011).

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Chapter 5

The Reality of Mobile Payment Systems and Social Inclusion in Latin America Myriam Martínez-Fiestas ESAN University, Peru Katia Oviedo-Cáceres ESAN University, Peru Ignacio Rodriguez-Garzon Cientifica del Sur University, Peru

ABSTRACT This chapter describes the role of mobile payment systems in Latin America as a means leading ultimately to social inclusion and financial inclusion. Specifically, the first section will discuss the social disparity in Latin America and the existence of financial and social exclusion. The second section will analyze Latin America’s mobile payment systems, the region’s current panorama of mobile money, the general trends that characterize money and the business models used for mobile money.The third section will review mobile money as a mechanism of financial inclusion and its role in reducing poverty in Latin America. This section will also analyze the barriers to financial inclusion.The fourth section will focus on the risks of mobile payment systems such as money laundering and terrorism funding.The chapter will conclude by comparing the similarities and differences of mobile payment systems that contribute to social inclusion implemented in Brazil, Colombia, Mexico, Paraguay and Argentina.

1. INTRODUCTION This chapter describes the role of mobile payment systems in Latin America as a means leading ultimately to social inclusion. The terms “social inclusion” and “social exclusion,” often used in research, are addressed throughout this chapter in spite of the complexity of their definition. “Social exclusion” today most commonly designates situations of poverty, unemployment, discrimination and education level. DOI: 10.4018/978-1-5225-0236-4.ch005

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 The Reality of Mobile Payment Systems and Social Inclusion in Latin America

Social inclusion, in turn, focuses on access of the excluded population to social, political and economic institutions. Hence, when referring to policies directed toward fomenting social inclusion, we denote those that allow the excluded segment of the population to make use of their freedom of expression to formulate decisions. A predominant reality in Latin American societies is great social inequality, differences of levels of education, a great diversity of income and a highly unequal access to public services. Moreover, many countries combine a highly dispersed population (for geographical reasons), a lack of infrastructure and a wide variety of subcultures. These divergent aspects often reflect different realities within the same country resulting in a socially excluded population. Low levels of banking are also observed in certain Latin American societies. The Global Findex report of 2014, according to Demirguc-Kunt et al. (2015), reveals that only 51% of the population possesses at least one bank account. The general tendency of Latin Americans is to manage their financial dealings in cash. Moreover, since transactions in jungle or mountain villages usually involve small quantities, there is little appeal on the part of the entities to set up costly and unprofitable bank branches. It is interesting to note, nonetheless, that a large section of Latin America’s population does not make use of banking services and does not have access to mobile phone services. In the last decade the demand of cellular telephones has, nonetheless, grown exponentially. This region’s market in September 2014, according to the report by the Global System for Mobile communications Association (GSMA, 2014), was the world’s fourth largest, comprising 326 million unique subscribers and 718 million connections. Furthermore, in recent years it has seen a very high rate of growth, with a total of 200 million cell phones as of September 2014. In fact, 90% to 100% of Latin America’s population now possesses a mobile phone. This could therefore ultimately generate the development of profitable business facilitating financial inclusion. The more common mobile financial services offered are mobile banking, electronic wallets and mobile payments. In June 2014, according to data from GSMA (2014), Latin America saw the deployment of 36 systems of mobile money and 19 others were scheduled for launch. For these mobile payment systems to generate financial inclusion it is essential to coordinate the work of all the different parties, a condition that is difficult to achieve. It does not make sense, for example, to implement new methods of payment if they are not adopted by the business sector. It also makes no sense to install expensive equipment if it is not going to be used. It is therefore essential that financial institutions, telephone operators and technology providers join forces and develop systems that are useful for all players. The offer of financial products must also provide tangible benefits to users. Hence, the challenge is not only to design a product that works, but to inform and educate the consumer on its use and utility. The consumer must be sold the idea of the need of the product to improve his daily reality. It is also relevant to work with mobile payment systems that will endure over time. In this sense it is each country’s regulatory body that plays an important role. Government in these initiatives is participatory because it must generate mechanisms of confidence among the population and other players of the ecosystem to strive toward achieving the objective of financial and social inclusion. Other factors ensuring the success of mobile payment systems are technologies that form the base of mobile payment systems, such as adequate cellular signals and adequate levels of security so as to build trust between consumers and businesses. Financial inclusion through mobile payment systems can generate several benefits. The main advantage is that it contributes to the economic development of a country as it promotes consumption and strengthens investment in different economic sectors. The benefits for the varying parties are therefore 95

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different. For example, financial institutions will increase the number of customers and their satisfaction, telephone operators will increase sales, businesses will expand their volume of transaction, and consumers will have a greater capacity to access social and economic institutions. However, like any payment system, it is important to establish mechanisms and regulations to prevent money laundering (Merlonghi, 2010) and the funding of terrorism, issues that are especially relevant in Latin America. All of these aspects will be addressed in this chapter. Specifically, the first section will present a worldwide overview of mobile money services and its importance in promoting social inclusion. This section also will presents the case of a worldwide success story. The second section will discuss the social disparity in Latin America and the existence of financial and social exclusion. It will also elaborate on the issues of levels of poverty, racial differences, subcultures, geographic dispersion and lack of access to banking services by a large segment of the population. The third section will analyze Latin America’s mobile payment systems, the region’s current panorama of mobile money, the general trends that characterize money and the business models used for mobile money. The fourth section will review mobile money as a mechanism of financial inclusion and its role in reducing poverty in Latin America. This section will also analyze the barriers to financial inclusion. The fifth section will focus on the risks of mobile payment systems such as money laundering and terrorism funding. The chapter will conclude by comparing the similarities and differences of mobile payment systems that contribute to social inclusion implemented in Brazil, Colombia, Mexico, Paraguay and Argentina. The contents of this research have implications for academia, management and society. For academia it provides an overview of mobile payment systems in Latin America, as well as a framework for understanding its most important characteristics. For management it identifies the critical factors of success. Finally, for society, it analyzes the impact of the use of these systems in reducing poverty.

2. MOBILE PAYMENT SERVICES IN THE WORLD In the study of Dahlberg et al. (2008) mobile payment services are defined as payments for goods, services and bills by means of a mobile device that uses communication technologies. Dahlberg et al. (2008) considers mobile devices as any type of mobile tool such as a credit card or a mobile wallet. Mobile payment systems are relatively recent. The first of these operations were carried out in the early 1990s. They were generally used for bank account or utility bills payment . and required security codes sent via text message. In the past decade, Japan began using the first mobile wallets by means of a wireless chip in the mobile device with a pre-paid format. The worldwide spread of mobile payment systems has been rapid and intense. Throughout 2014, 61% (85 of 139 markets) of the countries have mobile money services for the unbanked (GSMA, 2014b). Of all the mobile money services, sub-Saharan Africa accounts for most services launched globally (53%), followed by Southern Asia, Latin America, the Caribbean, Eastern Asia and the Pacific (GSMA, 2014b). In fact, success stories can be found in Africa such as Safaricom in Kenya launched in 2007, Vodacom in Tanzania in 2008 and MTN in Uganda in 2009. Asia stands out by the number of registered clients: Smart in the Philippines in 2003, True Move in Thailand in 2005, Globe in the Philippines in 2004 and

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Eko in India in 2009. Latin America ranks third globally in the number of mobile payment services. Given the importance of this position, this chapter will limit itself to exploring mobile payment services of this region. Furthermore, competition between markets is growing as most markets have two or more payment services. The growth of this competition obliges mobile operators to show concern about developing new technologies, and new networking tools for offer its clients (GSMA, 2014b). However, barriers to mobile payment services still exist in some countries related to as the small size of some markets, out of tune or underdeveloped regulatory frameworks, expensive customer identification systems or even restrictions on international money transfers. It is important to note that technology is not usually a major problem despite being an important precondition. Along with the increase in new mobile payment systems is an exponential expansion of the use of mobile devices that has led companies to develop new products, applications and services that can be performed with these devices. These not only result in developing ties of loyalty among its customers, but attract new customers with different types of needs. It is in the search of these new customers that mobile devices are offered as tools mobile payment. Mobile money therefore draws the unbanked individuals nearer to the financial systems and attainment of financial inclusion. Globally, by the end of 2013 there were more mobile money accounts that traditional bank accounts. M-Pesa, a mobile money service in Kenya, is the most successful example of this service in a developing country. It was implemented by Safaricom (company affiliated with the Vodafone group, Kenya). This mobile payment model is based on the telephone network operator, the funds received in exchange for the mobile money issued that are consigned in trusts managed by Safaricom in banks regulated by the Central Bank of Kenya. This service functions through cell phone SMS and uses a network of agents that can open e-money accounts, receive and withdraw cash. M-Pesa initiated, among other services, domestic money transfers and airtime purchases. As part of its progression, Safaricom has made alliances with banks and other institutions to expand its range of products, offering cash withdrawal through ATMs, reception of international money transfers, payment of micro-credits and health cards. The success of M-Pesa is due, among other reasons, to the following: • • • • • •

A high demand for domestic money transfers. The poor quality of traditional financial services. A single dominant telephony operator. The initial absence of regulation. A service based on a simple processes. A wide network of agents.

Thus, the services offered by M-Pesa were successful in achieving financial and social inclusion needed for a country whose population did not have access to traditional financial services. This service has been replicated in several countries at a worldwide level, in particular in those with vulnerable or low income populations. Latin America is a vast and unequal region. Its varied socio-demographic and economic realities lead to an interest in analyzing how mobile payment systems are developed for the unbanked. The following sections focus on this issue.

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3. SOCIAL INCLUSION AND EXCLUSION IN LATIN AMERICA: THE IMPORTANCE OF FINANCIAL INCLUSION Although “social inclusion” and “exclusion” are new terms widely used today, there is still no formal definition accepted by academics as valid and complete. Authors such as Atkinson (1998) acknowledge this lack of precision. Yet there does exist a social and economic consensus on the use of these terms. Social exclusion generally refers to poverty, unemployment and low levels of education whereas social inclusion focuses on the success of the policies of access to social, political and economic institutions allowing people freedom of expression and decision-making. Oxoby (2009) defines social inclusion as the way in which each individuals perceive their access to institutions and resources in the system of decision making. Furthermore, Oxoby stresses the importance of considering how individuals perceive the return on their investments. The Americas Quarterly magazine publishes a Social Inclusion Index since 20121 that defines social inclusion in broad terms including institutional, social, political and attitudinal domains, going beyond questions of economy, reduction of poverty and inequality. The magazine refers to social inclusion as the sum of factors that a person requires to have a safe and productive life as a fully integrated member of society, regardless of gender, ethnicity, race or sexual orientation. According to the results of this index, Uruguay was the country that remained in first place in Latin American during 2013 and 2014. Furthermore, Uruguay also increased its score in economic growth, political rights and access to adequate housing although a slight decline is registered in inequality as to the questions of gender and race. Costa Rica and Peru were the countries that respectively increased their ranking from position 4 to 2 and position 7 to 6. Peru improved its levels specifically in terms of access to formal employment and women’s rights. Yet, Peru still has low levels of financial inclusion. Its score on gender education also decreased. Its lowest variable is the percentage of its GDP invested in social programs, only above that of Ecuador. Costa Rica was ranked as the country with the best access to housing by gender in the region and showed a high percentage of its GDP invested in social programs. Costa Rica also has a high score regarding women’s rights and a high index of financial inclusion. Yet it scored low regarding the rights of homosexuals. Guatemala occupies the last place of the Index. Its level of GDP growth is very low and has a low percentage of GDP invested in social programs. Moreover, its lowest variable regards the rights of women. The results of the index show a Latin American reality with serious social inclusion problems spread throughout all of its countries. Although it appears that the reasons for the existence of social exclusion are specific to each country, all share characteristics in terms of poverty and, to a lesser extent, social inequality. Thus, Latin American countries face a serious challenge of moving forward in the fight against social exclusion and inequality. While there has been significant progress over the last decade in this regard, stagnation has set in since 2012. According to the Social Panorama of Latin America issued by the Economic Commission for Latin America and the Caribbean (CEPAL, 2014), the rate of Latin America’s economic growth in 2013 (2.5%) was higher than the world average (2.2%). The GDP per capita also grew by 1.5% while the unemployment rate declined to 6.3% in 2013. However, the values of the rate of poverty remained virtually unchanged between 2012 and 2013 with percentages above 25%. Moreover, the rate of poverty

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has a different impact according to gender. Latin American women between 25 and 49 years of age show an average rate of poverty equivalent to 1.2 times the average of men in the same age group. This difference is even more pronounced in Argentina and Chile. On the other hand, education, a key to participate actively and productively in society factor, is unevenly distributed. The shortcomings of education in all countries are obstacles to overcoming poverty. The disparity of income is another feature of Latin America in the struggle to overcome the problem of poverty and social inequality. CEPAL (CEPAL, 2014) points out the importance of increasing the income of the poor to cover their basic needs and reduce social exclusion. Geographical dispersion is also a reality in Latin America that affects social inclusion. Although the urban population is higher than that of rural zones, there is still much to be done in the areas outside cities. The Global Findex of 2014 (Demirguc-Kunt et al, 2015) indicates that Mexico, Panama, the Dominican Republic and Bolivia are constantly striving to improve access to finance in rural areas. Through the GINI index, the World Bank has attempted to quantify these inequalities. Although not all countries have been the object of this measure, it is clear that a high level of inequality still remains. In short, macroeconomic figures show that social inequality, gaps in education, unequal distribution of income and limited access to public services for certain groups are aspects that are predominant in Latin American societies. To this is added the high geographic dispersion and the wide variety in subcultures of each country. It is for this reason that governments have adopted in their agenda the incentive of policies that improve the inclusion of individuals in economic and social affairs. Various studies have revealed that one way to improve social inclusion is through access to financial services (Roa, 2013). In fact, different studies point to a strong correlation between poverty and exclusion from the formal financial service. For example, Rico (2013) states that financial inclusion is a motor for the development of countries and for the welfare of the population. It facilitates channeling public funds into productive activities so as to achieve a higher quality of life. According to J. E. Rico (Rico, 2013), it is very difficult to bolster economic growth without the development of the financial system. It is for this reason that financial inclusion is essential to incorporate the highest proportion of the population into the formal financial system. The aspects of financial development of a country and its impact on the economy have been reviewed considerably in academic literature. Part of the research indicates a close relationship between financial development and economic growth. Others casts doubt on this relationship and argue that the impact of financial development varies between countries due, among other reasons, to the heterogeneity of economic structures, institutional quality and financial markets. Rioja (2004) states that in low-income countries, the finances affect economic growth mainly in the accumulation of capital. On the other hand, in middle- and high-income countries, the effect of finance on economic growth touches on productivity. In this sense, considering that Latin America is still a low income region, we can state that the finance-economic growth effect lies in the accumulation of capital. The incentive of the financial system toward the accumulation of capital can lead to facilitate access to credit, savings, insurances and systems of payment. However, authors such as Kar et al. (2011) argue that the relationship between financial development and economic growth is not yet conclusive, at least in developed countries. Samargandi et al. (2014) conducted a study of middle-income countries and concluded that although financial development and economic growth are interlinked, their bond is non-linear.

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In all cases, nonetheless, research shows a positive correlation between financial development and economic growth. Due to this, both international organizations and governments of different countries have chosen to improve financial systems, creating stable regulatory frameworks, seeking to increase both their depth and financial coverage and caring for the use and the quality of services. From the different aspects stated above, since 2000, the issue of financial disclosure has taken on relevance as a common objective in the G-20 countries, governments, tax ministries, international organizations and central banks. The Alliance for Financial Inclusion, a global network of financial policy makers in developed and developing countries was created in 2009. Besides this network, the World Bank (WB) and the Organization for Economic Co-operation and Development (OECD) joined to lead aspects of global financial inclusion. As is the case of “social inclusion,” there is still no general consensus regarding the definition of “financial inclusion.” Nonetheless, it is a multidimensional concept both from the standpoint of supply and demand of financial products. Its three basic dimensions are access, use and the quality of both. Some of the existing definitions of financial inclusion are detailed below. The Consultative Group to Assist the Poor (CGAP, 2015) considers that financial inclusion means that households and businesses have access to and can effectively use appropriate financial services. These services must be provided in a responsible and sustainable manner in a well-regulated environment. The Organization for Economic Cooperation and Development (OECD), through its International Network on Financial Education (INFE) defines financial inclusion as the process of promoting an affordable, timely and adequate access to a wide range of services and regulated financial products, as well as the extension of their use to all segments of society through the application of innovative and tailored approaches. These include activities to raise awareness and financial education with the goal of promoting both financial well-being and economic and social inclusion (Garcia et al., 2013). The Center for Financial Inclusion (2015) defines financial inclusion as a state in which customers have convenient access to affordable services provided with dignity. Financial services should be offered by a wide range of suppliers, for the most part private, and should be accessed by people with low income or living in rural areas, the disabled and those are in state of exclusion. For the Alliance for Financial Inclusion (AFI), in 2011. Financial inclusion has four dimensions: access, usage, quality and welfare. Access is the “capacity to use formal available financial services.” Usage is “the permanence and depth of the use of financial products and services.” Quality is whether the attributes of financial products and services fit with the needs of customers and product development takes into account these needs. Welfare is understood as “the positive impact that a financial device or service has had on the life of consumers.” According to the analysis of the environment for financial inclusion by Global Microscope 2014 (EIU, 2014) the indicators for Latin America are Prudential Regulation, Regulation and Supervision of Branches and Agents, and Grievance Redress and Operation of Dispute-Resolution Mechanisms. Five Latin American countries scored in the top ten rankings in the index of the General Microscope 2014: Peru (1st), Colombia (2nd), Chile (4th), Mexico (5th) and Bolivia (7th). Yet four of the worst rankings of this index were also held by countries in the region: Haiti (55th), Venezuela (49th), Trinidad and Tobago (48th) and Honduras (44th). Bolivia and Brazil had the highest overall scores in the case of ease of agent operation because they have regulations that allow various institutions to offer financial services such as payment of public utilities, cash withdrawals and deposits. By contrast, Jamaica and Argentina do not have regulatory frameworks for such operations. 100

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Colombia, Costa Rica, El Salvador and Peru have the most favorable Prudential Regulation for financial inclusion, setting minimum capital limits for the entry of financial institutions oriented toward the low-income population. Some countries such as Chile, Colombia, Mexico and Peru have promoted financial inclusion by constituting interagency commissions that bridge the issue among the interested sectors and government. Other countries that have no clear strategy to support financial inclusion are Argentina, Haiti, Nicaragua, Panama, Trinidad and Tobago and Venezuela. Despite efforts to improve financial inclusion, Latin America is still in last place in terms of regulation of electronic-payment services. This is mainly due to high costs and barriers of small financial institutions to serve the low-income population. Based on the above, we can assert that financial inclusion is a task that is pending in Latin America and is not being applied with the same intensity and manner in the different countries. It is an important part of the process of social inclusion and is becoming a priority for governments as part of their public policies. Sebastian Cabello, Director of GSMA Latin America, stated during the Mobile 360 Latin America conference that Mobile payment systems can contribute to financial inclusion. Mobile money services are a powerful tool to facilitate financial access in developing markets and will be critical to continue building a healthy digital business ecosystem in the region (GSMA, 2015). Furthermore, adoption and widespread use of mobile financial services in the region still have a long way to go. Clearly, competition is increasing, and with it, the level of investment and the interest of the private sector. Given the above, this chapter now turns to the analysis of the current state of mobile payments in Latin America with the objective to understand the current situation and identify opportunities to explore.

4. MOBILE PAYMENT SYSTEMS IN LATIN AMERICA Sebastian Cabello (GSMA, 2015) also observed that although the number of adults Latin America with bank accounts has greatly increased, almost half of the adult population still remains without access to banking services. Therefore, the need to create systems that enable financial inclusion of the population becomes more and more necessary. To identify which systems could be the most appropriate, it is necessary to understand the current Latin American situation. During 2014, the mechanisms for electronic payments were via debit card, credit card or cell phone. According to the Global Findex 2014, almost 30% of adults have at least one account, using one of these three forms of payment. According to the latest report of the Groupe Speciale Mobile Association (GSMA, 2015) on “Mobile financial services in Latin America & the Caribbean,” there has been progress in the adoption of mobile money in Latin America. Almost two-thirds of the market has mobile money activity. There are, to date, 37 mobile money services representing 14.9 million accounts registered in 19 countries. Moreover, during 2014, the region showed a rapid increase of new mobile money accounts, with a growth rate of 50%. Three of the mobile money services have more than one million active clients. Brazil is the country with the largest number of subscribers, attaining 114 million in September 2014. Consumers of mobile money services in Latin America most often use Person-to-Person (P2P) transfers or refills for their operations, equivalent to 73% of the total volume of the transactions.

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Latin America stands out for having diverse business models for mobile services either operated by banks, mobile operators or third parties. Although none of them is perfect, they all strive to create a healthy financial ecosystem. The literature reveals different business models for mobile money used in Latin America. Kaw (2014), for example, proposes four business models based on the type of provider: 1.

2.

3.

4.

Model Managed by a Telephone Operator: In this model the mobile operator charges the mobile payment applications of its customers in NFC-enabled (Near Field Communication) devices. Consumers can make prepayments to the operator to charge into their wireless accounts. The mobile operator then provides merchants with Point of Sale (POS) wireless terminals. Model Managed by a Bank: The bank provides mobile payment applications or mobile devices to customers and provides merchants with the necessary POS. Payments are processed by the existing financial network. Banks provide the NFC mobile devices in the same manner as they do credit cards. Peer-to-Peer Model: This model created by the payment industry processes payments without using the existing network of electronic transfers and bank cards so as provide an inexpensive service that can be used daily. This model can present the following three scenarios: Scenario 1: The provider supplies the cards or mobile devices to the customers and the POS to the merchants in a closed circuit. Scenario 2: The provider supplies mobile payment applications for NFC-enabled devices of the client. Scenario 3: The provider of the Peer-to-Peer services uses an existing online application. POS equipment is not required. Collaborative Model: This model is characterized by the participation of both banks, mobile operators and other actors in the value chain of mobile payments. Payments are made through existing financial networks. This model involves two possible scenarios: Scenario 1: The bank and mobile operator create an alliance to offer a specific mobile payment service. Scenario 2: Trade associations representing both mobile operators and financial institutions negotiate and establish standards for the applications and the security of the mobile devices. This allows the use of many cards from different banks.

The associations provide the NFC-enabled mobile devices and the compatible POS terminals. Ontiveros et al. (2009) offers two classifications according to the segment of population to which it is directed: 1. 2.

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Additive Models: These models are directed primarily to customers of traditional banking. This offer of services for these clients is added to that already provided by their banks. Transformational Models: These models are primarily aimed at segments of the population that do not yet use banks and are meant to cover their specific needs.

 The Reality of Mobile Payment Systems and Social Inclusion in Latin America

In relation to mobile financial services in Latin America, it is noteworthy that although the supply of financial services through mobile devices is in an initial phase, some banks already offer part of their operations through mobile banking (Ontiveros et al., 2009). The following mobile financial services in Latin America stand out: 1.

2.

Mobile Banking Financial Services: a. Mobile Banking: Mobile banking is a multi-channel distribution strategy used by most banking institutions. It includes a network of bank branches, ATM machines, online banking, mobile banking and, in some countries, a network of non-bank correspondents. b. Bank Mobile Payments: These types of payments are still less developed in Latin America. The operations could include, among others, commercial purchases, mobile refills and payments of bills. c. International Money Transfers: Since international money transfers remain an important source of income for Latin American, this type of transaction between financial institutions is expected to increase. Noteworthy is the initiative between Ecuadorian and Spanish banks called Halcash that serves for domestic or international transfers. This service requires that the recipient have a mobile device allowing access to a code for the operation. The withdrawal is by means of the ATM of the bank entity. Non-Bank Mobile Services: These services are offered through mobile wallets (accounts associated with cell phones) based on value commodities that differ greatly from bank accounts.This system is one of the most accessible to the low-income, unbanked population. a. Non-Bank Mobile Payments: The Brazilian operator Oi offered this service through Paggo in 2008. The service offered a means of payment on credit separate from the mobile billing receipt. The customer therefore did not need to possess a bank account and the merchant did not require a POS. At the end of each contract, the client canceled the Paggo bill in an authorized establishment. b. Money Transfer Reception: Western Union, affiliated with the GSMA’s Mobile Money Transfer program, has begun to use mobile devices as a complement to its network of agents. This program aims to create an interoperable global platform for money transfer by a mobile wallet.

Celexpress through its GNB Sudameris and Servibanca networks in Colombia offers money transfers and a mobile wallet. In short, a variety of business models and financial services are now offered in Latin America. Their use and exploitation are, however, still incipient. Moreover, there are still few mobile payment financial services aimed at reducing social exclusion.

5. MOBILE MONEY AS A MECHANISM FOR FINANCIAL INCLUSION IN LATIN AMERICA Mobile money systems are a means of fomenting financial inclusion. They also generate many other advantages. For example, they help reduce operational and transaction costs both in banking and nonbanking institutions, as well as generate new employment opportunities and create new platforms in which 103

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new businesses can grow. However, there remain many obstacles in Latin America to the implementation of this type of service for it to play a role in enhancing financial inclusion. These include the following: 1.

Socioeconomic Constraints: a. The population’s low level of financial literacy hurts demand for financial services. b. The instability of financial markets undermine customer confidence, restricting savings and long-term investments. Institutional and Regulatory Constraints: a. The low quality of the institutional framework limits the development of financial markets. b. The poor governability of the region, social violence and the low quality of the legal framework have led the customer to prefer to save abroad. c. Lack of an adequate regulatory framework strengthening the use of mobile payment systems and the defense of consumers. Technical Constraints: a. Low geographical coverage of the bank branches. b. The high level of formalism in applications for inversions such savings accounts and credit in financial institutions. c. High maintenance costs of the bank accounts. d. Information asymmetry that provokes higher costs and less access to the low-income population. e. Lack of quality records of debtors. f. Higher bank interest rates since small entrepreneurs are deemed to present a greatest risk. g. Besides these limitations, for mobile payment systems to operate in the region there are preconditions, facilitators and catalysts that must be taken into account. The minimum preconditions are: i. Operability of networks and cellular technologies. ii. Cell phone coverage in both urban and rural areas. iii. Absence of legal impediments. iv. Clear regulations on money laundering and terrorist funding.

2.

3.

Facilitators that serve the operation of mobile payment services are: • • • • •

Regulation of non-bank correspondents. Specific regulation of electronic money. High penetration of cell phone use. High levels of security for users and intermediaries. High levels of literacy. Elements that can serve as catalysts to accelerate the use of mobile payment systems are:

• • • •

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Access to the opening of low-cost bank accounts. Lower taxes on financial transactions. Distrust of traditional financial systems. High flow of international transfers.

 The Reality of Mobile Payment Systems and Social Inclusion in Latin America

Although all the conditions necessary for the development of mobile payment systems are not yet in place, mobile services are being used more and more every day. The services most accepted by the population are cash deposits and withdrawals, money transfers, commercial payments, mobile phone airtime refills, payment of public utilities and the association of card payments to mobile accounts. As to deposits and withdrawals, it must be kept in mind that people in this region are very dependent on cash, so cash deposits and withdrawals are still the most requested type of transaction. In this case, besides the use of the debit card, identification document and cell phone, this requires agents, ATM machines, physical bank branches or banking correspondents. While a system of mobile money should still be able to count on these types of operations, the goal is to gradually replace them with the direct use of the mobile in commercial transactions. When referring to money transfers, attention has to be paid to two types of services, i.e. domestic payments (P2P) and international transfers. 1. 2.

P2P Payments: These are operations that are easy to implement and consist of sending money from one account to another within the same geographic region. The customer can send money to other mobile accounts or different bank accounts. International Transfers: An essential service for mobile payments and accounts for a large portion of the money entering each country.

They are a better and less expensive option than sending money through specialized companies such as Western Union and considered faster, safer and cheaper. The downside is that they involve different regulatory entities between countries, which affects the fluidity with which one can work. One of the most used services is commercial payments. In this case the mobile phone is used as an electronic wallet to pay for purchases in stores. It works by linking the mobile of a client with his bank account or a prepaid electronic money service. Brazil is an example of a country that has developed this type of mobile wallet. Refills of cell phone minutes (airtime refills) is another of the more commonly used services in the region that can be undertaken through non-banking correspondents. These entities, in fact, sell refills of the cell phone credit balance to clients. The balance can also serve as electronic money for payments or money transfers between individuals. Mobile payments of public utilities are also becoming a substitute for the billing system of public services. It is less expensive and faster and simplifies trade relations.

6. MONEY LAUNDERING PREVENTION In places where there are more people with mobile phones than bank accounts, as is the case of Latin America, mobile money services have served, and continue to serve, to include more and more people in the formal financial system. However, there is a significant risk that must be considered: money laundering. When considering mobile money services as a means to achieve financial inclusion, it is essential to relax certain criteria, such as the means of identifying a customer (KYC, Know Your Customer). However, this can result in the increase of risk of money laundering. Because of this hazard, and to provide greater access to the excluded population, it is essential to set the delicate balance between the 105

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Table 1. Vulnerabilities of the mobile money system General Risk Factors

Sample of Exploiting the Vulnerabilities at Each Stage Deposit

Transfer

Withdrawal

Anonymity

Criminals can open multiple accounts to hide the real value of the deposits

Suspect’s names cannot be identified by the system, making it a safe haven for criminals and known terrorists

Allows removal of illicit funds associated with terrorism

Elusiveness (untraceable transactions)

Criminals can apply “smurfing” to the profits of criminal activity in multiple accounts

Criminals can perform multiple transactions to muddle the money trail and the true origin of the funds

Funds resulting from the “smurfing” of multiple accounts can be withdrawn simultaneously

Rapidity

Illegal money can be quickly deposited and transferred to other accounts

Transactions takes place in real time, leaving little option to stop them if there is suspicion of financing terrorism or money laundering

Money from crime can be moved through the system quickly and be withdrawn from another account

Lack of oversight

Without proper oversight, the service is subject to systematic risk.

Source: Solin Marina and Zerzan Andrew (2010). “Mobile Money: Methodology for Assessing Money Laundering and Terrorist Financing Risks” GSMA discussion paper.

required identification of the client and more flexible identification rules. Successful experiences in some countries have shown that this is possible if there is a clear regulation that sets limits on transactions and daily balances. Nonetheless, according to the Global Microscope 2014 of The Economist Intelligence Unit, Latin America and the Caribbean have the lowest rating in terms of general regulation of electronic payments. Technical change in Latin America has been introduced rapidly, not giving time to adapt regulations. Thus, the speed of mobile money transactions can be a risk if automatic internal controls are not maintained. There is no doubt that mobile money is more traceable than cash, since transaction data and both cell phones (sender and receiver) can be identified. Despite this last aspect, the mobile money system has vulnerabilities that should be considered when designing the anti-laundering regulations and combating financing of terrorism (see Table 1). Mitigating these vulnerabilities begins by the simple controls mentioned above limiting transactions and balances, and a higher level of oversight (initial and ongoing) by representatives and agents, as well as monitoring transactions and clients.

7. SIMILARITIES AND DIFFERENCES OF PAYMENT SYSTEMS IN LATIN AMERICA (BRAZIL, COLOMBIA, MEXICO, PARAGUAY, AND ARGENTINA) Mobile payment systems in the countries of Latin America, created under the above mentioned business models, share certain similarities as well as specific differences. To compare these systems we have chosen the five countries with the greatest number of mobile payment systems: Brazil, Colombia, Mexico, Paraguay and Argentina. Specifically, we begin with the information provided by the GSMA global tracking services by means of the MMU Deployment Tracker.

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Table 2. Mobile payment systems in Argentina Name

Argentina Mi Billetera Movil

Year of launch

April 2012

Organization

Sicom Group

Services

• Domestic P2P payments • Electronic wallet

Provider

Mobile financial services regulation

No

Entity requires an authorization as a financial institution

No

Supervisor of electronic money services

Banco Central de la República

Medias used to operate the service

Cell phones

Protection of funds

No

Source: by author

Argentina’s mobile money service Mi Billetera Móvil allows operations through cell phones, purchases in stores, money transfers, payments of public utilities and ATM cash withdrawals (see Table 2). In Brazil there are five mobile money services (see Table 3): Table 3. Mobile payment systems in Brazil Name

Brazil Oi carteira

Zuum

Meu Dinheiro

Tim Multibank Caixa

Olha conta

Year of launch

January 2007

April 2013

September 2013

April 2015

2015

Organization

Oi

Vivo Telefónica

Meu Dinheiro Claro

Tim Telecom

Ohla Conta

Bradesco

Mastercard

Services

• Airtime refills • Commercial payments • Domestic P2P payments

• Commercial payments • Domestic P2P payments • Airtime refills • Other payments • Electronic wallet

• Commercial payments • Domestic P2P payments • Airtime refills • Electronic wallet

• Commercial payments • Domestic P2P payments • Airtime refills • Electronic wallet

Supervision of regulation of the mobile financial services

Yes

Yes

Yes

Yes

Yes

Entity requires an authorization as a financial institution

No

No

No

No

No

Supervisor of electronic money services

Banco Central de Brasil

Banco Central de Brasil

Banco Central de Brasil

Banco Central de Brasil

Banco Central de Brasil

Medias used to operate the service

• Cell phones • Lottery units

• Cell phones • Branch offices and banking correspondents • ATMs

• Cell phones • Branch offices and banking correspondents • ATMs

• Cell phones • Branch offices and banking correspondents • ATMs

• Cell phones • Branch offices and banking correspondents • ATMs

Protection of funds

Yes

Yes

Yes

Yes

Yes

Provider

Source: by author.

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1.

Oi Carteira is a service collaborating with the Bank of Brazil and the operator Cielo that operates through a refillable prepaid card that allows users to buy and transfer money. It runs through a cell phone or as a traditional card. It also allows withdrawal through bank ATMs. Zuum is a service that allows the transfer of money, the purchase of credits for prepaid mobile phones and the payment of bills with a cell phone. Zuum was launched by a society created by Telefonica and Mastercard. It does not require applications, mobile Internet access, or ownership of a smartphone. Meu Dinheiro is a service that allows the purchase of airtime refills, payments of public utilities, commercial purchases, transfers and withdrawals. TIM Caixa Multibank is a partnership between TIM and MasterCard that offers a prepaid card. It is intended exclusively for individual users of the services of the TIM telephone company. It permits public utility payments, transfers between TIM Multibank clients, airtime refills, commercial purchases, deposis and withdrawals. Olha Conta is a mobile financial transaction system via mobile that permits, among others actions, payment for services, transfer and reception of money.

2.

3. 4.

5.

Colombia has also developed five mobile money services (see Table 4): 1.

DDDedo is the mobile payment system of VTU Colombia SA that allows purchases in financial institutions and airtime refills. DaviPlata is an electronic money repository offered by the DaviVienda bank to physical persons. This is a type of account that differs from savings account and checking accounts. Ahorro a la Mano is a free savings account that works from any cell phone and does not require a minimum balance. It allows reception and transfer of money, airtime refills and public utility payments. Transfer Aval is a mobile service that allows opening a savings account associated with a cell phone number. It allows multiple operations from the cell phone and permanent access to money. It also serves for payment of public utilities, airtime refills and ATM deposits and withdrawals from bank branches or correspondents. PlataMóvil is a savings account specialized in managing money through cell phones. It allows savings, deposits and withdraws, public utility payments and purchases in shops. It works with all cellular phone operators.

2. 3. 4.

5.

In Mexico there are four mobile money services (see Table 5): 1. 2. 3.

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Boom is a financial service offering its clientele money transfers and reception. Boom Visa card clients can make purchases and withdraw cash. Transfer is a service that allows mobile payments, money transfers and real-time queries 24 hours a day, 7 days a week. The service is offered via cell phone, SMS and ATM machines. MiFon is a mobile service that allows to manage money via cell phone SMS. It is operated by Banorte and is not contingent on a contracted telephone company. It offers airtime refills, public utility payments, purchases and cash deposits and withdrawals.

 The Reality of Mobile Payment Systems and Social Inclusion in Latin America

Table 4. Mobile payment systems in Colombia Name

Colombia Dddedo

Daviplata

Ahorro a la Mano

Transfer Aval

Plata Movil

Year of launch

February 2009

March 2011

March 2013

October 2012

August 2014

Organization

V.T.U. de Colombia S.A.

Banco DaVivienda

BanColombia

Claro (América Móvil)

Mi Plata

Provider

Claro (América Móvil)

Redeban

• Banco Av Villas • Banco de Occidente • Banco de Bogotá • Banco Popular

• Une • Banco Cooperativo CoopCentral • Fenalco • Fogafin • CAF Banco de Desarrollo América Latina

Services

• Electronic wallet • Airtime refills

• Commercial payments • Other payments • International transfers • Domestic P2P payments • Airtime refills • Electronic wallet

• Mobile microinsurances • Links to other financial products • Domestic P2P payments • International transfers

• Airtime refills • Electronic wallet • Domestic P2P payments

• Commercial payments • Domestic P2P payments

Mobile financial services regulation

No

No

No

No

No

Entity requires an authorization as a financial institution

Sí

Sí

Si

Sí

Sí

Supervisor of electronic money services

Superintendencia Financiera de Colombia

Superintendencia Financiera de Colombia

Superintendencia Financiera de Colombia

Superintendencia Financiera de Colombia

Superintendencia Financiera de Colombia

Medias used to operate the service

• Cell phones Correspondents

• Cell phones • Branch offices • ATMs • Banking correspondents

• Cell phones • Branch offices and and banking correspondents • ATMs

• Cell phones • Branch offices and banking correspondents • ATMs

• Cell phones Agents

Protection of funds

Yes

Yes

Yes

Yes

Yes

Source: by author.

4.

The mobile money service eZuza offers airtime refills, cash deposits and withdrawals, purchases in stores, public utility payments and international money transfers. A feature of this service is that its network of agents consists of local businesses that can be trusted.

Although Paraguay only has two mobile payment systems, Tigo Money is listed as a success story in Latin America (see Table 6): 1.

Tigo Money is a service that allows purchase of airtime refills, money transfers, bill payments, shopping, ATM withdrawals and international transfers. It also offers an electronic wallet through financial entities.

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Table 5. Mobile payment systems in Mexico Name

Mexico Boom

Year of launch

December 2011

Transfer March 2012

Mifon

Ezuza

December 2011

September 2013 eZuza

Organization

Boom Financial

Tel Cel América Móvil

Banorte

Provider

• Caja Popular Mexicana • CIBanco • BBVA Bancomer • Banorte • Bansefi • Grupo Elektra • Soriana • FAMSA • Bancopel

• Banamex • Inbursa

Rev Worldwide

Services

International transfers

• Domestic P2P payments • Other payments • Airtime refills

• Domestic P2P payments • Links to other financial products • Airtime refills

• Commercial payments • Airtime refills • International transfers

Mobile financial services regulation

No

No

No

No

Entity requires an authorization as a financial institution

No

Yes

Yes

Yes

Supervisor of electronic money services

Comisión Nacional Bancaria y de valores

Comisión Nacional Bancaria y de Valores

Comisión Nacional Bancaria y de Valores

Comisión Nacional Bancaria y de Valores

Medias used to operate the service

• Cell phones • ATMs • Prepaid card

• Cell phones • ATMs • Branch offices or banking correspondents

• Cell phones • ATMs • Branch offices or banking correspondents

• Cell phones • Network of agents

Protection of funds

Yes

Yes

Yes

Yes

Source: by author.

2.

Envíos Personal is a service to send money to another person through the telephone operator Personal. It also has developed an electronic wallet (that stores money in the cell phone for later payment or transfer) and mobile payment (allowing purchase with an approved cell phone from an authorized establishments without the necessity of cards).

Certain similarities can be observed between the mobile money services of these countries in that all of them have allowed non-banking entities to enter the market and offer these services. These non-baking services are nonetheless associated with banks and can profit both from their network of branches and ATM machines. Brazil, Colombia and Mexico offer the largest number of mobile money services. Yet Brazil is the only one that has changed its regulatory framework to encourage the entry of non-bank entities and Colombia is in the process of adapting its regulatory framework to allow non-bank electronic deposits. The others, however, do not have specific regulations regarding this issue.

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Table 6. Mobile payment systems in Paraguay Name

Paraguay Tigo Money

Envios Personal

Year of launch

January 2008

February 2013

Organization

Tigo Millicom

Personal (Telecom Argentina)

Provider

• IN Switch Solutions • Banco Continental • Itaú Unibanco • Vision Banco

Services

• Commercial payments • International transfers • Domestic P2P payments • Airtime refills • Electronic wallet

• Domestic P2P payments • Airtime refills

Mobile financial services regulation

Yes

Yes

Entity requires an authorization as a financial institution

No

No

Supervisor of electronic money services

Superintendencia de Bancos del Banco Central de Paraguay

Superintendencia de Bancos del Banco Central de Paraguay

Medias used to operate the service

• Cell phone • Branch offices • ATMs

• Cell phone • Branch offices • ATMs

Protection of funds

Yes

Yes

Source: by author.

Mexico is more geared to the business model centered on the banking system. Although it has allowed some non-banking financial institutions to enter the market of electronic payments, they are granted licenses as “niche banks” or “payments banks.” Another similarity between these countries is that Brazil, Colombia, Mexico and Paraguay seek to facilitate and simplify processes to its customers allowing them to open accounts by means of a code and enter personal information to access mobile money accounts. Whereas most countries have included the incentive and development of mobile payment services as part of their financial and social inclusion policy, not all of them are at the same level. Argentina, for example, shows no clear policies for financial inclusion or an improvement in the regulatory framework to create an environment to enable the development of mobile payment systems. High costs and restrictive criteria also create barriers for smaller institutions (that cater to the lower-income population) to form part of the electronic money market. In Argentina, the market for financial services is centralized in banks and their regulatory environment is based on competition. Services targeting low-income individuals are not attractive for banks because they involve a greater risk and a greater investment in physical branches. There is also no regulatory framework for the creation of agents. In Brazil, the financial products and services that promote financial inclusion are led by both private and state banks that can count on a broad network of correspondents that allows them to reach almost the entire country. The Brazilian government pressures banks to extend access and credit to the lowincome sector. In addition, a new law enacted in October 2013, created a category of electronic payment institutions regulated by the Central Bank. 111

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Financial inclusion in Colombia has become a policy of national interest, involving different entities of the state. The Financial Superintendency oversees the financial system and promotes an increasingly inclusive, transparent, formal and dynamic market. In recent years it has also improved the financial coverage through agents. The Ministries of Finance and Information Technology and Communications submitted a bill in 2014 called Pague Digital (Digital Pay). By means of this law, a new type of financial institution called Specialized Electronic Payment and Deposit Company was created. This new entity allows customers to open digital accounts for payment or saving supervised by the Financial Superintendency of Colombia (SFC) and covered by the national deposit insurance. In Mexico the panorama is similar. Although the financial sector is concentrated in a few foreign banks, access still unequal. Promotion of financial inclusion in recent years has been important but not sufficient and there is yet to be an adequate national strategy. Regulatory holes also remain important, especially in relation to electronic money. Paraguay, despite being below the average number of savings accounts in the region (according to Global Findex 2011), is the leader in developing mobile financial services. The World Bank is helping Paraguay to define a documented and comprehensive strategy for financial inclusion. In addition, progress is being made in the regulation and supervision of financial services offered to the low-income population. In 2013, a company was created specializing in financial inclusion under the Superintendency of Banks. The analysis of these five countries shows that while all have developed mobile payment systems, Paraguay leads the region in this market, especially from the point of view of social inclusion. This is mainly because it has several elements that bolster the mobile payment systems. One of these, perhaps the most essential, is that Paraguay has defined the regulation of mobile payment systems and has maintained a permanent control of its two mobile operators Tigo and Personal. Both business models are focused on telephone operators backed by the country’s banks. Another important factor influencing the success of Paraguay is its deep knowledge of the market, leading to offering products that are affordable, useful and compatible with the needs of the population. Moreover, Tigo and Personal maintain a close and continuous coordination with their agents, monitoring their activities, providing training and focusing on attention given to customers. Therefore, it is clear that there are several factors that make a mobile payment system more successful than others, and even more so in a region such as Latin America.

REFERENCES Alliance for Financial Inclusion (AFI) & Financial Inclusion Data Working Group. (2011). Measuring financial inclusion. Core set of financial inclusion indicators. Bangkok, Thailand: Author. Retrieved from http://www.afi-global.org/sites/default/files/publications/afi%20fidwg%20report.pdf Almazán, M. (2013). Mobile money regulation in Latin America: Lleveling the playing field in Brazil and Peru. Retrieved from http://www.gsma.com/mobilefordevelopment/mobile-money-regulation-inlatin-america-leveling-the-playing-field-in-brazil-peru Almazán, M., & Frydrych, J. (2015). Mobile financial services in Latin America and the Caribbean. GSMA. Retrieved from http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2015/05/2015_ GSMA_Mobile-financial-services-in-Latin-America-the-Caribbean.pdf

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Atkinson, T. (1998). Social exclusion, poverty and unemployment. In A. B. Atkinson & J. Hills (Eds.), Exclusion, opportunity and employment (pp. 1–21). London: Center for Analysis of Social Exclusion. Boom. (2015). Retrieved from http://www.mybanktracker.com/news/2012/07/19/boom-financial-mpesalatin-american-diaspora/ Brintim, R., Escarfuller, W., Sabatini, C., Tummino, A., & Wolsky, A. (2014). Índice de inclusión social 2014. Americas Quarterly, 7(3). Retrieved from http://www.americasquarterly.org/charticles/socialinclusionindex2014/social_inclusion_index_2014-spanish.pdf Center for Financial Inclusion. (2015). Retrieved from http://www.centerforfinancialinclusion.org/ Comisión Económica para América Latina y el Caribe (Cepal). (2014). Panorama social de América Latina. Santiago de Chile: Cepal. Dahlberg, T., Mallat, N., Ondrus, J., & Zmijewska, A. (2008). Past, present and future of mobile payments research: A literature review. Electronic Commerce Research and Applications, 7(2), 165–181. doi:10.1016/j.elerap.2007.02.001 Davi Plata. (2015). Retrieved from https://daviplata.com/wps/portal/daviplata/Home/QueEsDaviPlata/!ut/p/ b1/04_SjzQ3NjE0NzaztNCP0I_KSyzLTE8syczPS8wB8aPM4o0tAk38vJyMfJ0dHZ0NHAO9LS0dg0wNPA0NgQoigQoMcABHA0L6w_WjwEpM3D19DF3NAhzNAkLcDBzN3Fw9jXyNjdwdjaEK8Fjh55Gfm6qfG5Vj6anrqAgA2Rp6AQ!!/dl4/d5/L2dBISEvZ0FBIS9nQSEh/ DDDedo. (n.d.). Retrieved from http://www.dddedo.com/index.php?option=com_content&view=arti cle&id=85&Itemid=58 Demirguc-Kunt, A., Klapper, L., Singer, D., & Van Oudheusden, P. (2015). The global findex database 2014: Measuring financial inclusion around the world. Washington, DC: World Bank Group. doi:10.1596/1813-9450-7255 eZuza. (2015). Retrieved from http://ezuza.com/ García, N., Grifoni, A., López, J. C., & Mejía, D. (2013). La educación en América Latina y el Caribe: situación actual y perspectivas. Retrieved from http://scioteca.caf.com/handle/123456789/379 GSMA. (2014). Economía móvil. America Latina, 2014. Retrieved from http://www.gsmamobileeconomylatinamerica.com/GSMA_ME_LatinAmerica_2014_ES.pdf GSMA. (2014b). El estado de la industria. Servicios Financieros Móviles para los no bancarizados. Retrieved from http://www.gsma.com/mobilefordevelopment/wpcontent/uploads/2015/04/2015_MMU_ El-Estado-de-la-Industria-2014-Servicios-Financieros-M%C3%B3viles-para-los-No-Bancarizados.pdf GSMA. (2015). Mobile financial services in Latin America & the Caribbean. Retrieved from http:// www.gsma.com/mobilefordevelopment/wp-content/uploads/2015/05/2015_GSMA_Mobile-financialservices-in-Latin-America-the-Caribbean.pdf Kar, M., Nazlioglu, S., & Agir, H. (2011). Financial development and economic growth nexus in the MENA countries: Bootstrap panel granger causality analysis. Economic Modelling, 28(1), 685–693. doi:10.1016/j.econmod.2010.05.015

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Kaw, V. (2014). Overview of mobile payment: technologies and security. In Electronic payment systems for competitive advantage in e-commerce (pp. 186-222). doi:10.4018/978-1-4666-5190-6.ch011 Meu Dinheiro. (2015). Retrieved from http://www.bradesco.com.br/html/classic/produtos-servicos/ cartoes/cartao-meu-dinheiro-claro-bradesco.shtm MiFon. (2015). Retrieved from http://www.banorte.com/portal/personas/productos/seccion.web?produ cto=597&categoria=8&esSubcategoria=false&fullSite=true&miFon=true Multibank Caixa, T. I. M. (2015). Retrieved from http://www.caixa.gov.br/voce/cartoes/pre-pago/timmultibank/Paginas/default.aspx Normativa. (2015). Retrieved from: https://www.superfinanciera.gov.co/jsp/index.jsf Oi Carteira. (2015). Retrieved from http://oi.com.br/oi/oi-pra-voce/oi-para-comprar/oi-carteira#utm_ source=oicarteira&utm_medium=todas+as+midias&utm_campaign=oicarteira Ontiveros, E., Martín, A., Fernández, S., Rodríguez, I., & López, V. (2009). Telefonía móvil y desarrollo financiero en América Latina. Barcelona: Ariel. Oxoby, R. (2009). Understanding social inclusion, social cohesion, and social capital. International Journal of Social Economics, 36(12), 1133–1152. doi:10.1108/03068290910996963 Plata Móvil. (n.d.). Retrieved from http://www.miplata.co/dineromovil.html Rico, J. E. (2013). Las tecnologías de telefonía móvil como mecanismo de inclusión financiera. Bogotá: Colegio de Estudios Superiores de Administración (CESA). Rioja, F., & Valev, N. (2004). Finance and the sources of growth at various stages of economic development. Economic Inquiry, 42(1), 127–140. doi:10.1093/ei/cbh049 Roa, M. J. (2013). Inclusión financiera en América Latina y el Caribe: acceso, uso y calidad. Newsletter from Centro de Estudios Monetarios Latinoamericanos, 59(3). Retrieved from http://cemla.org/PDF/ boletin/PUB_BOL_LIX03-01.pdf Samargandi, N., Fidrmuc, J., & Ghosh, S. (2014). Is the relationship between financial development and economic growth monotonic? Evidence from a sample of middle income countries. CESifo Working Paper No. 4743. Retrieved from http://www.econstor.eu/bitstream/10419/96840/1/cesifo_wp4743.pdf Solin, M., & Zerzan, A. (2010). Dinero móvil: metodología para la evaluación de riesgo de lavado de activos y financiamiento del terrorismo. Retrieved from http://www.gsma.com/mobilefordevelopment/ wpcontent/uploads/2013/09/alacftespanol94.pdf The Consultative Group to Assist the Poor (CGAP). (2015). Financial inclusion. Retrieved from http:// www.cgap.org/topics/financial-inclusion The Economist Intelligence Unit (EIU). (2014). Microscopio global 2014: Análisis del entorno para la inclusión financiera. Author. The World Bank. (2015). The GINI index (World Bank estimate). Retrieved from http://data.worldbank. org/indicator/SI.POV.GINI

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Tigo Money. (2015). Retrieved from http://www.tigo.com.py/tigo-money/que-es-tigo-money Transfer Aval. (2015). Retrieved from https://www.avvillas.com.co/wps/portal/avvillas/banca-personal/ conoce-nuestros-productos/ahorrar-invertir/Transfer-Aval Zuum. (2015). Retrieved from http://www.zuum.com.br/institucional/termos

KEY TERMS AND DEFINITIONS Airtime Refill: Refill of the prepaid balance of a cell phone. Financial Inclusion: delivery of affordable quality financial services to disadvantaged individuals. The services must be convenient and dignified. International Money Transfers: Sending money from one country to an account in another country. This transaction is often performed by immigrants to their country of origin. Mobile Payments: Payment made for goods and services via a mobile device taking advantage of mobile communication technologies. Money Laundering: Set of operations carried out by one or more individuals designed to conceal or disguise an illicit origin of goods or resources from criminal or illegal activities. P2P Money Transfers: Sending money from one account to another within the same geographic region. Smurfing: Laundering illegal money by breaking up large quantities into smaller amounts to avoid suspicion from the authorities. Smurfing transactions are carried out by one or more “investors” or “Smurfs”. Social Inclusion: The way in which individuals perceive their access to institutions and resources in the decision-making process and how they perceive the return on their investments.

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APPENDIX The Americas Quarterly journal compiled the data for the Index of Social Inclusion for 2014 from the following sources: 1. 2. 3. 4. 5. 6. 7. 8.

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The data of the variable percentage of GDP invested in social programs are from the Human Development Report of the United Nations Development Programme (UNDP). Data regarding Education are from the World Bank. Data on respect for political and civil rights are from the Freedom in the World 2013 survey by Freedom House. These measured the respect of 10 political rights into three categories: electoral process, pluralism, and political participation and functioning of government. Data on the percentage of individuals that live on more than $4 a day, access to adequate housing and percentage with access to formal employment are provided by each country. Data on personal empowerment (internal efficiency), the responsiveness of government (external efficiency) and citizen participation are from the AmericasBarometer survey from 2012. The scale is 1-7. Data on women’s rights, maternal mortality, reproductive rights, women in political power, rates of femicide, laws criminalizing violence against women, as well as others, are recompiled by Caivano and Jane Marcos-Delgado. The scale is from 0 to 35. The values on gay rights are based on the index of sympathy for homosexuals are compiled by Javier Corrales. The scale is from 0 to 7. Data regarding financial inclusion for 2012 are from the World Bank.

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Chapter 6

Attracting Customers’ to Online Shopping Using Mobile Apps: A Case Study of Indian Market Baljeet Kaur Delhi University, India Tanya Jain Delhi University, India

ABSTRACT The chapter will try to take a systematic and holistic approach to the M-Commerce trust discussing complete issues of trust in E-Commerce from the customer’s perspective. It will mainly focus on understanding trust and the elements of M-Commerce trust prevalent in the Indian society. The study will focus on identifying the trust factors pertaining to B2C E-Commerce websites/mobile applications from the perspective of Indian customers. The chapter will primarily discuss a case study of Indian market to explain what trust factors influence the consumers to buy online. The present case study is an in-depth examination of the customers’ situation in their daily practice of online shopping. It highlights several valuable lessons concerning the evaluation of B2C E-Commerce investment and ways of enhancing the customers’ trust in the e-vendor, thereby increasing the e-vendors’ sales along with the ease of the customers. The study is based on the responses collated from personal interviews, questionnaires and experts’ judgements.

INTRODUCTION The latest advancement in the field of E-Commerce is its wireless form used for conducting business using smart phones and tablets. This form is commonly referred as Mobile Commerce or m-Commerce. The Internet revolution along with the affordability of smart phones, tablets and other hand-held devices has fueled the m-Commerce market in India. Most of the e-Commerce websites in India have launched their mobile apps. Indian banks are also coming into m-Commerce to enable their customers to perform transactions with increased ease. The leading fashion retailer in India, Myntra, has already become mobile DOI: 10.4018/978-1-5225-0236-4.ch006

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based solely. Another Indian e-Business Snapdeal has declared that 65% of the orders placed with them are through their mobile app and they expect this percentage to go up to about 90% by the end of 2015. Similar numbers have been reported by the top management of Amazon. They claim, nearly 50% of their traffic comes from mobile apps. In a study “State of Mobile Commerce in India 2015” by Vizury, it is revealed that mobile commerce in India has grown over 130% within a year. According to the report, online sales through m-Commerce has more than doubled since last year. Only 25% online shopping was done using mobile until last year whereas m-Commerce amounts for about 58% of online sales in India as of now. Exponential growth has been witnessed by mobile commerce in India, Lifestyle and Classifieds being the customers’ favorite domains for m-Commerce shopping. Another report by KPMG on Indian m-Commerce market estimates that the mobile app download would grow six-fold by the end of year 2015 to 9 billion apps. It also suggests that India has been the fastest growing mobile app market since 2013. The report also mentions that due to significant growth in the number of online shopping transactions executed through mobile apps, major e-commerce players are giving serious thoughts in discontinuing their full-version websites altogether. In yet another survey carried out by MasterCard, India emerged at the second position occupying 62.9% after China at 70.1% in terms of number of respondents using a mobile device to do shopping. The survey also gave an insight about the sale of smartphones which has increased significantly. The tremendous hike in sale of smart phones in India coupled with broadband penetration indicate accession to the customer base of e-commerce applications. This surge in m-commerce is mainly due to the fact that mobile devices are much more affordable, accessible and portable than their bigger, bulkier counterparts that are required to carry out e-commerce activities. Also, an internet connection is required to access a website which may not be available everywhere, every time but this is not the case for m-commerce because internet is available on most mobile devices. The poor state of networks in our country mean that apps work better than mobile browsers because the former are better at caching data. This means that they store user data including frequent searches and purchase history to serve the users faster. This also leads to another important aspect of shopping on apps – personalization of the entire process. The mobile applications are interactive and tend to personalize the shopping experience for the user. The apps take complete advantage of the hardware and software features that mobile phones offer. The availability of camera, contacts and location help the app to make personalized offers for the customer. It is also easier to recommend products to others using apps and hence promote sales for the company. The push notifications act as effective reminders for consumers to know about the latest deals. These regular, subtle reminders allure customers and catalyze business. M-commerce is gaining more value with trending features like pointing nearby stores, quick searches, photographs, graphics, bar code scanning, 3D views, price calculators and ratings which gives it an edge over traditional e-commerce operations. To promote online shopping through mobile apps, major e-commerce players like Flipkart and Myntra have been announcing app-only sales frequently. Flipkart has also announced to shut down its mobile websites and direct its customers to do shopping on its mobile app instead very much like Myntra. Mobile apps enhance shopping experience for the customers while cutting on website maintenance and advertising costs. Other benefits include in terms of discount notifications. Customer can receive discount notifications from e-vendors without opening the web browser or mobile app. According to Vizury ecommerce mobile apps are much more beneficial to business than their desktop counterparts. It states that a quarter of the users who add products to their carts go on to buy them on a mobile app whereas this figure stands low at 14 percent for web users. In case of travel apps, 35 percent of users proceed to checkout, and 18 percent of them go on to make a booking; the corresponding numbers for the mobile web are 23 percent and 14 percent. 118

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According to Abhishek Rajan, Myntra’s head of mobile business, Myntra had three times as much user engagement in terms of number of visits and time spent on the app vis-a-vis the website. Also after a customer moved from website to app, the company witnessed a two fold increase in purchase frequency. With such a bright future for m-Commerce market in India, it is a primary concern for the e-vendors to encourage more and more use of their mobile applications among existing customers and attract new customers to indulge in online shopping with them. B2C e-vendors who have not established a trustworthy relationship with the customers have been forced by market to shut their online shops and discontinue their online business’s. In short, they have not been able to survive in this highly dynamic and competent market. This gives enough reasons to the existing online merchants to understand and address the trust issues associated with the online market that restrains the customers from shopping through mobile apps. This chapter presents a case study that compares three well-known B2C m-Commerce mobile apps in India based on the model suggested by 3C3G framework of trust as suggested by Baljeet Kaur & Sushila Madan in 2013. 3C3G framework of trust highlights the trust factors prevalent in Indian online B2C market. The present case study is an in-depth examination of the customers’ situation in their daily practice of online shopping. It highlights several valuable lessons concerning the evaluation of B2C m-Commerce investment and ways of enhancing the customers’ trust in the e-vendor, thereby increasing the e-vendors’ sales along with the ease of the customers. Online retail industry in India is growing at a fast pace and it has been drawing the maximum interest among all the segments of the Internet commerce market. Therefore, three mobile applications from B2C e-tail with domain names www.flipkart.com, www.snapdeal.com and www.jabong.com have been chosen for the purpose of the case study. Flipkart was founded in 2007. It now sells over 30 million products and has launched apps for Android and iOS platforms. Jabong started operations in January 2012. With a slogan which says ‘Be You’, it mainly sells apparel, footwear, fashion accessories, home accessories and other fashion and lifestyle products. Snapdeal started as a daily deals platform in February 2010 but expanded in September 2011 to become an online marketplace. It has gross sales of over 3 billion dollars annually with over 40 million registered users. The mobile apps have been chosen based on their popularity found from http://analytics.topsy. com/. The case study closely examines various aspects of these B2C e-tailing mobile apps with respect to the customers’ trust according to the model suggested by the 3C3G framework and identifies a set of positive and negative aspects that require the focus of the e-vendors and mobile application designers in particular of the above mentioned brands.

BACKGROUND Though m-Commerce has brought various benefits in the life of people especially for the organizations by increasing their reach to the customers by floating mobile apps, but, the issue of customers’ trust for a relatively novice e-vendor remains the point of concern. According to Lewis and Weigert(1985), Trust in everyday life is a mix of feeling and rational thinking. Trust can also be defined as “The willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trust or, irrespective of the ability to monitor or control that other party”, as suggested by Mayer et al(1995). According to yet another author Rotter(1971),Trust is a personality characteristic of an individual that influences that person’s interactions with the world at large.

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E-vendors have to try hard to acquire new customers while retaining the older ones because of lack of customers’ trust in the online set up. Online businesses might end up booking losses if they fail to gain trust of customers. Lack of customers’ trust in online set up also has an adverse effect on a brand’s reputation. E-Vendors won’t be able to get a good return on their investment if customers don’t trust online shopping. Therefore, it should be of primary importance for the e-vendors to gain prospective customers’ trust by developing trustworthy mobile apps and working on their organization’s reputation and policies while retaining the older customers.

E-TAILING IN INDIA: A BRIEF OVERVIEW E-Commerce and m-Commerce are the greatest sunrise sectors in India. There has been a lot of momentum behind online businesses in India over the past two years. In terms of investments, the sector has had very high valuations for various online businesses. India’s retail market estimated at $470 billion in 2011 and is expected to grow to $675 billion by 2016 and $850 billion by 2020, – estimated CAGR of 7%. According to Forrester, the online shopping market in India is set to grow the fastest within the Asia-Pacific Region at a CAGR of over 57% between 2012–16. Indian e-tailing industry estimated at Rs 3,600 crore ($800 million) in 2011 and is estimated to grow to Rs 53,000 Crore ($11.8 billion) in 2015. Overall online shopping market is expected to reach Rs 1,07,800 crores ($24 billion) by the year 2015 with both online travel and e-tailing contributing equally. Flipkart attracting $1.8 billion from foreign investors and Snapdeal getting $627 million from one of its biggest investors Softbank in the year 2014 clearly indicates the increasing investment and also subsequently increasing customers’ interest in online shopping. Internet retail is not a new phenomenon in India. It saw its share of popularity in the early 2000s, with several portals setting up shop during the period. According to PwC analysts, eTailing, which comprises of online retail and online marketplaces, has become the fastest-growing segment in the larger market having grown at a CAGR of around 56% over 2009-2014. The market is expected to witness rapid growth in years to come. While travel is the largest segment among all the internet commerce categories, Internet retail would reportedly match the travel segment, by the value of goods sold, within three to four years and, thereafter, surpass it. Figure 1. India-online travel and retail (%) breakup Source: Ernst and Young Estimates, Avendus.

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India is witnessing unprecedented number of people buying online with a great range of products being offered backed by the clear focus on the customers by the e-vendors. Products available online are the ones that customers typically buy when they go out shopping. In fact, in some cases, the desired products are not available in shops but are being offered online. Customer service is the buzzword, with portals and mobile apps increasingly thinking of newer ways to delight the average customer.

ANALYSING TRUST FACTORS OF 3C3G FRAMEWORK OF TRUST FOR THE THREE E-TAILING WEBSITES E-Commerce and m-Commerce are attracting huge investments. It is very important for the e-vendors to gain customers’ trust so that more and more visitors of their mobile apps/websites turn into loyal customers thereby yielding profits for the investors. Keeping this in mind, 3C3G framework suggested by Baljeet Kaur and Sushila Madan(2013) of trust was proposed which identifies various factors affecting customers’ trust, which if taken care of, will ultimately lead to the success of the mobile app/website, generating revenues for the e-vendors. In the model suggested by the 3C3G framework, these factors have been categorized into three types viz. organizational trust factors, mobile website(in this case mobile app) trust factors and customer trust factors. Organizational factors deals with the trust elements based on the characteristics of the web based seller or the brand which is selling its products/ services online. Mobile website factors basically deals with the trust elements based on the features of the mobile app. Customers’ trust on a mobile app is also influenced by their behavioural characteristics, psychographics and demographics. Customer trust factors deal with these. There are four factors left after filtering in organizational factors i.e. brand recognition, order fulfilment, money back guarantee/return and exchange policy and competence; ten factors in the category of website(in this case mobile app) trust factors i.e. website look and feel, navigation, payment related issues, privacy policy, presence of third party seals, security-presence of security policy, security protocols and SSL certification, product description/information content, information about e-vendor- presence of ‘About Us’, ‘Contact Us’ pages, absence of pop-up advertisements/ third party advertisements and customer reviews on home page; and four factors in customer trust factors category- past site experience, knowledge and experience in internet usage, social awareness and propensity to trust. Table 1 presents a list of attributes considered under each category Table 1. Trust factors considered for evaluation of the three e-tailing mobile apps Organizational Trust Factors

Website Trust Factors

Brand Recognition

Website look & Feel

Order Fulfilment

Navigation

Money Back Guarantee/ Return & Exchange Policy

Payment Related Issues

Competence

Privacy Policy Presence of Third Party Seals Security- Policy, SSL Certification Product Description/ Information Content E-Vendor Information Absence of ‘Pop-Up’ Ads/ Third party Ads Customer Reviews on Home Page

These factors with respect to the three mobile apps have been discussed further in the case study.

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a. b. c.

Flipkart: ‘My Orders’ option appears in the user account tab of the mobile application. In this user can check the status of his/her orders along with the list of all the orders placed by them till date. Jabong: ‘Track Order’ option appears in the user account tab of the mobile application. After clicking on the ‘Track Order’ option, the user is able to check the status of his/her order. Snapdeal: ‘Track your order’ option appears in the panel that runs on the left of the mobile application.

Though all the three mobile apps give options to track order but none of the mobile app mentions its shipping partners before user places order. This might make user unsure of the order delivery which has a negative impact on seller’s order fulfilment parameter. 3.

Money Back Guarantee/Return AND Exchange Policy: Lack of face to face interaction and inability to touch and feel products, leads to so many doubts in customers’ mind. Money back guarantee is basically a simple guarantee which assures the customer that in case of dissatisfaction of the customer with respect to a product or service, a refund will be made. Customers want to know, prior to buying from a mobile application, what if they don’t like the product or if they want to exchange the product. A clear mention of money back guarantees and returns and exchange policy might trigger the customer to buy from the mobile app. According to Egger(2001), return policy is considered to be one of the parameters to judge the competence and professionalism of a company by a customer. The language used in policy should be simple and unambiguous. The mobile app policies were evaluated for ease of finding them and the simplicity, ambiguity in the language used.

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Flipkart: Return and Exchange Policy is mentioned under each product but is contradictory at times. It is not very easy to find it on home screen. It can be located under ‘Terms Of Use’ in ‘Policies’ that appears in the user account tab. 30 day replacement policy does not hold for all the products available on the Flipkart app. This results in ambiguity and may make the customer unsure of purchasing that product from this app. b. Jabong: When the Jabong app was evaluated for the presence of return/exchange policy it was found that it does not hold a standard return/exchange policy. It is not mentioned on the home screen but beneath product information for certain products only. Thus all products are not entitled to replacement and/or return. Mentioned policy is brief but clearly stated. Presence of return/exchange policy makes the customer content with the fact that he/she can get the product returned/exchanged if the product does not turn out to be the one that they desire. c. Snapdeal: Snapdeal’s ‘Return & Exchange Policy’ and policy for ‘Cancellation of Orders’ is difficult to find. It is displayed under ‘Terms of Sale’ in ‘Terms and Conditions’ tab which can be accessed from ‘More’ option in the panel that runs on the left side of the mobile application. The policy is mentioned elaborately in simple terms. Competence: In an online environment, competence is the ability of a company to fulfil promises made to the customers, as suggested by Chen and Dhillon(2003). According to Cheung and Lee(2000), competence is one of the mandatory traits of the e-vendor in acquiring customers’ trust in Internet shopping. The online sellers should also have competitive prices for their products. If the price being offered is too high, then the customer does not tend to trust the online seller easily. The competence of the application was evaluated on the basis of price comparison and its ability to offer free shipping for a particular product. The product was not available at Jabong while it was being offered by Snapdeal and Flipkart.

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Standard ‘Filter’ and ‘Sort By’ options were found in all the three apps to help the user refine the search for a particular product. a.

3.

Flipkart: The navigation on Flipkart is optimum and does not require significant effort to search for the product of choice. A number of search methods including text search, voice search and bar code scan help in a quick search. For broken links, processed 3000 web pages, found 0 broken links. b. Jabong: Absence of tabs for all categories makes searching a little difficult. A product can be searched using the text or voice search feature. One can also look into the categories displayed on the home screen. For broken links, processed 3000 web pages, found 0 broken links. c. Snapdeal: Navigation on Snapdeal is optimum. Products can be easily searched using text or voice search. One can also have a look in the various categories provided on the home screen. For broken links, processed 3000 web pages, found 4 broken links. Payment Related Issues: In an online environment, there are various issues of concern related to payments. Payment related issues range from availability of cash on delivery option, secure payment gateways used for payment processing, second level authentication by using one time password generation or preset password and availability of multiple payment options like credit cards, debit cards, net banking, cash on delivery and gift vouchers.The three applications have been checked for COD option, secure payment gateways of third parties and multiple payment options. 129

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b.

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Flipkart: Flipkart offers multiple payment options like net banking, credit card, debit card, e-gift voucher as well as cash on delivery. In the case of credit and debit cards, the application takes the credit card and debit card details on its own page while in case of Internet banking, the customer is redirected to third party bank’s secure gateway. Cards by Maestro, Master Card and Visa can be used to make payment. Jabong: Jabong also offers multiple payment options like cash on delivery, net-banking, ewallet, credit cards and debit cards from Visa and Mastercard both. But, in the case of credit and debit cards, the application takes the credit card and debit card details on its own page while in case of netbanking and e-wallet, the customer is redirected to third party bank’s secure gateway through PayU.

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6.

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in ethical and competent ways as suggested by Cheskin Research (1999). The three applications used in case study were checked for the presence of third party trust seals. The three applications used in case study were checked for the presence of third party trust seals. All the three apps were found not carrying any third party trust seals assuring privacy of user information and reliability of the online business. Though the home screen did not display any third party trust seal ensuring safety of user data, it was observed that while making payment through credit/debit card on Flipkart app, the page carried the seal of Norton and PCI-DSS. Security: Security can be defined as the protection of data against accidental or intentional disclosure to unauthorized persons, or unauthorized modifications or destruction. According to Kalakota and Whinston(1996), a security threat has been defined as a “circumstance, condition, or event with the potential to cause economic hardship to data or network resources in the form of destruction, disclosure, modification of data, denial of service, and/or fraud, waste, and abuse”. Three applications have been checked for the presence of security policy and security certificates. Site Check Tool at the website www.networking4all.com was used to check whether each of the three applications had a proper SSL and valid security certificate. None of the apps display Security Policy on their home screen. a. Flipkart: Using the Site Check Tool it is observed that the SSL certificate is installed correctly on the Flipkart’s application and is valid till 4 December 2017. b. Jabong: Using the Site Check Tool, it was found that Jabong e-tailing application has its SSL certificate installed properly and the certificate is valid till 13 March 2016. But the application has a weak signature algorithm and it accepts connections with a weak cipher suite.

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Table 2. Overview of the three e-tailing apps according to the trust factors suggested by the 3C3G framework Trust Factors Brand Recognition

Jabong Very Low

Flipkart High

Snapdeal Average

Order Fulfilment Order Tracking

Yes

Yes

Yes

Logistics Partner

No

No

No

Money Back Guarantee

Difficult to Find

Easy to Find

Difficult to Find

Return and Exchange Policy

Appropriate Clarity

Less Clarity

Appropriate Clarity

Competence

Products generally not available, Free shipping

Slightly Higher Price, Nominal Shipping Charge

Reasonable price, Free Shipping

Application Look & Feel

Home Screen Not Cluttered, Balanced Use of Text and Images

Cluttered Home Screen, Balanced use of animation, Animation not overshadowing categories

Home Screen Not Cluttered, Appropriate Animation

Broken Links

Minimum

Minimum

Moderate

Ease of Search

Moderate

Optimum

Optimum

COD

Yes,

Yes,

Yes,

Multiple Payment Options

Yes,

Yes,

Unique Credit Card EMI Option,

Secure Gateway

Yes

Yes

Yes

Privacy Policy

Unavailable

Easy to Find, Good Clarity

Difficult to Find, Less Clarity

Third Party Trust Seals

No

Yes

No

Navigation

Payment Related Issues

Security Security Policy

No

No

No

SSL Certificate

Valid

Valid

Valid

Product Description/ Information Content

Average

Average

High

E-Vendor Information About Us Page

No

No

No

Contact Us Page

No

Yes

Yes

Absence of Pop- Up Ads/ Third Party Ads

Yes

Yes

Yes

Customer Reviews

No, Product Reviews Not Available, Customer Ratings and Reviews for Seller Not Available

No, Product Reviews Not Available, Customer Ratings and Reviews for Seller Available

No, Product Reviews Not Available, Customer Ratings and Reviews for Seller Available

Trust Index*

0.631

* Calculated in accordance to 3C3G Framework

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0.927

0.801

 Attracting Customers’ to Online Shopping Using Mobile Apps

et al (2004). This also holds true for the online transactions. Consequently, in online businesses, customer reviews are very important. If used appropriately, it can serve as a marketing technique to get quick responses from the customers. The customer reviews are an easier way to track the existing customers and influence the new ones. Presence of customer reviews on home screen of the application enhances the trust of the visitors and encourages them to do shopping on that application. The three applications were checked for the customer reviews on home screen. It was observed that none of the three applications displayed the customer reviews about the application or about any product on the home screen or anywhere else. But, the customer reviews and ratings about the seller were made available on Flipkart and Snapdeal app when any product was tapped upon.

FUTURE RESEARCH DIRECTIONS The chapter discussed current B2C m-Commerce market in India and the trust issues related to it. Future research can be extended beyond B2C model to other m-Commerce models like B2B, C2C etc. Future studies can also focus on trust issues before and after m-Commerce purchase unlike this study which lays emphasis to the formation of trust for the initial purchase. Current B2C m-Commerce market of India is shifting swiftly towards the marketplace model where different vendors are coming together to sell on the m-Commerce platforms. In this case, m-Commerce businesses are not maintaining inventory which is done by the vendors. Future studies can be done to see how this shift to marketplace affects the customers’ trust.

CONCLUSION E-Tailing Industry is growing at a rapid pace in India. It is expected that by the year 2025, the total online market in India will reach at least Rs. 4,00,000 crore and the share of online retail will be half at Rs. 2,00,000 crore. Due to such a growing trend of online retail, the foregoing case study was conducted in this segment of the online market. Three popular e-tailing mobile applications Jabong, Flipkart and Snapdeal were chosen for the purpose of the case study. Various features of these online retail mobile apps were assessed on the basis of the model suggested by the 3C3G framework of trust for B2C ECommerce websites. The observations thus made revealed the various aspects of the three online retail mobile applications. It was observed that Flipkart corresponded with the model suggested by 3C3G framework most satisfactorily followed by Snapdeal. Consequently, the trust index of the websites of Flipkart and Snapdeal were high resulting in high customer trust whereas the trust index of Jabong was low as compared to the other two suggesting low customer trust in Jabong’s mobile app.

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REFERENCES Chen, S. C., & Dhillon, G. S. (2003, April-July). Interpreting Dimensions of Consumer Trust in ECommerce. Information Technology Management, 4(2-3), 303–318. doi:10.1023/A:1022962631249 Cheskin Research & Studio Archetype Sapient. (1999). E-Commerce Trust Study. Sapient. Retrieved from http://www.sapient.com/checkin/ Cheung, C., & Lee, M. (2000). Trust in Internet shopping: a proposed model and measurement instrument. Proc. America Conference of Information System. Egger, F. N. (2001). Affective Design of E-Commerce User Interfaces: How to Maximise Perceived Trustworthiness. In Proceedings of CAHD2001: Conference on Affective Human Factors Design. Kalakota, R., & Whinston, A. B. (1996). Frontiers of Electronic Commerce. Reading, MA: Addison-Wesley. Kaur, B., & Madan, S. (2013). An analytical study of the trust concerns of online buyers in India. Journal of Computing, 5(6). Kaur, B., & Madan, S. (2013). Identifying customers’ preference of trust factors in adoption of B2C E-Commerce in India. International Journal of Computer Science and Technology, 4(2), 2013. Kaur, B., & Madan, S. (2013). Factors Influencing Trust in Online Shopping: An Indian Consumer’s Perspective. European Journal of Business and Management, 5(29). Kaur, B., & Madan, S. (2013). A Paradigm Approach to Generate Trust Index Using 3C3G Framework for B2C E-Commerce Websites. In Proceedings of Advances in Information Technology, 6th International Conference, IAIT2013. Springer International Publishing. Lewis, D. J., & Weigert, A. (1985). Trust as a social reality. Social Forces, 63. Mayer, R., Davis, J., & Schoorman, D. (1995). An integrative model of organizational trust. Academy of Management Review, 20(3). Ribbink, D., & Allard, C. R. (2004). Comfort Your Online Customer: Quality, Trust and Loyalty on the Internet. Managing Service Quality, 14(6), 446–455. doi:10.1108/09604520410569784 Rotter, J. B. (1971). Generalized expectancies for interpersonal trust. The American Psychologist, 26(5), 443–452. doi:10.1037/h0031464 Vizury, State of Mobile Commerce in India. (2015). Early trends from India. Retrieved from http:// web.vizury.com/website/in/wp-content/uploads/2015/03/StateofMobileCommerce2015-EarlyTrendsfromIndia.pdf

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ADDITIONAL READING Baier, A. (1986). Trust and Antitrust. Ethics, 96(2), 231–260. doi:10.1086/292745 Castelfranchi, C., & Tan, Y. H. (2001). Trust and Deception in Virtual Societies. Kluwer Academic Publishers. doi:10.1007/978-94-017-3614-5 ComScore research report for Assocham India (2012). State of E-commerce in India, September. eCommerce in India- Accelerating Growth- pwc 2015- https://www.pwc.in /en_IN/in/assets/pdfs/publications/2015/ecommerce-in-india-accelerating-growth.pdf Gefen, D., & Straub, D. W. (2010). Consumer trust in B2C E-Commerce and the importance of social presence: experiments in e-Products and e-Services. Networking and Digital Society (ICNDS), 2nd International Conference on 30-31 May 2010, Volume: 1. Head, M. M., & Hassanein, K. (2002). Trust in E-Commerce: Evaluating the impact of third-party seals. Quarterly Journal of Electronic Commerce, 3(3). Kaur, B., & Madan, S. (2014). A Fuzzy Expert System to Evaluate Customer’s Trust in B2C E-Commerce Websites. In Proceedings of INDIACom-2014, International Conference on Computing for Sustainable Global Development, India. Kelley, H. H., & Thibaut, J. W. (1978). Interpersonal relations a theory of interdependence. New York: Wiley. Koehn, D. (2003). The nature of and conditions for online trust. Journal of Business Ethics, 43(1/2), 3–19. doi:10.1023/A:1022950813386 Marsh, S., & Meech, J. (2000). Trust in Design. In Proceedings of the Conference on Human Factors in Computing Systems (CHI’2000), The Hague, The Netherlands, April 1- 6. McCord, M., & Ratnasingam, P. (2004). The impact of trust on the technology acceptance model in business to consumer E-Commerce. In Proceedings of the International Conference of the Information Resources Management Association: Innovations Through Information Technology, New Orleans, USA, May 23 - 26. Rowley, J. (2004). Online Branding. U.K.: Emerald Group Publishing Limited. Shneiderman, B. (2000). Designing Trust into Online Experiences. Communications of the ACM, 43(12), 57–59. doi:10.1145/355112.355124 Tseng, S., & Fogg, B. J. (1999). Credibility and computing technology. Communications of the ACM, 42(5), 39–44. doi:10.1145/301353.301402 Uslaner, E. M. (2004). Trust online, trust offline. Communications of the ACM, 47(4), 28. doi:10.1145/975817.975838

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KEY TERMS AND DEFINITIONS E-Commerce: Buying or selling of goods or services over Internet. M-Commerce: Buying or selling of goods or services over Internet using a handheld device like a smartphone or tablet. Order Fulfilment: Steps involved from processing customer order to the delivery of product to customer. Privacy: Ability of an individual/group of people to be able to hide significant information about themselves while revealing minimal and selective information required. Security: The degree of resistance offered by a person or system from potential harms that can be caused to it.

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Chapter 7

Mobile Commerce Security and Its Prevention Mona Adlakha University of Delhi, India

ABSTRACT Mobile commerce is the next generation of e-commerce, where payments and financial transactions can be carried out with utmost ease using handheld mobile devices. Mobile devices are at a higher security risk due to the large amount of critical financial and personal data available on it. The cause or consequence of these threats could be - malware and spyware attacks ; multiple or incorrect m-Commerce payments; breaches due to unauthorized access or disclosure, unauthenticated transactions and risk due to the use of third party networks. This chapter discusses how to manage security risks in m-commerce by first identifying them and then discussing preventive measures for their mitigation. A continuous approach for risk prevention needs to be followed, reviewing the strategy according to the latest challenges. Various risk prevention and mitigation strategies can be adopted. Service providers must follow physical and digital security measures to protect consumer’s business information. Independent auditing should ensure compliance with best practice security standards.

INTRODUCTION Mobile commerce (m-commerce) refers to the buying and selling of goods and services through wireless handheld devices such as smartphones, tablets and PDAs. It is the next generation of e-commerce, where payments and financial transactions can be carried out with utmost ease, all under a user’s fingertips. M-commerce is available anywhere you go, and at anytime, even if there is no internet, because the internet is available in your mobile phone. This makes it more convenient and accessible than e-commerce. Smartphone turns into a mobile payment device, where a consumer can keep his electronic record of transactions, avoiding the need to carry multiple credit cards and debit cards . Consumers can make payments and purchases when and where it suits them. The services and transactions available through m-commerce are vast. It is not just restricted to mobile banking (m-banking) and on-line purchasing. Services like retrieval of real-time weather reports, sport scores, flight and reservation information, DOI: 10.4018/978-1-5225-0236-4.ch007

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 Mobile Commerce Security and Its Prevention

navigational maps, and stock quotes, also come under m-commerce . The resent technological advancements in handheld devices, wireless communication and the enveloping infrastructure, give users a comfortable environment for mobile commerce . The ease of use of these mobile devices comes with its own disadvantages. There are numerous security risks in m-commerce, which have varying impact. These risks can be due to risks inherent in – the mobile handheld devices (its hardware or OS), the mobile applications installed on the device, the e-commerce transactions, the wireless communication network being used and the cloud being used for data storage. The transactions can be performed over adhoc wireless networks (i.e. wireless trading outside an established computer network). Thus, mobile adhoc networks are increasingly being used as a cost-effective mode of communication . On the other hand, there are a lot of implementation challenges in its applications. These networks are easily prone to serious network attacks, which make the customer’s private resources vulnerable. There is a need for adequate guidelines for designing secure mobile commerce applications. Security issue surfaced in the design of these applications should be dealt with; else it would lead to inappropriate design of routing protocols used in mobile adhoc networks. The dynamic topology of the adhoc networks and the faster consumption of power in the mobile nodes can cause malicious activity to the customer’s device. There are certain limitations in the mobile adhoc wireless networks as well. The objective of this chapter is to discuss the management of security risks in mobile commerce. This includes identifying the possible risks and discussing some possible solutions and preventive measures for their mitigation. The next section discusses different aspects of m-commerce security research done in this area.

BACKGROUND Throughout this chapter¸ the words customer, consumer, user refer to the user of the handheld mobile device like smart phones tablets and PDA (Personal Digital Assistant). Also, the word organization refers to the company or individual who plays a role in imparting an m-commerce service or is part of a transaction (discussed below). Prior to understanding the security issues in m-commerce, we need to be aware of all the parties involved in providing m-commerce Services. The Position statement on mobile commerce, (Australian Communications Consumer Action Network (ACCAN), 2014) states that a single m-commerce transaction could involve: a) the consumer, b) the retail merchant whose service/ product is being used/purchase through the transaction, c) each party’s bank, d) a credit card provider, e) a communications network provider, f) a mobile hardware manufacturer of the handheld device, g) a mobile operating system developer and h) a mobile application developer of the of the m-commerce app being used. A failure of an m-Commerce transaction might be attributed to any one of these parties involved in providing mCommerce Services. This complicates matters as one can not single out the root cause. Researchers have suggested many ways of categorizing security risks in m-commerce. A list of the top five mobile security threats are - loss of mobile devices, mobile application security, data loss on the device, malware and spyware attacks, theft of mobile devices (Actus Mobile Solutions Ltd.). Threat related to data being stored remotely in the cloud is also a cause of concern. A classification of risks related to mobile device are – device risks (like data storage, weak passwords, Wi-Fi hijacking, open hotspots, bandwidth hacking, Bluetooth spoofing and fuzzing) and application risks (trojaned apps, hidden malicious URLs, phishing, smishing, war texting) (Rhodes-Ousley, 2013). The powerful new 142

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smartphones and tablets have high storage capacity by storing data on the local device and on the cloud. The third-party mobile apps installed on the device pose high risks as the installation of these lies on the sole discretion of the consumer (Rhodes-Ousley, 2013). New threat vectors being introduced today are not considered in organizations’ mobile banking security approaches (Arxan Technologies Inc.). Key threat vectors include: jailbroken or rooted devices, outdated OSs and non-secure connections account takeover, cross-channel credential theft and attacks to the mobile application. The security risks in mcommerce can thus be due to risks inherent in – the mobile handheld devices, the mobile applications installed on the device, the e-commerce transactions, the wireless communication network being used for transactions and the cloud being used for data storage. The next section discussed these risks, their causes and impact. Mobile commerce transactions operate on radio frequency platform, which are prone to passive attacks e.g. (snooping - eavesdropping on a network) or listening to ongoing conversation (Gururajan, 2002). Consumers are concerned about the information they share amongst participating parties, be it data or voice messages, from an unauthorized party gaining access. Identification integrity and message integrity are important aspects of mobile security. The current platform, in which mobile communication is built, does not offer full scale security measures for integrity of transaction integrity. (Wushishi & Ogundiya, 2014). The range of radio wave is usually limited, and the network components may have some mobility, thus the topology of a wireless network can vary with time (N. & Kumar, 2012). According to the relative mobility of hosts and routers, researchers have defined three different types of wireless networks - fixed wireless network, wireless network with fixed access points and mobile adhoc network. Conventional routing protocols that are generally deployed in wired networks, can only maintain routing in fixed wireless networks and mobile networks with fixed access points, which generally require onehop routing over a link. Multiple-hop routing is majorly required in mobile adhoc networks and certain fixed wireless networks. Therefore the routing protocols for such types of wireless network should be able to maintain paths to other nodes and in maximum cases, must tackle changes in paths due to mobility reasons. Adhoc networks are increasingly being used as a cost-effective mode of communication (N. & Kumar, 2012). These networks are found to be effective enablers for engaging the customers in secure mobile commerce operations, irrespective of time and location. This is achieved by making use of the wireless resources without having any dependency on a network service provider. On the other hand, there are a lot of implementation challenges in its applications. These networks are easily prone to serious network attacks, which make the customer’s private resources vulnerable. There is a need for adequate guidelines for designing secure mobile commerce applications. Security issue surfaced in the design of these applications should be dealt with; else it would lead to inappropriate design of routing protocols used in mobile adhoc networks. The dynamic topology of the adhoc networks and the faster consumption of power in the mobile nodes can cause malicious activity to the customer’s device. Various studies have been carried out to find an optimal routing protocol to be used for secure mobile commerce in mobile adhoc wireless network. Researchers have classified these routing protocols into three main categories - proactive (table driven) protocols, reactive (source-initiated) protocols, and hybrid protocols (N. & Kumar, 2012). Proactive routing protocols keep an up-to-date topological map of the entire network. With this map, the route is known and immediately available when a packet needs to be sent. Example of proactive routing protocols are Destination-Sequenced Distance-Vector routing (DSDV) protocol, Cluster head Gateway Switch Routing (CGSR), Optimized Link-State Routing Protocol (OLSR), Wireless Routing protocol (WRP). Reactive routing does not continuously attempt to determine the network connectivity. Instead, a route determination procedure is invoked, on demand, when a packet 143

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needs to be forwarded. The technique relies on queries that are flooded throughout the network. Some algorithms using these are Temporally Ordered Routing Algorithm (TORA), the Dynamic Source Routing (DSR) and the Ad-hoc On-demand Distance Vector (AODV) protocols. Hybrid routing combines the best features of both proactive and reactive approaches. Examples are Zone Routing Protocol (ZRP), Distributed Dynamic Routing algorithm (DDR). Researchers have analyzed these protocols, mostly in a simulated environment. The results have highlighted the vulnerability in some routing protocols, amongst other issues. They have identified some frameworks and the results have shown the protocol’s inherent exposures in security issues in m-commerce. Algorithms need to suit the dynamic nature of adhoc wireless networking and the characteristics of adhoc m-commerce. These are further discussed as a solution in a later section. Researchers have proposed a number of security solutions for m-commerce. A detailed survey critically evaluates four such solutions (Mirarab & Kenari, 2014) - security solution based on WPKI (Wireless Public Key Infrastructure - a two-factor authentication scheme generally using the mobile phone and a laptop) with Bluetooth; an advanced mobile security solution based on distribute key without changing hardware configuration of the mobile devices; a double layer encryption scheme based on WAP (Wireless Application Protocol - a standard for accessing information over a mobile wireless network) for m-commerce; and an improved double encryption model. Most of the solutions discussed, try to fix security flaws in WPKI and WAP gateway and also reduce the burden on the user and mobile devices. Regular surveys being conducted, repeatedly highlight the question – ‘How secure mobile banking apps and mobile devices are?’ (Arxan Technologies Inc.). The security gaps and vulnerabilities in the transactions give advantage to attackers. Only a few organizations are taking these seriously to gain a competitive advantage by offering secure mobile apps. A recent analysis, by ArxanTechnologies Inc, found that the majority of paid financial services and retail apps have been hacked. Mobile devices running iOS or Android are not secure. The Kindsight Security Lab Report (Kindsight Security Labs, 2014), from Alcatel-Lucent, highlights that there are currently over 15 million infected mobile devices worldwide - a 20 percent increase from 2013. The infected mobile devices are - about 60% Android phones; 40% Windows computers tethered (the use of a device, usually a smatphone or tablet, to enable a wireless internet connection on another nearby device, usually a laptop) to mobile devices ; and less that 1% are from other devices (iPhones, BlackBerrys and Windows Phones). This study also found an increase in mobile spyware. Of the 2.3 billion smartphones around the world, Kindsight Security estimates that 40% of them contain spyware to spy on the phone’s owner. (The spyware can track the device’s location, incoming and outgoing calls, text messages, email, victim’s web browsing and history). Also, 18% of homes are infected with high-threat-level of malware such as a bot (an infected computer part of a botnet, a network of infected computers that are remotely controlled via the internet by cyber-criminals), rootkit (malware component that compromises the computer’s OS so that it is not detected by anti-virus software) or banking trojan (a computer program/application that has hidden malware inside, but looks fine on the surface). The Motive Security Labs Malware Report (Motive Security Labs, 2015), from Alcatel-Lucent, 80% of mobile infections are on windows PCs and 20% of Android phones; 10 of the top 25 mobile phone threats are spyphone apps; and 14% of homes are infected by malware. There was a decline in the Android malware detected were probably due to steps taken by Google to eliminate malware from Google Play and the introduction of the Verify Apps feature on Android. On the residential side, there was a significant increase in adware.

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Most mobile commerce applications and mobile-enabled websites currently use only standard web security (SSL/TLS) to secure data being transferred to and from the user’s phone (Actus Mobile Solutions Ltd., 2013). Research teams were able to ‘hack’ over 41% of mobile apps. This shows that the standard approach is completely inadequate, and leaves end-users, app developers, app owners and mobile operators seriously exposed. The reasons for the web security being inadequate are: a) it encrypts only the communications tunnel being used to transmit data to and from the phone, not the data itself. Breaks in communication, happening frequently on mobile devices, leave this data in the clear on the device, which may then be misused if the phone is lost or stolen; b) Since the data secured using web security takes 5 times longer to process, the performance of the apps are affected; c) Data secured using SSL/ TLS assumes an always-on connection between the sender and receiver. Persistent connection on mobile devices is usually impossible, requiring a need to constantly re-establishing the connection. This adds to significant delays to processing any transaction or results in the transactions being abandoned. Actus Mobile’s patented Secure Mobile Transaction Platform fixes these fundamental security, performance and ease-of-use issues, thereby accelerating the adoption of m-Commerce as the preferred method for transacting online. This is one of the possible solutions being discussed in a subsequent section.

SECURITY RISKS IN MOBILE COMMERCE, CAUSES AND IMPACT M-Commerce brings with it a range of threats and attacks. These could lead to loss of data, access to privileged data - infringing on consumers privacy. Since there are many players involved in m-commerce transactions, the security risks in m-commerce can be due to risks inherent in – the mobile handheld devices, the mobile applications installed on the device, the e-commerce transactions, the wireless communication network being used for transactions and the cloud being used for data storage. This section discusses these risks – its causes and impact.

Limitation in the Mobile Adhoc Wireless Network There are inherent problems in mobile adhoc wireless networks, posing as additional challenge in providing secure mobile commerce. The limitations of these networks are briefly discussed below (N. & Kumar, 2012): •

•

Transaction Management: Effective execution of secure transactions in a mobile adhoc networks is difficult due to - the lack of infrastructure, the dynamic network topology and the use of a device with resource constraints. The network may have intermittent disconnections, affecting a particular service of a secure m-commerce operation. Failure of an operation would lead to a transaction being aborted. Delivery of Service: The existing service discovery and delivery protocols do not seem to suit the needs of the adhoc wireless network, due to the networks unique characteristics and complexities, making them unsuitable for m-commerce. Service advertisements and deliveries may need to be dispersed by a mix of a store and forward strategy as well as local multicasting to cope with intermittent online connectivity.

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•

Trust-System: An important security aspect of online communication is trust; it assists the participating entries to ensure secure transactions by reducing the chances of risk involved in transactions. The mobile adhoc network cannot rely exclusively on network service providers to facilitate security services such as Certification Authority (CA), which assists to design trust system among peer nodes in the existing network. Also, peer nodes have to rely on their peers in the network to provide trust verification in order to evaluate other nodes’ reliability.

Security Risks Each security risk discussed below could be attributed to one or more flaws in (or attack on) – the mobile handheld device, the mobile applications installed on the device, the e-commerce transaction, the wireless communication network being used for transactions or the cloud being used for data storage. Some risks also have common. Additionally, it may not always be clear to consumers where they should direct any complaints about m-commerce services, since there are multiple parties that might be involved in any m-commerce transaction (Australian Communications Consumer Action Network (ACCAN), 2014). To have a complaint resolved, a consumer must potentially contact each of these parties and lodge a complaint. Below is a compilation of risks or threat vectors defined by some researchers and organizations along with their impact (Actus Mobile Solutions Ltd.) (Arxan Technologies Inc.) (Australian Communications Consumer Action Network (ACCAN), 2014) (Rhodes-Ousley, 2013). Most risks are related to the mobile devices being used for m-commerce. •

•

•

•

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Loss, Theft, Breakage of Devices, Weak Passwords: (Device Risks) Leaving mobile phones in public places is a common problem that occurs. Mobile handheld devices are more vulnerable to loss due to their small size, becoming a major security issue. Expensive and trendy devices attract thieves. Due to its size, pickpockets can easily steal them. In both cases the device can reach unsafe hands. If the device is not adequately secured with a PIN lock and other forms of encryption, then the information is open to misuse by its new owners. Such security breaches can lead to loss of critical data and financial loss. It is easy to drop a handheld device, causing it to break. Depending on the damage, the owner may lose some or all of his data. Jailbroken or Rooted Devices: (Device Risk) A secure mobile app cannot secure the mobile device (Arxan Technologies Inc.). Some users tamper with the inbuilt security on their hand held device, i.e. jailbreak/root their devices, exposing it to high risk. They break the security model and remove any inherent limitations, allowing mobile malware and rogue apps to infect the device and control critical functions such as SMS. For example, recently, a variant of the PC-based Zeus malware “ZitMo” was used to forward SMS messages to cybercriminals as a means of evading authentication. Data Storage: (Device Risk) The storage capacity of mobile devices is very large, which can be used to steal valuable intellectual property of an organization for misuse (Rhodes-Ousley, 2013). The onboard memory of these devices allows it to easily connect to the organizations computers. Once the data is on these mobile devices, it is very difficult to control its use. Wi-Fi Hijacking: (Device Risk) Similar to man-in middle attack, the attackers use the free WiFi hotspots available at public places (hotels, coffee shops, malls) (Rhodes-Ousley, 2013). The attackers usually are monitoring these hotspots to harvest (extract data from device) personal information, financial data and passwords.

 Mobile Commerce Security and Its Prevention

• •

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Open Hotspots: (Device Risk) A mobile device can act as wireless network for computers around it or can be used to tether a computer, for internet access (Rhodes-Ousley, 2013). Attackers can then connect to this vulnerable hotspot to steal information and launch attacks on the network. Baseband Attack: (Device Risk) Since smartphones have both network and voice capabilities, the network can be used to compromise voice capability (Rhodes-Ousley, 2013). The attacker can compromise the smartphone by intercepting the cellular call. Vulnerabilities in the hardware (and firmware of iPhone, Android devices) of the smartphone is exploited. The attack uses the phone’s baseband processor to sabotage it into a listening device, so that the attacker can eavesdrop on the conversation. Bluetooth Snooping and Fuzzing: (Device Risk) Most users do not change the Bluetooth device’s default pin (Rhodes-Ousley, 2013). The attacker can easily pair a device, using the connection to steal data. Fuzzing uses the pairing of Bluetooth devices to launch its attack through vulnerable software. Attacker can send invalid data to causing abnormal behavior, like – crashing, privilege escalation and intrusions. Attack on Mobile Applications: (Application Risks) Some mobile apps are not secure and have privilege to access data on the device. Advertising companies linked with mobile apps are on a lookout for user contact details like browsing history and geographical location. If these apps are downloaded, then they can pose a security threat if the user has personal and business related data on the device. An app downloaded by a user is in binary code format, and if left unprotected, the app is susceptible to reverse engineering (Arxan Technologies Inc.). Many tools are available that can reverse an application from binary format into source code. Through this source code, hackers can gain access to sensitive data and intellectual property (IP). Additionally, the code can be modified (e.g., security controls can be patched out), the run-time behavior of the applications can be altered and/or malicious code can be injected into the application. Once altered, the application can be repackaged and circulated to look as though it originated from a known/safe source. Other attacks could be trojaned apps, hidden malicious URLs, phishing, smishing, and war texting (Rhodes-Ousley, 2013). Trojaned Apps, a malware, is a realistic-looking app that compromises the mobile device. These may be hidden in apps available on authorized mobile app market sites like Google Play. Hidden Malicious URLs are designed in such a way that if this URL is clicked, it redirects the user to a malicious site defined by the attacker. The link text appearing on the screen is different from that in the actual web page. When using mobile handheld devices, it becomes difficult to validate links before clicking them. Phishing attack sends email to a user which contains a malicious attachment or web link with some fake but realistically-looking message. The user is tricked into opening the attachment or clicking the link, allowing the attack to steal personal information (bank account numbers, credit card numbers, usernames, passwords) from the device. Smishing is similar to phishing, but it uses SMS to attract unsuspicious customers to call a voice number to give personal details. The text message contains realistic and urgent request to confirm details for security reasons, or to confirm a payment, purchase or refund. War Texting is a relatively new attack which allows the attacker to remotely start, unlock, track a vehicle associated with a compromised smartphone. This is possible in the new vehicles which are computerized, networked, interconnected and interoperable with the smart phones. An attack on the smartphone, gives access to the interconnected vehicle.

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SIM Swap: (Application Risk) The attacker collects the customer’s (victim) personal banking information through phishing, vishing (a person calls the customer, posing as a bank executive and collects private information, i.e. identity theft), smishing or any other means (Vishwanathan, 2015). Using this personal information, the victim’s mobile phone SIM gets blocked. The attacker next obtains a duplicate SIM card from the mobile operator’s retail outlet with fake identity proof. The mobile operator deactivates the genuine SIM card which was blocked and issues a new SIM to the attacker. It now becomes easy to generate a one-time password (OTP) required for transactions using the stolen banking information. This OTP is received on the new SIM held by the attacker through which further transactions can take place. This has become a very common scam. Data Loss on the Device: Data loss can occur due to a number of reasons - mobile malware, poorly written third party apps, insecure market places; insecure Wi-Fi and NFC (Near Field Communication) proximity based hacking methods. Malware and Spyware Attacks: (Application Risks) Malicious software for mobile devices can replicate the problems a virus on your PC can do. It can hack your email and send spam mail to your contact list, slow down your device – rendering it unusable, delete important files and cause your device to lock up completely. In the severe cases, it can hack the built in camera and take photos at random, followed by stealing these photos for use. Incorrect m-Commerce Payments: (Application Risk) Phishing (an attack) emails, websites, scam messages and mobile apps are increasing security risks. These can be used to trick consumers into making m-commerce payments to the wrong people or making multiple payments. Unauthorized Access or Disclosure: (Device Risk) An outside attacker or an employee without correct authorization can get access to critical data, causing loss of control of data. Making information available on a public-facing website can cause unauthorized disclosure of information. The hardware used to enable m-commerce can present security risks. For example, a NFC chip used to communicate between a mobile device and a payment terminal is readable by remote devices. This raises the risk of an unauthorized third party remotely reading the chip. Additionally cybercriminals can use mobile devices to access a victim’s account through mobile browsers or mobile banking apps (Arxan Technologies Inc.). This amounts to an ‘Account Takeover’. The criminals maintain their anonymity when using mobile devices, making it challenging to defend against. Unauthenticated Transactions: Skipping the authentication step in a transaction makes it convenient for the consumer and saves him time by not needing to provide any kind of authentication code. This is common in low-value purchases at a point-of-sale terminal. Some contactless payment systems (in which a card or other payment device need only be held near a terminal for the transaction to continue) do not require any user authentication for payments below a certain value. The lack of any authentication step, however, also presents a significant risk to consumers—if m-commerce device or a credit card is lost, an unauthorized person will easily be able to make payments using that card or device if no authentication is required. Risk Due to the Use of Third Party Networks: The information being used in m-commerce systems is highly sensitive, which needs to be protected on the mobile device, on any servers used for the transaction, and in transit between all parties to the transaction. Some m-commerce services also make use of third party networks to carry transactions (a banking portal for e-payment). Introducing an extra party to an m-commerce transaction can pose a threat to the security of the information.

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Cross-Channel Credential Theft: Phishing or malware on the online channel is one of the common enabler for account takeover through stolen credentials (Arxan Technologies Inc.). In some cases fraud can either start or end on the mobile device, but most methods of attack involve at least one additional channel that attackers use to complete their task. To effectively protect end users and the mobile banking application, cross-reference actions need to be performed on the various channels while looking for suspicious activities. To identify mobile account takeover, one must see the entire picture (full fraud life cycle) rather than a limited view of just the mobile channel. Outdated OSs and Non-Secure Connections: (Device Risk) Out-of-date operating system versions and non-secure Wi-Fi network are being used for pharming attacks (redirects a website’s traffic to a fake site) (Arxan Technologies Inc.). These attacks allow attackers to exploit an existing online banking session to steal funds and credentials or gain full access to the mobile device.

SOLUTIONS AND RECOMMENDATIONS Risk prevention is not a onetime activity. Organizations and individuals have to follow a continuous approach, reviewing the strategy according to the latest challenges. Various risk prevention and mitigation strategies can be adopted. With new threats being discovered daily, there is no full-proof mechanism which will make m-commerce 100% secure. The security strategies should factor in the multiple players involved in each transaction or service being provided. These should ensure privacy of consumers’ data. This section discusses some solutions and policies currently adopted by organizations for risk prevention and mitigation. Routing protocols for wireless networks are also discussed briefly. Since each mobile commerce application is different, the organization needs to carefully design its own strategies. The policies/ models discussed below can serve as a guideline to decide on the correct approach to be followed. The ‘Position statement on mobile commerce’, developed by the Australian Communications Consumer Action Network (ACCAN), is discussed in detail in this sections as it is an example of a policy that gives a comprehensive m-commerce security solution to the multiple players involved. Service providers must follow physical and digital security measures to protect consumer’s business information. Independent auditing should ensure compliance with best practice security standards (Data Ready, Australian Communications Consumer Action Network (ACCAN)). A device not adequately secured with a PIN lock and other forms of encryption is open to misuse by its new owners. Preventative measures should be considered to ensure that if a customer’s device gets stolen, then he can remotely wipe it clean to remove everything from it (Actus Mobile Solutions Ltd.).

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Avoid SIM Swap Scam: A customer can safeguard himself from becoming a prey to the SIM swap scam. If a customer’s mobile has stopped working for unusual reasons, he should check with his mobile operator to make sure he has not become a victim of the SIM swap scam (Vishwanathan, 2015). He should never disclose his internet banking password or personal identification number (PIN) to anyone. One should be alert. A caller, asking for details such as the password or PIN, could be a fraudster. Bank officials never call asking for personal details. Customers should register for SMS as well as email alerts to stay informed about the activities in their bank account.

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Clear and Simple Regulations: M-commerce has a complex regulatory environment, with includes multiple laws and industry codes applying to m-commerce services and providers. Consumers need to be given a clear guidance about the regulatory environment. Enforceability: These regulations must be enforceable with meaningful action, including mechanisms for action to be taken against a provider who fails to satisfy those regulations. These must apply to all m-commerce providers. Complaints and Redress: There should be a clear and simple mechanisms using which consumers can lodge complaints and seek redress or remedies for problems arising from the use of m-commerce services.

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Limited Liability for Unauthorized, Delayed or Duplicate Transactions: The service provider should follow measures to limit the possibility of mistaken transactions and multiple payments. Consumers should not be held liable where a payment is unreasonably delayed for reasons outside the consumers’ control and should also be protected against unreasonably long delays in processing payments. Privacy: M-commerce systems should be subject to privacy impact assessments (PIAs), making the results of the PIAs publicly available. In the event that a service provider or any participating party loses control of consumers’ information, the provider should promptly notify all affected consumers of the data breach. No Additional Fees: No additional or increased fees should be charged on the basis that a transaction is carried out using an m-commerce system. Authentication: Every m-commerce transaction must, by default, include an authentication step (a password or a PIN). Consumers should be free to choose to take on the risk of unauthenticated transactions. Alternatively, the service provider could allow the consumer to specify the conditions under which authentication will not be required, for example, for transactions below a particular value or to particular payees. A consumer’s decisions to allow payments without authentication should not increase their liability. The decision to provide the consumer with the option of unauthenticated transactions rests with the provider. Security: M-commerce systems should implement security measures to ensure that users’ personal and financial information cannot be accessed by unauthorized parties during transactions, while stored on the device, or while in transit. The measures need to include: a) Preventing unauthorized access to m-commerce apps; b) Encrypting data stored on mobile devices: c) Encrypting data in transit; d) Limiting the range of times during which any payment hardware is active; and e) Protecting data stored on any providers’ systems.If a third party networks is being used to carry m-commerce transactions, it is important to ensure that the third party is sufficiently securing the information they transmit and process.The security measures used by an m-commerce system must be disclosed to end users. The service providers involved in m-commerce transactions must ensure that consumers are aware of precautions that should be taken, such as the use of strong passwords or other authentication tools, how to avoid malware, and how to avoid scams. Interoperability and Technological Neutrality: M-commerce systems should be interoperable wherever possible. A consumer should not be unnecessarily restricted in the transactions they can perform because of their choice of mobile device, social network or financial institution. A user should not be limited to making payments to people using the same mobile app, or through the same social network. Additional Measures to Be Taken by Service Provider: The merchant service provider must appropriate control measures to ensure that consumers’ data is as safe as possible from digital or physical intrusion by outsiders, fellow customers and rogue employees. Some of these measures are: ▪▪ SSL Certificates: To process client information such as personal and credit card data through a website, it is mandatory to have a Secure Sockets Layer SSL certificate installed. 151

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Handling Security Incidents: The service provider must be easy to contact (e.g. by telephone and email) with requests for support, and be able to respond to security incidents promptly. The provider must establish a means of securely contacting all its consumers about any incidents that may affect their data. Backup Procedures: The backup protocols used by the provider should be flexible to meet to consumers needs. Increasing or decreasing the frequency of backup should be driven by the number of transactions a business can afford to lose. A business involving online ordering with immediate dispatch of products, may want backups to run more frequently than once per day. ACCAN recommends that a consumer should also backup their own data using an alternate cloud service. Alternatively, an easily accessible external hard disk can be used by the consumer for back-up, to protect against a cloud system failure of any sort. Record-Keeping: An m-Commerce system should provide users with a clear record of transactions, including: the time and place of the transaction; the value of the transaction; the merchant or payee involved; the type of transaction (e.g. NFC or a remote credit payment); and whether or not the transaction was successful.

Securing Online Commerce by using a Secure Mobile Transaction Platform m:Cyphertm from Actus Mobile Solutions Limited is a secure payment standard for frictionless mobile commerce (Actus Mobile Solutions Ltd.). It provides a single-step payment platform for mobile commerce, reducing abandonment and risk. This patented Secure Mobile Transaction Platform fixes the fundamental security, performance and ease-of-use issues, thereby accelerating the adoption of m-Commerce as the preferred method for transacting online. This is a closed security eco-system which provides companies/ organizations with the capability of certifying that all transactions originated/ terminated between it and its registered clients (the two authorized sources) with each transaction being fully authenticated. This significantly reduces the possibility of fraud as well as 3rd party interference. m:Cyphertm: • • • •

Provides end-users with a 100% end-to-end secure environment with up to five-factors of authentication: 5-FA (2-FA is considered secure enough for web-based/online transactions only). Protects all types of data (financial, personal, business, access, message etc.) being communicated to/from any end-user mobile device whether direct to a business service provider such as a retailer, bank, airline etc. or into/out of the cloud. Supports most handheld mobile devices – smartphones, tablets, iPhone, Android, iPad, Tablets, Windows Mobile and Blackberry, and feature (non-smart) phones from manufacturers such as Nokia, Motorola, Sony Ericsson, and LG. Is built on a five-layer security stack to provide a secure and scalable transaction environment.

The m:Cyphertm platform has been designed to isolate the end-user from the underlying technology, eliminating the difficulties that have impacted the wide-scale adoption of mobile transactions. This technology provides any company wishing to supply mobile enabled applications and services, with a 100% secure end-to-end application development environment upon which a wide-range of applications can be built, which are: very secure both on handset as well as ‘in-flight’; very fast regardless of network connection speed; and very easy-to-use regardless of age group. 152

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Factors to Consider while Designing Mobile Banking Apps: The design should take into account risk mitigation, security management and compliance strategies and should try to remove of web-based/mobile application source code vulnerabilities IBM® Security AppScan®: AppScan can be used to scan Web and mobile applications prior to deployment. It enables the developers to identify security vulnerabilities, generate reports and give recommendations to rectify the issues. This scanner can enhance Web application security and mobile application security, improve application security program management and help app developers meet regulatory compliance obligations. 153

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Deploy Dedicated Library: The dedicated library is designed to enable application security services for mobile applications needs. The IBM Security Trusteer’s Mobile SDK protects organizations’ native mobile applications. It can be used to customize applications with advanced security features - device risk detection based on indicators such as jailbroken/rooted device detection; malware infection detection; Wi-Fi network security state; active protection of IP and SSL; and unique and persistent device ID creation. Threat Protection by Detecting Attacks at Run Time: Arxan guards can - verify the integrity of the application, its data or the app environment at run time; detect hacking attempts by malicious attackers; detect another seemingly harmless but malicious application from performing a drive-by attack at run time. Another app can compromise an organizations app via run-time method swizzling or function/API hooking to steal information or gain control. Establish a Formal Mechanism to React to Attacks: Arxan, helps designers to define how the app should react upon detection of an attack. For example - the app can shut down or not start to prevent the use of a compromised application; self-repair capabilities can replace tampered code or data with original correct code; and the app can alert and phone home to a back-end system of choice. Real-Time Fraud Detection: Real-time fraud detection is possible by using evidence-based, cross-channel intelligence. With threats becoming more sophisticated, stopping fraud requires more decisive action, such as putting the transaction on hold and manually reviewing high-risk/high-value transactions. This can impact staff that investigate fraud and, ultimately, affect the customer experience. Several tools are specifically designed to prevent misuse: ▪▪ IBM Security Trusteer Pinpoint Criminal Detection™: This is designed to protect against account takeover and fraudulent transactions by combining - traditional device IDs; geographical location and transactional modeling; and critical fraud indicators. Phishing, malware and other high-risk indicators are used for evidence-based fraud detection. New and spoofed device fingerprints are matched; real-time phishing incidents and malware-infected account access history can be detected; and a trusteer (trusted person) can identify account takeover attempts. ▪▪ Arxan Application Protection: This is designed to protect binary code. Binary protections slow down an attacker from analyzing exposed interfaces and reverse engineering the code within a mobile app. Often, an attacker will steal code and reuse it within another app for resale. Arxan Protection defends applications against compromise by obscuring or scrambling the code and encrypting or pre-damaging some or all of the application statically or at run time.

Security Training for Individuals The author proposes that organizations should have processes in place to assure that the employees understand the importance of security and that they have suitable mechanisms to verify that employees follow it. This is not just applicable to mobile e-commerce. Organizations can start with training individuals, irrespective of their department and profile, highlighting how they can contribute to the organizations 154

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security while executing their daily tasks. An integral part of the organizations strategy is to sensitize employees about the security and confidentiality of organizations’ data. Also, strict action must be taken against defaulters who try to steel company’s intellectual property. Numerous security guidelines are available for every phase of development. The gap lies in understanding the need of security and its implementation. Mobile manufacturers, m-commerce app developers and third party service providers need to design a brief introductory, user- friendly tutorial for the users. Users on their part need to understand that security is an integral part of any service, and their personal and financial data is at stake. The ease of use of a small handheld mobile device should not become their biggest security threat.

FUTURE RESEARCH DIRECTIONS Extensive research is required to address serious security issues in m-commerce. The use of mobile adhoc wireless networks is a constant concern. The optimal and secure routing algorithm needs to be developed, after testing in real-time environments (N. & Kumar, 2012). Financial institutions constantly look for the right combination of technologies that can securely support multiple use cases and enable productivity while keeping enterprise data protected on mobile devices (Arxan Technologies Inc.). Despite the growing awareness and enormous efforts financial institutions undergo, a significant gap remains between mobile technologies and security protection mechanisms. They need to move away from the traditional mechanisms, adopting the latest tools. Research can be carried to develop an effective strategy of adoption of security measures by handset manufacturers, OS and mobile app developers, third party service providers and users of m-commerce. Any approach which is adopted needs to be reviewed periodically, taking into account the current threat scenario.

CONCLUSION M-Commerce is the next generation of e-commerce, where payments and financial transactions can be carried out with utmost ease. The small size of the handheld device and the ease of use of m-commerce applications pose security threat to the large amount of critical financial and personal data on it. Additionally, the wireless network being used has an additional set of threats as compared to a wired network connection. Threats can be due to security gaps in mobile device’s hardware or OS, vulnerabilities in the mobile app being used, issues in the security and dependability of the communication network used and an insecure third party portal being used (example, for payments). With multiple parties involved in providing the m-commerce services, it is sometimes difficult to trace the root cause of the security breach. Various risk prevention and mitigation strategies can be adopted. With new threats being discovered daily, there is no full-proof mechanism which will make m-commerce 100% secure. The security strategies should factor in the multiple players involved in each transaction or service being provided. These should ensure privacy of consumers’ data. Suitable routing protocols for adhoc wireless networks need to be chosen. Since each mobile commerce application is different, the organization needs to carefully design its own strategies. The policies/ models discussed in the chapter can serve as a guideline to decide on the correct approach to be followed. Service providers must follow physical and digital security measures to protect consumer’s business information. Independent auditing should ensure compliance with best practice security standards. Consumers should be aware of the service agreements with the service providers. 155

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Risk prevention is not a onetime activity. Organizations and individuals have to follow a continuous approach, reviewing the strategy according to the latest challenges. The bottom line is that until people understand the importance of security in all walks of life and the need to follow the laid guidelines or rules, the highest level of security measures cannot save them from harm. A handheld device, though easy to use, should not be tampered. The convenience of mobile app, which gives the power of making payments in minimum time, 24x7, if unsecure, also poses a security threat.

REFERENCES Actus Mobile Solutions Ltd. (2013, February). 2013 Guide to Frictionless eCommerce for Mobile App Developers. Retrieved September 2015, from m:Cypher Web site: http://ecommercesecurity.co.uk/ Actus Mobile Solutions Ltd. (n.d.). Retrieved August 2015, from m:Cypher Web site: http://ecommercesecurity.co.uk/ Arxan Technologies Inc. (n.d.). Securing Mobile Banking Apps: You Are Only as Strong as Your Weakest Link. Retrieved September 2015, from Arxan Technologies Inc.Web site: https://www.arxan.com/ securing-mobile-banking-apps-you-are-only-as-strong-as-your-weakest-link/ Australian Communications Consumer Action Network (ACCAN). (2014, January 10). Position statement on mobile commerce. Retrieved September 2015, from Australian Communications Consumer Action Network Web site: https://accan.org.au/files/Position_Statements/accan_mcommerce_policy_statement.pdf Ghosh, A. K., & Swaminatha, T. M. (2001, February). Software Security and Privacy Risks In Mobile E-Commerce. Communications of the ACM, 44(2), 51-57. Gururajan, R. (2002). New Financial Transaction Security Concerns in Mobile Commerce. Information & Security An International Journal, 8(1), 71–86. doi:10.11610/isij.0803 Labs, K. S. (2014). [Kindsight Security Labs Malware Report. Alcatel-Lucent. Labs, M. S. (2015). Malware Report. Alcatel-Lucent. Mirarab, A., & Kenari, A. R. (2014). Study of secure m-commerce, challenges and solutions. Advances in Computer Science: An International Journal, 3(2), 124-132. N, C. K., & Kumar, G. N. (2012). Modelling Efficient Process Oriented Architecture for Secure Mobile Commerce Using Hybrid Routing Protocol in Mobile Adhoc Network. International Journal of Computer Science Issues, 9(1), 311-321. Ready, D. Australian Communications Consumer Action Network (ACCAN). (n.d.). A Digital Business Kit for the Arts, Recreation & Education Service sector. Retrieved August 2015, from Data Ready Web site: http://digitalready.org.au Rhodes-Ousley, M. (2013). Securing Mobile Devices. In Information Security: The Complete Reference (2nd ed.; pp. 597-607). McGraw Hill Education (India) Private Limited.

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Vishwanathan, V. (2015, July 17). De-jargoned: What is SIM swap fraud? - Livemint. Retrieved September 2015, from Livemint E-paper Web site: http://www.livemint.com/Money/7GrbhOvZjgVHd20jDUiUQI/ Dejargoned-What-is-SIM-swap-fraud.html Wushishi, U. J., & Ogundiya, A. O. (2014). Mobile Commerce and Security Issues. International Journal of Scientific Research Engineering & Technology, 3(4), 739-741.

KEY TERMS AND DEFINITIONS Attack: An unauthorized action, carried out by a specific technique or by a specially crafted code, with malicious intent. It exploits the vulnerabilities in the system to get illegal access to systems and data. Authentication: The process of verification of the person or entity entering a system. First, the identity they are claiming to be is validated. The next step is to evaluate whether this entity should be granted access to the system. Authorization: Requires prior authentication. It is the process of determining the rights a person or entity has, and what elements of the system they should be granted access to. Mobile Adhoc Network: A self-configuring network of mobile devices connected without wires in an infrastructure-less network, i.e. a network which does not have any access points. Each device in this network has the freedom to move independently in any direction. Also called MANET, the network helps the mobile device to continuously re-configure to keep connected to the network. Payment: The electronic payment made while using an m-commerce service. It is one of the steps involved in completing an m-commerce transaction. Prevention: The act of stopping an m-commerce security breach from happening. Threat: An object, event or action that may cause harm during an m-commerce transaction. Strategy: A policy giving a direction and scope to an organization, which helps them achieve the prime goal of secure mobile commerce.

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Chapter 8

Mobile Payments for Conducting M-Commerce Rupali Ahuja University of Delhi, India

ABSTRACT Mobile commerce or M-commerce facilitates users to conduct commercial activities using mobile equipment like Smartphone, tablet etc. M-commerce has come a long way since its inception in 1997. With adoption of 4G networks, it is believed that M-Commerce will outpace E-commerce soon because of its high speed, convenience, flexibility and mobility features. Mobile payment is an integral component of M-commerce. Any transaction on mobile devices involving monetary value has to go through a payment mechanism. With increased interest of users in M-Commerce, the mechanisms available for mobile payments are becoming more prevalent and are continuously evolving. This chapter describes stakeholders of the mobile payment ecosystem, mobile payment technologies, payment carriers, payment gateways and issues involved with them. We also discuss the popular payment options available in M-commerce market space today.

INTRODUCTION Smartphone and Internet penetration in large number of households has changed the consumer’s concept of performing business. With E-Commerce already a hit, M-Commerce is soon to follow the success path. Mobile Commerce is any transaction which involves buying/selling of goods, services, apps etc. using wireless technology. From downloading games, ringtones, apps, and other digital content to online shopping, online banking, and funds transfer, M-Commerce has come a long way. Apart from using traditional SMS based mobile payments and M-Commerce payment gateways, the consumers are now ready to experiment new innovative payment modes like NFC, mobile wallets etc. There are a wide range of choices available for the consumers in the mobile payment world. Several online payment methodologies available for merchants and consumers include debit/ credit cards, bank account transfers, direct debits, prepaid/gift/loyalty cards, third-party payment agents like PayPal. Mobile Payment technology like NFC, 2D barcodes have also started redefining the mode of payment at PoS (Point of Sale) termiDOI: 10.4018/978-1-5225-0236-4.ch008

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nal. The mobile payment ecosystem comprises of many stakeholders. Looking at the rapid growth of M-Commerce each player wants to capture their space in the value chain, from the increasing volumes and values of products/services delivered using mobile based payments. Each stakeholder is trying to get its revenue share by providing their own payment carriers and modes. Mobile Payment is a promising digital sales channel of the next generation. The Asia-Pacific region currently dominates the world mobile payment market with Japan and Korea being global leaders, but its use in other parts of world is also expanding faster. According to an April 2012 study by the Pew Internet and American Life Project (Smith, Anderson, & Raine, 2012), “The Future of Money in a Mobile Age,” by 2020, most consumers will have embraced and fully adopted the use of smart-device swiping for purchases, nearly eliminating the need for cash or credit cards. President of Visa Europe, Peter Ayliffe, has predicted that 50 percent of Visa’s transactions would be carried out on a mobile device by 2020. According to Gartner, Inc., (Gartner Inc., 2013) a global information technology firm, have predicted that worldwide mobile payment transaction values would increase from an estimated $235.4 billion in 2013 to $721 billion by 2017, with a corresponding increase in an estimated 245.2 million mobile payment users worldwide in 2013 to more than 450 million users by 2017. Gartner forecasts that NFC will account for only 5 percent of the total transaction value in 2017, although growth is expected to increase somewhat from 2016 when the penetration of NFC mobile phones and contactless readers increases. Asia/Pacific will overtake Africa to become the largest region by transaction value, reaching $165 billion in 2016. In this busy world where people are always short of time, doing financial transactions from anywhere anytime will be very advantageous. This chapter gives insights into mobile payment system, various stakeholders, technologies, benefits, payment modes, carriers, gateways, challenges and issues. It also discusses popular payment options available today.

BACKGROUND With increase in the number of mobile users and availability of high bandwidth 4G networks, mobile phones are not merely being used for communication and entertainment purpose. Consumers have steadily started using mobile phones as tools for banking, paying bills, budgeting and shopping. In the past, consumers used mobile payments mainly to purchase digital services that they consumed on their mobile devices. Recently, however, consumers have expanded use of mobile payments and have adopted it for purchases of physical goods, payment of bills, shopping, ticketing, paying at kiosks, toll plazas, automated vending machines etc. A Survey of Consumers’ Use of Mobile Financial Services by Federal Reserve Board’s Division of Consumer and Community Affairs (Governors, 2014) on US adult population revealed that by 2014, usage of mobile payments had increased to 22 percent for mobile phone users and increased to 28 percent for Smartphone users. Forrester forecasts that US mobile payments will reach US $90 b in 2017. With many merchants showing interest in expanding their business using M-Commerce, the mobile payment market is rapidly evolving. Blackhawk Network Shopper (Blackhawk Network, 2015) study conducted in July, 2015 found that 25% of Smartphone owners now use Mobile wallets. According to Boston-based independent research firm Aite Group (Cluckey, 2011) mobile payments will total $214 billion by 2015, 77 percent of which will be payments made at a physical retail location in the United States. 159

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Top IT giants like Facebook, Samsung are investing money in developing mobile payment applications after looking at the success of PayPal, Apple Pay and Google Wallet. According to a survey done by 451 research group in April, 2015 (Tracy & Needham, 2015), Apple Pay is the top choice in terms of mobile payment applications, closely followed by PayPal.

MAIN FOCUS OF THE CHAPTER Stakeholders, Benefits, Carriers, Types, Technologies, Issues 1.

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Mobile Payment Ecosystem: There are many stakeholders in a mobile payment ecosystem that must interact and cooperate with each other to complete a payment transaction. Each stakeholder plays a vital role in the payment system value chain. The various players that are required to conduct a successful mobile payment transaction for M-Commerce are: a. Users: form the two ends of the payment transaction, i. Customers/Consumers: The subscribers of a mobile phone service and a mobile payment tool who initiate the payment transaction for performing M-Commerce are called Customers/consumers. ii. Merchants: The retailers, digital service providers, shopkeepers, seller of any tangible products or digital content that sell their products via their e-stores, web stores, websites or web applications and are ready to accept payment for product/service delivered through mobile equipment, are called merchants in this scenario. b. Financial Institutions: i. Acquiring and Issuing Banks of Credit/Debit Cards: The banks that provide infrastructure of credit/debit card payments. ii. Prepaid Card Issuers: The organizations that provide prepaid cards which are loaded with money in advance in order to make payments by entering card details. iii. Third Party Payment Providers like PayPal: These companies provide alternative to banks for performing online mobile payments. They handle all payment processing for its subscribers and charge them for this. The consumers share a credit/debit bank account number with these payment providers who perform transactions on their behalf. c. Mobile Equipment Based Requirements: i. Mobile Software and Platform Providers: The organizations that provide platform and software like virtual wallet through which payments can be conducted. ii. Mobile Handset Manufacturers: Organizations that develop mobile handset and incorporate features that assist in mobile payment. iii. Mobile Hardware like SIM/Chip or Extended Card Readers Manufacturers: The vendors that develop SIM chip which can be integrated with “Secure element” that store financial details of consumers securely. iv. Mobile Network Operators: The companies that provide wireless communication services on the mobile handset. They have full control of the data that flows through their network. They generate the bill for subscribers based on their consumption. Mobile Network Operators also provide facilities for mobile payment through their services of “Premium SMS” and “Direct Carrier Billing” in which expenditure incurred by the consumers in M-Commerce is billed in the next billing cycle.

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For Online Transactions: i. Website and Web Application Developers: The people who develop websites and web applications for the merchants web store. They create an alternative marketplace for merchants to expand their business. ii. Related Software or Technology Developers: The people who develop additional software like image scanning algorithms, report and bill generation software etc, which are required for integration of various components of the mobile payment ecosystem. iii. Payment Gateway Infrastructure Providers: They provide a reliable online payment infrastructure which integrates the web stores with financial institution in a secure way. They handle payment transactions for the merchant. e. For Transactions at PoS: i. Hardware Vendors Who Develop NFC Based PoS Terminals and NFC Chips: The manufactures who build NFC chips that are embedded in consumers mobile phone for performing payment transaction at PoS. They also develop NFC chip readers; deploy them at merchants PoS, which receive information from NFC enabled device of consumer. ii. Hardware Vendors Who Develop and Embed Card Readers in Merchant’s Mobile: These manufacturers develop credit/debit card readers that can be attached to merchants mobile to accept credit/debit card based payments from consumers. iii. Software for Scanning and Decoding Barcodes: The software developers who develop software for scanning 2D barcodes or RFID tags and retrieve product information from them for billing or consumer authorization. f. Miscellaneous: i. Product/Service Manufacturers: The manufacturers who create physical goods or develop digital products that consumers wish to buy. ii. Maintenance Personnel: The people who maintain mobile networks, web stores, PoS terminals, payment gateways etc. iii. Delivery Infrastructure: The merchant should employ an efficient and reliable delivery infrastructure so that goods or services are delivered to the consumer according to his satisfaction after mobile payment transaction has been successfully completed. iv. The Government: Government should employ regulatory frameworks, standardized mechanism for effective functioning of this ecosystem. Laws should be developed for consumer protection and redress in case of mobile frauds, money laundering etc. Benefits of using Mobile Payment for M-Commerce a. Cashless Transaction: Mobile payment provides an eco-friendly way of payment. Moreover customers do not have botheration to handle cash. b. Convenience: Users can connect with this system from anywhere and at anytime. c. Ease of Use: The mobile payment system can be used easily as consumers are already aware of mobile technology usage. d. Flexibility: The user can store multiple cards in his virtual mobile wallet. The user has the flexibility of choosing from multiple payment options available. e. Reporting: Users can know about their payment history. Merchants can easily generate bills and real time sales report to check financial irregularities. f. Monitoring: The users can monitor their finances; know about their account balances to control their spending. 161

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Security: Stringent security measures are employed at various levels to gain consumers and merchants trust like CA (Certifying Authority) authenticated secure servers. h. Efficiency: All transactions are rapidly and efficiently processed in real time. i. Value Added Services: Loyalty programs, gift cards, promotional offers are incorporated in the system. j. Accessibility: Mobile payments can be easily used in rural areas and places where noncash forms of payment such as checks or credit cards or banking facility are not easily available. Eg Some African countries. Mobile Payment Carriers: There are various carriers through which mobile payments can be made for a successful M-Commerce transaction. As there are many stakeholders in the mobile payment ecosystem, each one is trying hard to have his share of revenue in this growing market. This section gives details of how payments are carried forward for handling an M-Commerce transaction. a. Mobile Service Provider: Mobile operators have historically provided digital services like ringtones, games, songs etc. to its users through premium SMS based payments. The continuum growth of digital content market has made mobile service providers to no longer act merely as communication service providers. They now want to have their share of revenue in the M-Commerce supply chain especially of digital content. Though digital content is delivered via mobile networks, much of the value currently passes through a number of third parties and banking payment gateways and the mobile operator is largely cut out of the value chain. Therefore mobile operators are now trying to collaborate with popular app stores to give user a better experience to buy services without going through banking gateways and charged in their phone bill itself. This new mode is called Direct Carrier Billing. This section discusses about the two ways in which user can buy product/services and pay through their phone bills. i. SMS Based Payments: The simplest payment mode which is popularly used for micropayments. The consumers can buy products/services from merchant by exchanging SMS. The consumer initiates the purchase by sending SMS regarding digital service/ product requirement to the merchant. The merchant sends back an SMS to the consumer regarding billing information. The consumer then acknowledges the payment by sending another SMS back to the consumer. The merchant sends SMS to mobile service provider regarding payment details. The mobile service provider charges premium rates for this service from the user for it in their next billing cycle. This payment mode is traditionally used to buy digital content like ringtones, music, videos etc. It is popular because of its ease of use as it does not require either a Smartphone or installation of specific software or hardware for its processing. Although all mobile phone users can make use of this method of payment it is no longer preferred choice of payments because of its disadvantages in terms of high costs, security, resultant conversion rates, reliability, lack of standards, frauds and no support for refunds. Consumers are more at risk when using premium SMS services rather than credit cards or other similar financial instruments because of a lack of applicable law in place. In the United States, most of the major mobile carriers have entered into an agreement at the end of November 2013 to end premium SMS billing by the end of January 2014 in an effort to end mobile cramming, unauthorized third-party charges that appear on mobile telephone bills. Premium SMS billing had accounted for the majority of third-party charges on cell phones and for the overwhelming majority of cramming complaints by consumers in the United States.

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Figure 1. Stakeholders of mobile payment ecosystem

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On July 1, 2014, the FTC (FTC, 2014) announced that mobile phone service provider T-Mobile USA Inc. had been charged with making hundreds of millions of dollars by placing charges on mobile phone bills for premium SMS subscriptions. Direct Carrier Billing: Another mode of payment provided by Mobile service providers predominantly to buy digital products like apps, ringtones, games, songs etc. The mobile service providers have now realized the importance of mobile payments and have tried to have their share of revenue in the mobile payment ecosystem by providing ways to perform M-Commerce and then billed in the mobile monthly payments. Direct carrier billing gives mobile operators the opportunity to insert themselves into the mobile payment value chain and earn a significant proportion of this revenue. In Direct Carrier billing, payment is processed directly onto the customer’s phone bill. Carrier billing enables payments for any mobile phone owner regardless of whether they have a bank account. The mobile service providers need to integrate with mobile network providers and popular app stores to provide this payment option to its users. In this scheme, the mobile user buys products/ services through an M-Commerce website or app by choosing mobile billing option during checkout. This method is more secure than SMS based payments as it provides two way authentications using a pin and an

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OTP (One Time password). It provides a low-friction purchase environment for users as they do not need to progress through multiple payment steps or enter lengthy credit card details. Recently the number of mobile users in the world has outgrown the number of people having banking facilities. Direct Carrier billing through mobile communication service providers opens up customer segments and markets for the app stores where banking facilities and card penetration is low like parts of Africa and Asia. The biggest advantage of this mode is that it does not require a high end Smartphone having 3G and above facilities. Many mobile carrier providers like StarHub have started Direct Carrier Billing facility to its post-paid subscribers to charge apps, games and in-app purchases to their phone bill. Boku (Hernandez, 2014), a San Francisco-based direct carrier billing company, in October 2014 announced that it had signed agreements with the U.K.’s three major mobile network operators to let those customers charge items such as bus tickets and magazines to their phone bill. The analysis mason survey predicts that the value of digital content billed via direct carrier billing in Europe will rise from €2.6 billion in 2015to €7.2 billion in 2018. Juniper Research believes that the value of digital content billed via carrier billing will rise from just under €1.8 billion last year to nearly €9.8 billion in 2019, an average annual growth over the forecast period of 41%. Games and Video will remain the most popular categories for carrier billed content, generating combined sales via the mechanism of more than €5.3 billion annually by 2019. Banks and Payment Gateways: M-commerce is assisted with mobile payment gateways in a similar fashion as E-commerce is facilitated by Electronic payment gateways. The emergence of mobile payment mechanisms has provided consumers with opportunities to engage in commercial activities like E-Commerce using their mobile equipment. This involves online shopping of goods, physical products and services through Merchants website or apps. The M-commerce websites/apps collaborate with payment gateway providers like banks, credit/ debit card providers, prepaid card providers, third party payment providers like Paypal to accept payments from consumers securely. The payment gateway provides an interface between M-commerce based website/app and financial institutions like banks to authorize the transaction and process the payments. The steps involved in a credit/debit card based payment gateway are: Step 1: The consumer visits a mobile shopping website/app, selects the goods or services in his shopping cart and clicks on the “Buy now” button. Step 2: The merchant’s web server receives this request and creates a digital order by adding a digital certificate to it. Step 3: This digital order is sent to the payment gateway using a secure network. The payment gateway authenticates the web-store. Step 4: The payment gateway presents various payment options to the buyer. Step 5: The buyer selects the desired payment option, fills in personal financial details. Step 6: The payment details are sent to the merchant’s acquiring bank (usually Master Card, Visa) through secure payment gateway. Step 7: The acquiring bank sends these payment details to the buyer’s issuing bank through secure payment network. Step 8: The issuing bank authenticates the buyer and accepts or rejects the transaction. In case of some issuing banks, OTP (One Time Password) send via SMS is used to authenticate the buyer.

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Step 9: The acceptance / rejection message is transmitted to the payment gateway through the acquiring bank. Step 10: If transaction is accepted, digital receipts of transactions are forwarded to buyer and seller through SMS or email and products are shipped at buyer’s address by the merchant. Mobile Wallets: Mobile wallet is a software application that comes preinstalled in new versions of Smartphone or it can be downloaded easily from app stores. It acts as a replacement of physical wallets and is capable of storing all monetary information in digital form that a physical wallet carries. The consumer loads the digital wallet app with his financial credentials. The Mobile wallet may store the financial information of the consumer on the secure element in smartphoe’s SIM card or in the secure cloud. The mobile wallet app can be used to organize accounts, store credit/ debit details, gift cards, loyalty cards, payments history etc. and several security features to suit individual preferences. This software application can be used for requesting, transferring digital cash and performing online transactions. The software needs to integrate and coordinate with banks so that any change in financial information or details like credit limits, expiry date etc. can be updated automatically. The wallet software providers need to integerate with merchant’s so that their loyalty rewards, promotional offers,

Figure 2. Online payment steps

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gift cards can be redeemed easily by the consumer. According to Bhosale & Desai, (Bhosale & Desai, 2012) Mobile cash wallet is a concept of downloading required digital cash from bank accounts to your mobile memory card to perform various transactions. Mobile cash wallet hides all account details of account holder. Thus for each transaction cash in mobile wallet are used. The main reason why consumers will adopt proximity mobile wallets is not speedier payments, but because mobile wallets offer them the convenience of being able to store and redeem merchants’ offers and loyalty rewards. “Mobile wallets are the perfect aggregator of offers,” Josh Glantz, senior vice president, Mobiquity Networks, wrote in a Mobile Payments Today blog (Arnfield, 2015). According to Mobile Payments Today’s “Mobile Wallet Comparison Guide 2015,” in the U.S. alone, some 200 banks, retailers, telecoms and other third parties claim they provide a mobile-wallet service. An April 2015 survey by Blackhawk Network of U.S. (Blackhawk Network, 2015) consumers found that 25 percent of respondents had an app incorporating mobile wallet capability on their Smartphone and 54 percent of consumers would likely use a mobile wallet instead of a physical wallet if it were accepted everywhere. A study from Juniper Research (MobilePaymentsToday, 2015) has found that the number of mobile wallets using contactless technology is expected to reach 200 million by the end of 2016, representing growth of more than 100 percent from the end of 2014. Mobile Payment Classification: Mobile Payments can be used to assist M-Commerce at the location of sale or remotely from anywhere at any time. Figure 3 illustrates mobile payment types. a. Proximity Payments: Are those payment transactions that are performed at the shopping site location. The mobile device interacts in some way with the merchants PoS terminal. Mobiles can be used as a payment tool for automated transactions like vending machines, parking meters, ticketing counters, toll plaza etc. or for payments at merchant’s local stores. Such transactions can be unattended in case of automated vending machines or kiosks or attended by a local store employer. Proximity payments can be initiated by the buyer or seller in the following ways:

Figure 3. Mobile payment types

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Mobile at Point of Sale: This mode of payment is usually based on Near Field Communications (NFC) technology or images of barcodes. The NFC enabled phones may communicate with each other for transfer of funds or communicate with NFC enabled Point of Sale (PoS) terminals using Radio Frequencies. Such payments are also called Contactless payments. The Mobile devices store credit/debit card information which can be directly used to make payments using NFC. The consumer brings his NFC enabled phone near a NFC enabled terminal to transfer money from his stored bank accounts.2D barcodes like Data matrix and QR code are also facilitating M-Commerce at PoS. The Federal Reserve (Governors, 2014) says that over a third (39 percent) of all mobile payment users with Smartphone had made a Point of Sale payment using their mobile phone. Around 31 percent did so by scanning a barcode or QR code displayed on their phone’s screen at check out and 14 percent made a payment by waving or tapping their mobile phone at a POS terminal. ii. Mobile as Point of Sale: Small card readers are being offered by companies like Square (Square, 2015), VeriFone which can be connected to the merchants mobile and accept payments through cards. This mode is usually used by small scale business merchants. A card reader is attached to the merchant’s mobile which reads the credit/debit/ prepaid card details of the consumer and sends it to merchant’s mobile for processing. This card reader is similar to the credit/debit card reader that we see in stores. Software installed on the merchant’s mobile helps to generate receipts and sales report, track inventory, analyze sales and provide feedback. In the United States, mobile payments will total $214 billion by 2015, 77 percent of which will be payments made at a physical retail location, according to Boston-based independent research firm Aite Group (Cluckey, 2011). b. Remote Payments: Are those payment transactions that are used to buy physical goods and services at anytime and from anywhere in the world. The user does not come in direct contact of merchant. The online shopping websites and apps provide such facility. The customer logs into the merchant’s website or installed application through his mobile, creates shopping cart and proceeds for payment. Various payment options are provided to the customer and the payment transaction is processed by banks and payment gateways or virtual mobile wallets which integrate their services with merchant websites and apps. Javelin Strategy and Research predicts that total mobile online retail payments will grow from $75.8 billion to $217.4 billion between 2014 and 2019. Mobile Payment Technologies: There are various technologies and processes that enable mobile payment. Various software and hardware components need to be installed at both consumer and merchants end for a successful mobile payment transaction. The way financial transaction is executed depends on the Technology used for payment. a. Internet Payment Gateways: This technology supports mobile based E-Commerce on browsers or merchant’s store app downloaded by the customer. This payment system is developed based on the existing credit/debit card-based or banking based financial infrastructure by adding wireless payment capability for consumers on mobile devices. Web browsers which can securely transmit financial information using protocols like SET, 3D SET are required to support this payment mechanism. The merchant’s website or app needs to integrate with payment gateways to complete the transaction. The mobile should have at least 3G capability to perform this transaction. 167

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Cloud Based Mobile Wallet: In cloud based payment solution, both consumer and merchant must download cloud based application and subscribe to it. This system provides a serverbased digital wallet for each user to store their financial information. These mobile wallets are also called as Hosted wallets as the financial information and payment credentials of user are stored remotely on secure servers in the cloud. Tokens are sent to the mobile device to authorize and initiate transactions. The cloud wallet service provider has total control over the functionality it delivers and the security of the data and transactions. This mode of payment highly depends on reliability of network infrastructure. The network connection should not be lost during transaction. Apple iTunes stores its subscriber’s credit card and billing information in digital cloud wallet. SIM Based Mobile Wallet: In this scheme, the mobile stores, payment credentials, authentication details, financial data, and applications in an encrypted, secure form called as Secure Element. The information resides on user’s device in the form of a SIM Application Toolkit card or inside SD card in a secure format. Therefore it is also called as Client Wallet. Since the wallet is based on hardware, it is difficult to update, and potentially the user’s sensitive financial information is compromised if the device is lost or stolen. In case of NFC based payments, the NFC chip integrates with Secure Element to perform transaction. NFC: NFC is an ISO certified communication protocol that enables wireless communication between two devices which are in close proximity for data exchange and transfer. NFC based payments are also called Contactless or “tap and go” payments. Special Hardware like NFC chip and software app for conducting payment using this mode needs to be installed on the consumer’s mobile device. Similarly special hardware and software needs to be installed at merchants Point of Sale terminal. Contactless payments require a chip-embedded debit/ credit card or a software like Mobile wallets installed on the device. While making payment, the user chooses the payment mode and account using an app like a mobile wallet or uses a chip-embedded debit/ credit card information and enters a pin. The consumer then brings the mobile device near the PoS terminal, waves NFC enabled phone over a wireless receiver connected to a pay terminal to make a payment. The mobile device embedded with a NFC chip sends encrypted data to an NFC-enabled PoS device. This system requires integration of individual banks to make their internet banking system accessible via this wireless mobile technology. Transportation companies were the first to adopt this technology for ticketing purpose. Many retailers like Mc Donald’s, Dunkin Donuts, and Wall green have already adopted this technology and many are soon to follow. Coca Cola has launched vending machines that accept contactless payments. However, the pace of growth of this mode of mobile payment is slow as currently there are very few NFC enabled mobile equipment in the market and such devices are too costly. So they are beyond reach of many people in society. The merchants are also reluctant to adopt this technology because of hardware installation cost of NFC enabled terminals. According to research conducted by Aite Group (Cluckey, 2011), 7 percent of U.S. retail locations will offer mobile contactless payment by 2015, netting a gross dollar volume of $25 billion. This technology is more prevalent in Europe, where chip-embedded bankcards have been the norm for years. Juniper Research shows that half of the PoS terminal will be NFC ready by 2017. According to American Express, an NFC based mobile payment transaction is 63 percent faster than cash and 53 percent faster than using a traditional credit card.

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RFID: RFID is a technology that uses radio frequencies to transfer data from an RFID tag to a RFID reader. An RFID reader transmits an encoded radio signal to interrogate the tag. The tag receives the message and responds with its identification information. RFID can be used for mobile payments at PoS terminal in a similar way as NFC. However, RFID’s longer transmission range may cause RFID-enabled mobile payments to be less secure than NFCenabled ones. RFID has been widely used in Japan and South Korea. In Japan and South Korea people can now purchase food at McDonalds through their mobile phones (Schuman, 2007) and also know when their order is ready “At each table, there is an RFID reader and a menu that has built-in RFID chips. Customers plug the reader into their mobile phones and point them at the item on the menu that they wish to eat or drink. The bill is charged through the mobile phone. When the meal is ready, the system sends a short message to the phone so the customer can pick up the ready tray at a designated counter In Japan people can also pay through the cell phone number, or through an RFID chip, using the mobile e-wallet system developed by DoCoMo. 2D Barcodes: 2D barcode based mobile payment systems can be used at Point of Sale to enhance users experience of shopping. The customer needs to install an optical reader app to scan barcodes of products through the mobile camera. The merchant needs to install software at the PoS terminal to generate barcode for authenticating users and generating bills through his local server. The software at both ends needs to coordinate for a successful transaction. Masalkar et al. (Masalkar, Singh, & Shinde, 2015) have proposed 2D based Mobile payment system with Biometric security. In this system, a customer has to first register with Merchants local server database using biometric authentication. When the registered user visits the store, he scans barcodes of products using his mobile. The Wi-Fi enabled mobile connects with Merchants local server to authenticate customer and retrieve product information. The customer adds products to his shopping cart by capturing 2D barcodes of products and decoding them. The customer purchases the items in cart by selecting his registered payment option like PayPal, prepaid account or credit/debit payment gateway with the merchant. The merchant’s POS system generates the payment request bar code. The consumer’s mobile device scans the barcode, authenticates itself and authorizes the server to proceed for payment. The billing information is sent to the customer as well as the merchant’s local server.The customers experience is enhanced as he does not have to stand in long queues for payment. This technology has been used by merchants like Starbucks and Target to allow consumers to make mobile payments from a prepaid account with the merchant. QR Codes: QR codes (Briseno, Hirata, Sanchez-Lopez, Jimenez-Garcia, Navarro-Cota, & Nieto-Hipolito, 2012) were developed by the Japanese Company Denso Wave Corporation in 1994. They are called QR (Quick Response) as they are faster than other 2D codes .A QR code contains three square position patterns that are used for position detection. These patterns are also used to detect the size, the angle and the outer shape of the symbol. When a reader scans a symbol, it first detects these patterns. Once they have been detected, the inside code can be read rapidly by the scanner. They are used for mobile applications as they have a high decoding speed. In order to use QR barcodes for physical mobile interaction, mobile devices have to be equipped with cameras and image recognition algorithms. To perform M-Commerce, QR codes can help users retrieve product information. QR code technology (Crowe & Tavilla,

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2012) is being used by mobile payment platform called LevelUp via a downloadable mobile app that allows customers to make mobile payment transactions. To scan barcodes and accept mobile payments, a merchant must install a special LevelUp terminal. A customer links his debit or credit card to register for a LevelUp account and receives a unique QR code. The customer pays by displaying the QR code on his mobile phone in front of the merchant scanner. When the QR code is accepted, the phone vibrates and the terminal lights up. LevelUp sends an email receipt to the customer showing the merchant name and amount of purchase. Mobile Payment Issues: a. Limited Resources: Mobile equipment has its inherent restrictions of screen size, CPU, RAM, battery, and small/inconvenient keyboard. Due to these restrictions, users don’t feel comfortable performing commercial activities which involve filling forms, selecting items, entering personal details using mobiles and are rather attracted towards E-Commerce. b. Interoperability: There is lack of standardization throughout the world. Mobile phone standards vary from country to country and even within a country. The mobile payments market is fragmented and diverse in most countries. Regulatory frameworks are not in place for mobile payment infrastructure. M-Commerce lacks support for all kinds of international currencies. Multi-currency settlements are not provided by most of the vendors. Therefore due to regulatory conflicts, legal hassles and multiple currencies, M-Commerce is difficult to conduct cross-country. c. Lack of Laws, Standards, and Frameworks: Despite M-Commerce success, most of the countries do not have sufficient laws regarding consumer problems with mobile payments. There are various entities involved in the mobile payment ecosystem which removes clarity of responsibility among these entities and makes it more difficult for consumer dispute resolution and redress in case of wrong charges, defective deliveries, overcharges, refund settlement.The majority of the initiatives are concerned with establishing codes of conduct or similar guidelines to be employed by various players in the mobile payment services market. In Belgium, the mobile network operators have organized themselves in the GSM Operator Forum and issued a self-regulatory code of conduct. The members of the GOF meet weekly to discuss, inter alia, issues regarding specific service providers. In New Zealand, mobile phone operators in the Telecommunication Forum have agreed to a framework that will make it possible for customers to purchase applications and digital content through a safe payment environment on their phone and have the charge added to their phone bill (ICEPN, 2014). d. Security: Though many security based solutions like SSL,SET, 3D SET, TSET have been proposed for securely handling mobile based payment transaction, still the biggest obstacle in mobile payment adoption is security. According to a Gallup U.S. consumer survey published in July 2015, security concerns top the list of reasons why consumers shy away from proximity mobile wallets. Users and organizations want assurance that their wireless communications and transactions are not intercepted. A significant percentage of mobile users are hesitant in adopting mobile payment technology because of their security concern. Therefore, Security remains a key issue of mobile payments system. e. Trust: Trust plays a significant role in any business success. People are always apprehensive to adopt any new technology which involves money transfer because of lack of trust in its security, privacy and reliability parameters. Rising cybercrime and online fraud rate is a big deterrent of M-commerce usage. Therefore despite adequate reasons to go for online shopping,

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banking etc, people hesitate to disclose their personal information because of fear of payment frauds. M-commerce growth is sluggish due to lack of trust of consumers on e-vendors and security of the payment process. Building Trust factor of consumers to adopt mobile payments technology is a big challenge for M-commerce growth. f. Mobile Theft: Mobile Theft is a global problem and a big deterrent of using mobiles for making payments because of the vulnerability of the financial details it contains. According to a report by Consumer Reports National Research Center (Consumer Reports, 2015), 2.1 million Americans had phones stolen in 2014. To conduct mobile payment from mobile equipment, the device usually stores highly personal and financial information. In current times the importance of data has overpowered the significance of device. People are ready to pay any amount of money to retrieve their data and to save it from going in wrong hands. Many apps like lookout (Lookout Inc, 2014) are being developed which allows you to remotely locate your device, lock it down, and wipe it before a criminal can access sensitive or personal data. The industry, regulators and technologists have made significant advancements on addressing and curbing phone theft. In 2004 UK launched National Mobile Phone Crime Unit, to better police the problem. Minnesota and California both passed laws requiring manufacturers to make progress on installing anti-theft features by July 1, 2015. In USA, the wireless association has dictated a regulation for all mobile manufacturers to incorporate “kill switch” technology in all Smartphone manufactured for sale in the United States after July 2015. This is a system for remotely disabling Smartphone and wiping their data. Apple has already added “kill switch” to its Find My iPhone app in 2013. Though many innovative secure methods have been developed to protect user’s financial details, regulations and laws are being directed to mobile manufacturing industry to disable handset usage after it is lost or stolen, and apps that make stolen phones useless are available, which have reduced percentage of mobile thefts, still people fear linking their personal financial details to their mobiles because of probable mobile theft and loss of their information in wrong hands. g. Mobile Fraud: Mobile frauds have become quite common where someone uses a mobile equipment to complete a payment transaction that has not been authorized by the account holder. Despite introduction of dynamic authentication to avoid mobile frauds, people are still reluctant to use mobile payment infrastructure because of malicious hackers and lack of laws and regulations to protect consumers from financial loss when unauthorized transactions occur. There are no laws or regulations that apply directly to mobile based payment transactions that protect consumers from fraudulent and unauthorized charges on mobile carrier’s bills. . Mobile carrier billing platform raises a unique challenge for authorities with regard to the third-party practice of placing fraudulent or unauthorized charges on consumers’ mobile carrier bills known as cramming. Popular Mobile Payment Options: Almost all mobile manufacturers are embedding features in the new version of their mobiles to capture the mobile payment market space. The most popular payment options are listed below: a. PayPal: It is one of the most popular and largest internet payment service provided by PayPal Inc (PayPal, 2015). It gives users the ability to do online financial transactions by transferring funds between individuals and businesses. The consumer’s bank, credit/debit information is linked with PayPal account in a secure encrypted manner and is never shared with retailers.

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One can transfer funds using instant transfer, eCheck, PayPal balance or stored credit/debit cards. An anti-fraud technology is used to make transactions more secure. 10.7 million Buyers in Asia-Pacific are actively using PayPal. It is the leading player globally for Consumer to consumer or peer to peer mobile payments. Apple Pay: It is a mobile wallet service provided by Apple Inc. (Apple Inc., 2015) in its latest mobile equipment like Iphone6, Apple watch, iPad air etc. It provides a highly secure contactless and cashless payment mode for iOS apps and in-store purchases at contactless PoS terminals. The user can store his credit and debit card information in the “Passbook app” which is securely stored in a security chip within the device. The customer does not need to share personal identification details with merchants. A device identification number, fingerprint authentication and a dynamic security code is used for processing the transaction. In case of mobile theft, all services can be halted by Find my iPhone service. Google Wallet: It is a payment service currently available only in US (Google, 2015) through which we can pay online, in-store and send/receive money to anyone having a gmail or Google wallet account. The contactless in-store shopping can be done with NFC enabled android device. The credit/ debit card information is stored on secure servers and a virtual card number is generated for financial transactions. It has an inbuilt fraud monitoring service which makes it more secure. In case of mobile theft, the wallet app can be disabled easily.

FUTURE DIRECTIONS The future of payment industry lies in cashless payments. The use of virtual wallets will become more common in future. The in-store purchases will be driven by use of NFC technology using mobiles or wearable products like watches, jewelry, glasses, bands etc. Google glass and Apple watch have already captured user’s attention. In August 2015, Canadian authentication technology company Nymi (Nymi, 2015) in collaboration with TD Bank Group and MasterCard, launched a Canadian pilot of the Nymi Band. This is an NFC-based wristband which enables consumers to make biometrically-authenticated, wearable credit card payments using their heartbeat. According to Juniper Research (Nayak, 2014), the global wearable’s market could be as big as $19 billion by 2018. The online purchases will be dominated by payment gateways which incorporate mobile wallet as a transaction option so that need not fill forms for providing account information. In future, banks may develop their own wallet systems to get rid of third party financial transaction brokers. The financial transaction will be made safer by incorporating various biometric authentication mechanisms. The need of hour is to have regulatory framework for payment systems governed by governments so that people feel secure to use this payment option. Srivastava et al. (Gulati & Srivastava, 2007) have proposed a National Internet e-Commerce Payment Gateway that can support all banks and transactions. The in-store purchases may become purely wireless in coming years which will enhance shopping experience. The product information of items in cart may be retrieved using RFID or 2D barcode scanning and the bill automatically generated through software. The payment can be made at PoS through NFC technology. The NFC chip in consumer’s mobile device may be integrated with different mobile payment techniques stored in mobile wallets. Chikhale et al. (Chikhale, Unnikrishnan, & Khanore, June 2015) have proposed a “Smart Shopping Trolley” system for a complete wireless shopping experience. The

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user just has to drop their products in the trolley; the trolley will automatically identify all the products dropped into it by their RFID tags, the bill will be displayed on the trolley screen, thus the users will have real time data on their bill. The user can then proceed ahead for the bill payment through mobile. The future of mobile payment lies in integration of various payment methodologies and tools in a secure manner that provides a better user experience and meets expectation of various stakeholders too. Haifeng Wu et al (Wu, Li, Dai, & Zhao, 2010) have proposed an integrated mobile payment system which combines IC card, mobile phone payment and internet payment technology and provides enhanced security and flexibility. CardMobili (Hernandez, 2014), a Portugal-based digital wallet provider, is integrating Bango’s direct carrier billing capabilities with its own technology to create a product that Mobile Network Operators and merchants can brand as their own to enable consumers to buy physical items and charge them to their monthly mobile bill.

CONCLUSION Mobile payments have captured industry attention. There are initiatives and innovations and industry is now ready to invest in this market space. Mobile phones especially Smart phones are changing the way people make payments. Currently mobile operators are playing a larger role in the market for delivering digital content and the market for physical goods is dominated by bank based payment gateways. The ease of use, convenience and multiple payment options are attracting consumers to shop anywhere, anytime using mobile equipment. The only hindrance in adopting mobile payment technology is lack of trust of consumer in the security, reliability and privacy of mobile payment ecosystem and lack of standards, frameworks and laws for its fruitful implementation.

REFERENCES Apple Inc. (2015). Apple inc. Retrieved august 29, 2015, from Apple inc.: http://www.apple.com/apple-pay/ Arnfield, R. (2015). Mobile Wallets 101. Retrieved September 15, 2015, from MobilePymentsToday. com: http://www.mobilepaymentstoday.com/static_media/filer_public/c0/5a/c05a213e-9f4b-4274-a661fb2a872d602a/cardlinx_guide_final.pdf Bhosale, S. T., & Desai, V. P. (2012). Payment Gateway Model- Mobile Cash Wallet. International Journal of Emerging Technology and Advanced Engineering, 94-96. Blackhawk Network. (2015). Blackhawk Network Shopper Study Finds 2015 is the Year of Traditional, Digital and Mobile Convergence in Payments. Retrieved September 16, 2015, from Blackhawk Network: http://blackhawknetwork.com/2015consumer_payments/ Briseno, M. V., Hirata, F. I., Sanchez-Lopez, J. d., Jimenez-Garcia, E., Navarro-Cota, C., & NietoHipolito, J. I. (2012, March 7). Using RFID/NFC and QR-Code in Mobile Phones to Link the. Retrieved september 21, 2015, from intechopen.com: http://cdn.intechopen.com/pdfs/31056.pdf Chikhale, M., Unnikrishnan, S., & Khanore, M. (2015, June). RFID Enabled Mobile Billing in Retail. International Journal of Advanced Research in Computer and Communication Engineering, 4(6), 538–541.

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Cluckey, S. (2011). Mobile Payments 101: Retail. Retrieved September 13, 2015, from MobilePaymentsToday.com: http://www.mobilepaymentstoday.com/static_media/filer_public/86/48/864898a6-dcea4c82-841a-349a1958da47/mpt_wp_mobile-payments-101-retail_to-launch.pdf Crowe, M., & Tavilla, E. (2012, November). Mobile Phone Technology: Smarter than we thought. Retrieved September 4, 2015, from Federal Reserve Bank of Boston: https://www.bostonfed.org/bankinfo/ payment-strategies/publications/2012/mobile-phone-technology.htm FTC. (2014, July 1). FTC Alleges T-Mobile Crammed Bogus Charges onto Customers’ Phone Bills. Retrieved September 7, 2015, from Fedral Trade Commission: https://www.ftc.gov/news-events/pressreleases/2014/07/ftc-alleges-t-mobile-crammed-bogus-charges-customers-phone-bills Gartner Inc. (2013, June 4). Gartner Says Worldwide Mobile Payment Transaction Value to Surpass $235 Billion in 2013. Retrieved September 2015, 2, from Gartner.com: http://www.gartner.com/newsroom/ id/2504915 Google. (2015). Google. Retrieved August 29, 2015, from Google: https://www.google.co.in/wallet/# Governors, F. R. (2014, 12 21). Federal Reserve Board. Retrieved 08 31, 2015, from Federal Reserve Board: http://www.federalreserve.gov/econresdata/consumers-and-mobile-financial-services-report-201503.pdf Gulati, V. P., & Srivastava, S. (2007). The Empowered Internet Payment Gateway. In International Conference on E-Governance (pp. 98–107). Hyderabad: Computer Society of India. Hernandez, W. (2014, December 19). Security, bitcoin, carrier billing, and mPOS. Retrieved September 16, 2015, from MobilePaymentsToday.com: http://www.mobilepaymentstoday.com/articles/2014-inreview-part-ii-security-bitcoin-carrier-billing-and-mpos/ ICEPN. (2014, July). International Consumer Protection and Enforcement Network. Retrieved 7 September, 2015, from ICEPN.org: https://icpen.org/files/icpenDownloads/ICPEN_Mobile_Pays_Rpt_FINAL.pdf Kumar, B. (2013). A Study on Mobile payment in Mobile Commerce. International Journal of Enhanced Research in Management and Computer Applications, 1-8. Lookout Inc. (2014, March). Lookout. Retrieved September 10, 2015, from Lookout: https://www.lookout.com/resources/reports/phone-theft-in-UK Masalkar, P. A., Singh, U., & Shinde, S. (2015). 2D Barcode Based Mobile Payment System With Biometric Security. International Journal of Modern Trends in Engineering and Research, 485-499. Mobile Payments Today. (2015, September 8). Mobile wallets using contactless tech set to explode. Retrieved September 21, 2015, from MobilePaymentsToday: http://www.mobilepaymentstoday.com/ news/study-mobile-wallets-using-contactless-tech-set-to-explode/ Nayak, M. (2014, Dec. 2). Wearables: The future of mobility. Retrieved September 18, 2015, from MobilePaymentsToday.com: http://www.mobilepaymentstoday.com/blogs/wearables-the-future-of-mobility/ Nymi. (2015, August). Nymi. Retrieved September 18, 2015, from https://www.nymi.com/the-nymiband/: https://www.nymi.com/the-nymi-band/

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PayPal. (2015). PayPal. Retrieved September 6, 2015, from PayPal: https://www.paypal.com/in/webapps/ mpp/home Reports, C. (2015, June 11). Smartphone thefts drop as kill switch usage grows. Retrieved September 12, 2015, from ConsumerReports.org: http://www.consumerreports.org/cro/news/2015/06/smartphonethefts-on-the-decline/index.htm Schuman, E. (2007, September 14). McDonalds Starts RFID Ordering Trial in Korea. Retrieved Septembet 12, 2015, from eweek.com: http://www.eweek.com/networking/McDonalds-Starts-RFIDOrdering-Trial-in-Korea Smith, A., Anderson, J., & Raine, L. (2012, April 17). Pew Research Internet Project. Retrieved september 5, 2015, from The Future of Money in a Mobile Age: http://www.pewinternet.org/2012/04/17/ the-future-of-money-in-a-mobile-age/ Square. (2015). Square. Retrieved august 29, 2015, from Square: https://squareup.com/reader Tracy, J. C., & Needham. (2015, April 21). 451 research survey. Retrieved August 30, 2015, from 451 research: https://451research.com/images/Marketing/press_releases/04.21.15_Mobile_Payments_PR.pdf Wu, H., Li, X., Dai, W., & Zhao, W. (2010). Mobile Payment Framework Based on 3G. In Proceedings of the Third International Symposium on Electronic Commerce and Security Workshops(ISECS ’10) (pp. 172-175). Guangzhou, China: Academy Publisher.

KEY TERMS AND DEFINITIONS 2D Barcode: Two dimensional barcodes store data about identification or description of people/ products/websites in the form of a matrix of square dots which can be easily decoded using scanners. Direct Carrier Billing: It is a type of mobile payment technique in which user can buy products using his mobile device and is billed by the mobile service provider in his next billing cycle. E-Commerce: Any commercial activity conducted using an electronic device. M-Commerce: Any commercial activity conducted using mobile equipment. Mobile Wallet: A mobile application that stores the financial information of its subscriber which can be used for performing any financial transaction as a physical wallet. NFC: Near Field Communication is a short range radio communication technology used for communication between devices placed at a distance of less than 10cm. Payment Gateway: It is an application service provider that authorizes and securely processes the use of various payment options like credit/debit card for performing E-Commerce/M-Commerce. QR Code: Quick Response Code is a 2D barcode which represents identification information of a product, item or person and can be easily scanned and read using mobile devices. RFID: Radio Frequency Identification is a wireless technology used to exchange information between RFID devices placed at a distance of up to 20 feet.

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Regulatory Framework of Mobile Commerce Jyoti Batra Arora Banasthali Vidyapeeth University, India

ABSTRACT Mobile commerce has given a new definition to wireless payment methods. It is new emerging technique which requires security at the top priority. Users are not still confident in using this technology. The proper infrastructure and support from government is required to deal with mobile commerce which can be achieved by developing fundamental regulatory framework. Regulatory framework described the technological and legal regulations to ensure the security in transaction in mobile commerce. It helps to deal with security related problem, financial issues and other legal issues that cause a hurdle in making mobile payment. A clearly defined regulatory framework is also required to enhance the customers’ confidence and increase acceptance of mobile payment in their daily life. The cooperation and information sharing between telecommunication regulator, mobile service provider, and mobile operator and banking regulator is required to make a successful and efficient working regulatory framework.

INTRODUCTION Mobile Commerce is emerging as ubiquitous technology among the existing wireless payment modes. Since users are becoming highly dependent on making transaction through mobile devices, it is very much important to have secure transaction techniques. Though mobile device’s developers are doing much into incorporating security, yet the users are not confident in using Mobile Commerce. The research also states that achieving secure application is difficult without the infrastructure which fully supports security for computing application on the device. The prime flaw in emergence of mobile commerce is the government support and rules which they have to work or deal with mobile commerce. Zhao(2003) stated that mobile-Commerce or M-Commerce is a commercial transaction carried through mobile phones. It can be a process, systems or procedure that includes checking account balance, depositing a change, buying or selling any product, all this doing on mobiles. M-Commerce is actually an extension of E-Commerce. Woo and Jang (2008) defined M-Commerce as e-Business with mobile device with in its fundamental concept and architecture. DOI: 10.4018/978-1-5225-0236-4.ch009

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Mobile technology can be categorized into three generations. The first generation of mobile communication was analogue. The second generation used digital encoding for voice. The third generation which is in developing stage will support multimedia capabilities and circuit switched low speed data services. M-Commerce uses the different technology in all generation of mobile communication starting from first generation to fifth generation. These technologies are RFID, SDR, AMC, Digital Signal Compression, Biometric, WAP IPV6, and Turbo Codes. RFID is used in packing of products on store shelve, to pay for tolls and access fees, to purchase at vending machines. SDR overcomes the design problems of mobile devices. Digital signal compression or Source coding is employed to reduce bit rate requirement with lossless compression technique like the Lempel Ziv and Huffman code. Biometric control includes finger imaging, palm printing, hand geometry, iris and retina vascular pattern, stroke dynamics, voice recognition and speech pattern to authenticate user to access certain place and to monitor assets. WAP is an industry initiated standard, has emerged as a common communication technology and delivering wireless services on mobile. The feasibility of combining these technologies for use in a specific setting will be dependent upon security protocol. In M-Commerce cookies are replaced with locator devices and these devices facilitate the tracking and monitoring the individual’s activities. The location information can be captured even when device is merely on and not handling any call. Rose (2001) stated three major issues for necessity of trust. They are diverse nature, the intensive use of supply chain, the empowerment of workers and self-directed team work. One has to manage technological and business risks to get a satisfactory level of trust. Simpson (2003) in his research showed that there are many incidents where personal information is disclosed without proper consent. Trust is the center of security risk in the case of mobile transaction. Green (2004) in his report said that consumers are more worried about their privacy and potential intrusion in M-Commerce environment. To grow and develop M-Commerce in a country National IT infrastructure, Education and Awareness of citizen has important role to play. In short, future trends clearly indicate that the device manufacturers as well as service and infrastructure providers will keep adopting the WAP standard. The major issues related to use of infrastructure are skills availability of radio frequency, technology and service cost. A minimum standard availability can hinder development. Government is concerned with regulatory framework in development of M-Commerce. This chapter is mainly around to provide the detail of regulatory frame work set up by government to develop the usage of mobile commerce in every area of application in their nation. The main aim of this chapter is to discuss the regulatory framework to provide the existing technological and legal regulations that enforce security in transaction while dealing with Mobile Commerce. It has the detail of various acts to be used in business development through mobile devices. This framework provides the basic key finding in the security in data transmission during the transaction very efficiently and quickly.

Need of Regulatory Framework Australian media in 2000 reported that children who have access to mobile and enabled to pay, their parents/guardian considered being responsible for the debts. Using wireless technology in health industry records of patients can be moved from doctor’s office using adhoc network formed for the purpose of consultation. There is no standard regulatory framework to enforce certain security related problems.

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Ghosh and Swaminatha (2001) stressed on memory protection. He stated that most PDA devices do not provide memory application for its application which causes serious threats for each application own security and privacy attacker can steal the decrypted key in the signing application’s memory. Apart from technical issues in security Shortliffe and Barnett (2001) gave a concern regarding the privacy of information. In August 2001 in West Australia the local councils parted with ratepayer information to certain building contractor. This discloses the personal information to other parties. Yampel and Eskenazi (2001) said that due to nature of transmission of M-Commerce details of customers can be easily captured and analyzed. Sausser (2003) in his research has shown that data collection firm can track user’s online web usage by means of software program. The other loophole in security of M-Commerce is access control for objects to prevent unauthorized user and program from accessing confidential data in database or private keys. Service and support is more important in M-Commerce than traditional business. The strength of M-Commerce is based on four factors: the anticipated ubiquity of devices, online access for a large portion of the world’s population, location sensitivity of the devices and authentication and authorization capabilities (John etal. 2008). Different generations of mobile (1G, 2G, and 3G, 4G) play an important role in development and expansion of M-Commerce. These generations varies with their speed of data transmission. Research is going on to make a seamless gaming between growth and development of mobile technology and mobile device. Mobile commerce is touching many areas others than just simply targeting customers. Now, companies are focusing on B2E, where focus of business is employee. M-Commerce not only includes consumer but also enterprise solutions that enable companies to operate more efficiently. M-Commerce technology is expanding into enterprise market. As per Indian tele communication report on Jan 2014, the teledensity increased from 76.75 at the end of September to 77.04 at the end of October 2014. The wireless tele-density increased from 75.43 at the end of December 2014 to 77.27 at the end of March 2015. The number of telephone subscribers in India increased from 970.97 million at the end of Dec-14 to 996.49 million at the end of Mar-15, registering a growth of 2.63% over the previous quarter. The overall Teledensity in India increased from 77.58 as on 31st December, 2014 to 79.38 as on 31st March, 2015. If there is any security issues that disturb the M-Commerce will actually affect the customer and organization. The goal of this chapter is to explore the present possible security risk management in transactions in M-Commerce and provide a regulatory framework followed in different countries for mobile commerce. This study would help consumers as well as organization to know about the risk and their rights while performing with M-Commerce and can save their data and money. They can save money and time through safe transaction in M-Commerce. The present state of M-Commerce is not stable or matured. There are some bewildering problems like lack of coherence and stability in standard and protocols in the mobile world, bottle neck in network cascade of hardware and software options. The Internet is a platform for what is to come, a business platform, a technological platform and a platform for managerial experience. On this basis, it is possible to have pervasive wireless network in faster pace than the Internet did because companies can leverage the lessons of the past. It is very important because in business the winners are those who moved quickly and in right ways. The Jupiter consumer survey showed that 33% of mobile users are not using M-Commerce because they feel that their credit card or payment information is not secured. It also states that in December 2000, hackers broke into the commerce site of Egghead.com and were suspected of stealing more than 3 million credit card account numbers. Through this study industry sector can gain substantial benefits in manufacturing, marketing and retailing. Gartner Group report (2001) showed that manufacturing firms utilizing M-Commerce 178

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have increased worker productivity. Juniper report (2010) has shown that more than 76% of consumers surveyed use their smart phones to access personal or business information, including 51% to enter or modify passwords, 43% to access banking and credit card statement, 30% to access utility bills, 20% to share financial information, 18% to access employer’s proprietary information, 17% to access medical records, 16% to share security numbers. As per TRAI report of India 2014, the growth in new mobile connection has increased rapidly with 18 million net additions(TRAI,2014). The total growth in wireless sector is increasing at the rate of 0.55% whereas the wire line growth is declined at the rate of 0.02% since October 2014. The futures of M-Commerce would not only be low costs user friendly high speed connection and high level of security, but also be automatic language translator pre-installed so that everyone would understand each other irrespective of their language. This technology would develop faster than everyone could imagine. M-Commerce could improve the efficiency and effectiveness of business activities by distributing information to the workforce remote and by offering new ways in which to interact with customers. Nadesan (2001) poised that investing in effective mobile technology is likely to increase mobile workers productivity 30%. The US advocated that Internet commerce should be a tax free zone. Since research is going on the different areas of M-Commerce, but still there are lacking in some fields of research like operating system. Most mobile devices have simplified operating systems. MCommerce is a new innovation in the market therefore, there is not much research regarding its impacts. The issues and challenges of M-Commerce vary from market to market like in U.S. it is involved in potential growth whereas in Europe it is focused on a socio-economic analysis of new market evolution. Bergstrom (2001) had given trust, user friendliness, business models and regulatory aspects as other security issues. Tarasewich etal. (2002) had shown three technological issues: mobile clients, communications infrastructure and other technology. M-Commerce firms require the security control like firewalls, anti-virus protection user identification: authentication and secure device management to protect company network and web applications. Standardization, privacy and security solutions and electronic cash format reap a competitive advantage. M-Commerce require ISO 9001:27001 as its security certificate. BhartiAirtel got award in 2009 from ISO for standardization. It also uses ISO/IEC 27001:2005 for security techniques and information security management. Whenever there is a question about mobile commerce it is more or less related to banking activity that compliance with banking law which is a matter of public interest. For example if the consumer is using prepaid account created by mobile operator to make payment. The creation and usage of prepaid account doesn’t require bank involvement. The case would be differ if huge amount is deposited in the account for longer period or if it is used for investment purposes then the mobile operator will do banking activity and its balance sheet would be similar to banks balance sheet. Second case is if the mobile operator charges the consumer through their phone bill for collection of payment. It is desirable to make a clear demarcation line to avoid any legal uncertainty. The mobile money schemes have developed, which is only un- problematic as long as they limit the balances. The problems may occur in the case of financial fraud, bankruptcy mobile financial services provider. Therefore, the designer or regulator should seek an association between mobile operator and financial institution as a mean of circumventing the stringent banking regulation.

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A clearly defined regulatory framework is hence required to enhance the customer confidence and increase acceptance. Being a new phenomenon it has not attracted the attention of lawmakers as an independent business field in most of countries. The operations in m-commerce are usually governed by the e –commerce regulations supplemented by telecommunication laws.

Regulatory Framework Like E-Commerce, M-Commerce requires transparent and clear regulations as concerned parties are not necessarily to know each other. The participation rate is high because of easy and inexpensive access to telecommunication network and cross regional nature of application and low market barrier. Sometimes many potential customers worry about their privacy and sharing of personal data, while making any transaction. The concerned parties should work on the laws that are concluded using mobile devices. Therefore, the transaction through mobile is at different rate in different area. Gartner forecasts that by the end of 2016, more than $2 billion in online shopping will be performed exclusively by mobile digital assistants such as Google now, Siri and Cortana. A clear and transparent regulatory framework is used to boost up customers confidence to use smooth functioning of M-Commerce. The legal regulations make a balance between customer and business and set up new regulations to make the optimal usage of existing and emerging technologies. The cooperation and information sharing between telecommunication regulator, mobile service provider, and mobile operator and banking regulator is required to make a successful and efficient working regulatory framework. Most of the regulations have originated in multilateral treaties such as European Union and United Nations organizations. The other international organization such as the OECD, the World Trade Organization (WTO) and World Intellectual Property Organization (WIPO) are also involved in framing regulatory frameworks. It is assumed that regulatory principles have international characters though the degree of regulation may different across different nations. Veiljainen et al.(2003) and Heinemann et al.(2004) defined the following five principles applicable to regulate M-Commerce which are described later: 1. 2. 3. 4. 5.

Legal Enforceability of Contracts. Consumer Protection. Privacy of Data or Unauthorized Data Collection. Confidentiality of Data (Protection of Authorized Data from Misuse). Right of Self-Determination or Rejection of Any Communication.

The lawmaker does not put more attention to M-Commerce as an independent business field, as it is relatively recent phenomenon. E-Commerce and Telecommunication regulations govern M-Commerce transaction. BMWA(2004) poised that the Federal Republic of Germany has formulated regulation that provide a reliable and modern legal framework for better exploit the benefits of new technologies with high degree of consumer protection. The nations who participate in international trade and developed countries follow it completely. The EU (2005) has issued twelve directives to stipulate the regulatory framework for legally binding E-Commerce contracts, determination of jurisdiction and applicability, consumer and data protection, protection of Intellectual Property Rights (IPR), dispute resolution, cyber-crimes and taxation regimes, among others to ensure legal certainty and consumer confidence. These European directives lay down

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the regulatory framework for the member nations and ensure the compliance to international treaties such as “Model Law on Electronic Commerce”. These treaties are passed by United Nations Commission on International Trade Law (UNCITRAL) “The Information and Telecommunication Service Act” of Germany designed the law regime for electronic and mobile commerce. It is considered as largest subset of related law (BMWA, 2004). The regulations are: 1. 2. 3. 4. 5.

The Act on Legal Framework Conditions for Electronic Commerce. The Teleservices Act. The Teleservices Data Protection Act. The Conditional Access Services Protection Act. The Interstate Agreement on Media Services. Some other relevant laws are there, however, not part of the above regulation are:

1. 2. 3. 4. 5. 6.

The Fair Competition Act. The Act against Restraints of Competition. The Act of Distant Sales. The Copyright Act. The Copyright Administration Act. The Federal Data Protection Act

The aim of this regulatory framework is to ensure the similar legal certainty to customers and business vendors. ISO/ IEC use 27001:2005 standards for security technique and information security management system. ISO from its past learning is now planning to develop a standard for mobile financial services, ISO 12812. This standard will work on security and data protection for mobile financial services, mobile payments including person to person and person to business (ISO News, 2012). EU (2011) amended the few directives on cellular digital land based mobile communications in the community. It has also made the following directives having the regard to the opinion of European economic a social committee and act according to the procedure laid down in treaty with European community. 1. 2. 3.

The extension band of 890-915 MHz and 935-960 MHz is reserved for a public pan-European cellular digital mobile communications services. If any other system exists with GSM in the same band then it should avoid harmful interference by applying technical usage conditions other than GSM using 900 MHz band. Decision no 676/2002/EC of the European Parliament and of council on a regulatory framework for radio spectrum policy allows the commission to adopt technical implementing measures to make optimum use of radio spectrum.

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LEGAL ENFORCEABILITY OF CONTRACT This section describes the basic regulations and the legal framework governing M-Commerce, but does not provide all exhaustive information. BMWA (2005) defines the contract as legal binding where both parties make legal, mutual and corresponding declaration of intents i.e. a quotation by a customer for acquiring a good or service is accepted by vendors. The following specifications apply additionally to both E-Commerce as well as M-Commerce: 1.

The declaration of intent by the customer via electronic means is legally admissible, provided it is carried out by an unambiguous and deliberate act, e.g. reconfirmation of an order by sending an affirmation code via SMS to the vendor. 2. The presentation of goods and services on electronic platforms is in legal sense nothing more than an invitation to potential customers to submit their quotations. Only if the vendor accepts the quotation it can be considered a binding order. 3. The vendor has to acknowledge the receipt of the order without undue delay and by electronic means. The order and the acknowledgement of the receipt are deemed to have been received if the addressee can reasonably be assumed to be accessible. 4. Erroneous, or inadvertently sent orders i.e. owing to a typing mistake may be revoked. In this case the customer may however, be required to compensate the damages that arise for the vendor. 5. Electronic contracts may be revoked, and the purchased good returned, by the customer within fourteen days of the agreement without specifying any reason. This regulation does not apply for non-durable goods or mediums of data storage that might be copied like unsealed copies of audios, videos or software. 6. The vendor must identify himself clearly and inform the customer about relevant characteristics of the offered goods or services. 7. The vendor must inform the consumer about the final price of a good or service. The quoted price must include all taxes and other costs. Exceptions are only allowed while dealing with business customers. 8. If these regulations are violated such as failure to inform the customer of his right to return the goods within fourteen days, the contract is deemed null and void and the goods may be returned at any time. 9. The customer must be informed of the general terms of the contract, before the contract is concluded. 10. International transactions are governed by two different principles. All the commercial transactions taking place in the Business-to-Business (B2B) segment are governed by the “country of origin” principle, i.e. the transactions are subject to the regulations of the country in which the vendor is located and the transactions in the Business-to-Consumer (B2C) segment are on the other hand governed by the “country of destination” principle, i.e. the transactions are subject to the law of the country in which the consumer is residing.

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CUSTOMER PROTECTION The OECD guideline in context with customer protection says that customers should have same protection when shopping online as when purchasing any services or goods offline or from traditional shopping. In the year 1999 a guidelines for e-commerce was made which was revised and updated in 2006(OECD 2007). In 2000, the OECD’s policy guidance for addressing emerging customer protection and empowerment issues in mobile commerce. OECD 2000 examined the applicability of 1999 guidelines to m–commerce. The policy guidelines were adequate to impose on m-commerce but still policy maker considered following issues win context to m-commerce transaction. • • • •

Information disclosure issue related to technological constraints like small screen and limited storage capacity. Child protection concerns like over consumption, advertising and privacy. Dispute resolution option. Privacy and security concerns.

The consumers and vendors or organization face same kind of problems because of inadequate information disclosure practices. A robust information disclosure practice is required to make high value transaction with long term implication for consumers. This law prohibits unfair practices which includes false and misleading representation. The false representation may be in respect to price of goods or services and standard/quality of goods or services. The consumer contract would be considered as unfair if: • •

It causes significant imbalance in the rights and obligation among the consumer and organization involved. It is not reasonably necessary in order to protect the legitimate interests of the consumer and organization who would be advantaged by the term and it would cause detriment (whether financial or otherwise) to a organization if it were to be applied or relied on.

The court can check for a number of factors to make sure that term is transparent. A term is considered to be transparent if it is expressed in pain language, legible, clearly presented and available to read by anyone who is affected by the term. It is accepted by European Union and a few of Asian countries. Australia has an act in division 1 part3-2 which states that any goods or service supplied must have their description and fit for the purposes for which the goods are supplied. This act also says that if a consumer discloses the specific purpose to use the goods, then goods must be reasonably fit for the purpose. Sometimes a complex transaction chain may confuse the consumer. A consumer may not be sure about whether the vendor which is involved in transaction was located overseas or domestically. For example while purchasing of a ringtone the consumer may need to go to service provider, the supplier of ring tone and vendor who would process the payment. In Korea, the name of third-party content providers appears on all telephone bills. In the case of any dispute, the consumers can follow up directly with the content provider rather than the telephone company in the case of a dispute. Even when a consumer knows about the party or person who is responsible to respond to complaint or query may find it difficult to provide evidence to prove any claim. It is problematic in relation to digital content which may be defective, or never delivered. It is important to 183

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note that even when consumers may have a legitimate right to recourse and wish to contest transactions, they may feel obliged to pay for them for fear of having their service terminated or being left with a bad credit record (Office of Consumer Affairs Canada, 2010). This law also includes that in the case of major or minor failure in terms of performance, standard or qualiy of goods, the vedor should repair or replace the goods, or by refunding the consumer. The choice of remedy is up to the vendor, although the consumer may require a remedy to be provided within a reasonable time. In the case of major failure, a consumer may reject the goods and ask for a refund or replacement. On the other side, the consumer may keep the goods and ask the supplier for compensation covering any decrease in the value of the goods. Therefore it becomes difficult for consumers to engage confidently with m-commerce market which change cconstantly. Following principles should follow to make customer trust in m-commerce, despite technological change: • • • •

Consumers should be provided with information about the consumer rights and responsibilities to allow them to make informed decisions across technological platforms. Consumers should not be misled. Consumers should be able to enter into transactions safely and should not be liable for transactions they did not authorise. Consumers should be able to easily identify and engage with complaints handling and dispute resolution mechanisms.

DATA PROTECTION The protection of privacy of customer and prevention of unauthorized use of personal detail is major concern to increase the confidence of customer for mobile transaction. The followings are the stringent regulatory norms used for aforesaid purpose (EU 2005): 1. 2. 3. 4. 5. 6. 7. 8.

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Personal data can only be collected, processed or used with the explicit consent of the user and can be processed for the purpose which it has been explicitly collected. If the customer is offered the choice to give his consent electronically, the business vendor should guarantee that this consent can only be given by an unambiguous and deliberate act by user. Only the customer can access the text of such consent. The customer profile can only be created with his consent and he can withdraw consent any time. Separate processing of customer-data for the use of different services and data which is not required should be deleted without delay. The customer should be able to utilize and pay for the services anonymously or under a pseudonym, if technically possible. The customer can demand from the business vendor about information on the data stored on him. Violation of these regulations by the vendor or the failure to inform the customer of his rights constitutes an administrative offence, punishable with a monetary fine, not exceeding fifty thousand Euros.

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These are basic regulations and laws provide exception in extraordinary situation. These exceptions can be permitted by government authorities. On January 2012, the European commission announced Single Market Act and Digital Agenda to adopt the communication on E-Commerce and other online services. It represents the potential for online service in growth and employment and also identifies the main hurdles in the development of online services (European Commission, 2012).

Right of Self Determination or Rejection of Any Communication The growth of m-commerce in business is very complicate because of involvement of several interrelated stake holder and various regulatory agencies which are the part of m-commerce eco system. These are comprises of mobile telecom service providers, banking and financial institutions, content facilitators’, mobile terminal industry and consumers as the major stake holders. The merging of telecom, IT and broadcasting services established Global Information infrastructure (GII) which has capability to carry any type of information. The wireless technology and devices have enhanced the capability of GII by wireless information carriage and advancing the concept of e-economy to mobile technology. Consumer’s protection goes beyond data security and consumer’s identification. It begins already before the business relation is taken up. It is very important that consumer should take informed decision. Transparency requirements, accompanied by appropriate fiduciary duties of mobile service providers, would be appropriate means of covering consumer’s information needs. Iwamura (2011) and EU (2012) throw a light on major issues of self determination and rejection of communication. These issues are similar in European and Asian M-Commerce market. 1.

2.

3. 4.

Commercial Transaction Law: This law makes the content provider to display all information on their website indicating price of product, mode of payment, delivery date, and methods to cancel the order. It should also describe the name of person behind the site. This act prohibits the misleading advertisement and awakens the users. E-Contract: It is similar to regulation of E-Commerce which shows that vendor must allow the customer to cancel the order made accidentally or by mistake. The contract can be considered when a confirmation is received therefore; provision of confirmation page should be there to allow the customer to check the details of his purchase. The contact would be abolished in case these provisions are not provided. Customer Protection Law: It is similar to unfair contract terms act of E-Commerce. Data Protection Act: It is similar to data protection directive as explained above. The data is protected in such a way that it should not lose the purpose for which it is collected. This act has a minor change in Japanese market as there is no requirement for data controller to register with national authority and not even on transfer of personal data to other countries. It helps the Japanese vendor to handle personal data outside the country without using binding corporate rules or standard contractual clauses which are required in European countries.

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BUSINESS CONTRACT CATEGORIES NOT INCLUDED IN MOBILE COMMERCE Few categories of business are considered authorized by EU directives to prohibit conclusion of contract by electronic mean: 1. 2. 3.

Contracts that create or transfer rights in real estate, except for rental rights. Contracts requiring by law the involvement of courts, public authorities or professions exercising public authority, e.g. notaries. Contracts governed by family law or by the law of succession.

Mobile Commerce is on a growth track and has increased its acceptance in almost every section of society from banking to entertainment and marketing. The growth can be traced back to technological and demographical developments that have influenced important aspects of the socio-cultural behaviour in today’s world. The high availability of mobile phones, which is greater than that of the computers in most countries, is leading to conception of new, innovative mobile services, which are collectively described as M-Commerce. The adjective “mobile”, used within the specific contexts of “M-Commerce” or “M-Business”, signifies an “anytime and anywhere access” to business processes. The access takes place using mobile communication networks, making availability of these services independent of the geographic location of the user. These definitions, formulated in the initial phase of M-Commerce, do not seem to be appropriate today, even when they provide useful insights for understanding M-Commerce. It is therefore essential to formulate a new definition of M-Commerce that takes all of the above-discussed factors into account. M-Commerce opens, by the virtue of its ability to be immediate, local and personal, new avenues for push-marketing, such as content- and product offers. Services like “Opt-in advertising” can be offered, so that a user may choose the products, services and companies, which he wants to be kept informed about.

Comparison among Different Nations on Regulatory Framework Mobile commerce has really changed perception, behavior and nations at large scale. It has changed the way user perceive and the way he interact and the way he do commerce. M-commerce is expecting to be dominant form of e-commerce in the times to come especially with the proliferation, growth and penetration of mobiles and other handheld devices. M-commerce law is also emerging in cyber law, this is a highly specialized and niche field of cyber law which is developing through the world, till date there is a uniformity of approach s found as to the adoption of M-commerce technology and platform to make transaction. The growth of –commerce is different among different countries. In countries like CHINA and USA it is in developed stage where as in INDIA it is still in infancy stage. Mobile commerce is emerging sector but there is no strong regulations made to make it as a universal identity. International regulatory framework has not yet established a specific supervisory regime for mobile financial services. The national regulators in different developing countries are reluctant to intervene in a promising business specifically for rural and remote areas. The designing of the regulatory frame work depends on the usage of mobile telephone for different purposes from making transaction to downloading of services. Moreover, the regulators and supervisor from financial and telecommunica-

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tion sector must be aware of several distinctive feature and usage of mobile commerce. The regulatory framework for rendering financial services is more elaborated and encompasses more stringent structural and behavioral guidelines than the legal framework in telecommunication. GSM association report,(2006) has shown a direct relationship between average GDP growth and mobile penetration rate among 57 developing countries including ; Latin America middle and East Asia pacific and 15 European union countries. It stated about the direct relationship between two i.e. the increase in mobile penetration will increase m-commerce uptake and enhance GDP. The inclination of businesses to diversify is increasing among unrelated areas like telecom companies to banking and broadcasting sector, infrastructure companies into telecom industry, power companies into internet market and banking companies into future and commodity markets. This has increased the competition among business entities and also introduced a competition among services and their delivery platform. Therefore, horizontal expansion of business firms has further increased the need for integrated regulatory mechanisms and the regulatory responsibility of states to check any abuse of market power. The different stake holders affected with these policies are banking policy sector, content policy sector, retail policy sector, mobile tele-communication and mobile terminal manufacturing policy sector. These sectors are governed by different institution and service providers. User or consumer is far most person to be affected by these regulations. Venkatesh et al.(2003) stated that adoption of M-Commerce services would be primarily influenced by facilitating conditions such as affordability, availability of services, ease of subscription and behavioural intentions such as perceived usefulness, perceived value derived, ease of use, and social influence. The blistering growth of m–commerce is continue. Katyayan Gupta, analyst, e-business & channel strategy, Forrester research said that smart phone penetration will increase from to more than 21% in 2017. Rajan Ananadan MD, Google INDIA said that by 2017, 70-80% transaction would take place via smart phones (Economic Times, 2014). In India the consumers who all are involved in prepayment instruments shall seek authorization from department of payment and settlement, Reserve Bank of India under the payment and settlement act 2007. In case of mobile banking the only banks which have been permitted to provide mobile banking by RBI, shall be permitted to launch mobile based prepaid payment facilities such as mobile wallet and mobile account. Absence of appropriate regulatory framework effects the growth of mobile commerce. The poorly regulated industry may results in price hike, inferior quality services and prevalence of grey markets for handsets which results in revenue loss to government. In developing countries an advanced regulatory framework is required which would synergize various stake holders and acts as catalyst in growth of m-commerce. Sharma (2007) poised that that literature review on m-commerce related policy is not available for developing countries like India as m-commerce is still in nascent stage. Since, the services provided in M-Commerce are integrated; the regulatory framework also needs to be under a single framework. It needs to adapt the new challenges in market to build new confidence of market, various stakeholders and most importantly consumers. M-commerce is regulated mainly on three areas -legal, economic and social. Under the legal framework, in developing countries like India and a few African countries, many factors like law, regulations, acts, treaties should be specific and suitable to need of citizen rather than being compatible with international norms and practices. In the case of economic regulation the rules should be followed be operating agencies and individuals whereas the social regulations are concerned with content regulations 187

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like type of content used and law for gaming etc. Policies and regulations in above identified sectors are still evolving to meet the needs of M-Commerce for proper development and therefore it is difficult to give accurate predictions of the course of these policies in time. It is also difficult to predict and measure these variables in quantity and quality. Pew internet and American life project (2006b) predicted that by 2020 mobile wireless communications are very likely to be available to anyone anywhere on the globe at very low cost. Most of the mobile users are individuals. The most striking phenomenon in member countries in OECD is the daily use of such devices by children and young adults. In Korea, more than 60% of those under age 19 have a mobile phone. In Canada, 23% of students report having their own mobile phone, 44% of which have Internet capability. In Japan, 11.8% of students under age of 10-11 and 35.9% of age 13-14 have their own mobile devices In France, 94% of 15-17 year-olds reported having mobile phones. . 57% of children in world use their mobile phone to access internet which is highest in Chile (78%) and lowest in Egypt (44%). Therefore, to establish healthy mobile commerce markets, businesses and consumer policy makers need to consider how to promote the advantages while reducing the risk of disadvantages. The OECD Committee on Consumer Policy (CCP) started to examine consumer policy issues associated with mobile commerce and conducted a survey of member countries on this issue in 2006. The OECD Committee for Information, Computer, and Communication Policy (ICCP) also deals with mobile telecommunication issues. According to OECD 2005c different market players such as content owners and developers, content aggregators, mobile operators, handset manufacturers and various other businesses are entering the market and are competing. Apart from ringtone, music games news and other financial services many new services have entered the mobile commerce market, where integrated financial services are a prominent service. Different countries do differ in terms of cultural specificities, wealth and inequality, religion and values, political and social institutions and much more. Therefore the need to make change and acceptance of regulatory frame work varies in different countries. According to GSM report 2012, country like Japan who is early adapter of technology 73% of children have smart phones with features like GPS, Bar code reader etc. Across all countries entertainment apps are most popular to download. European Union directives regulate wireless devices use got off to a late start. Therefore, the directives on privacy and electronic communications from 2002 established legal standard for privacy protection in personal data processing for all electronic and communication devices. In US since the initial meeting of regulatory agencies in April 2012, the focus related to mobile payment has not changed much. It works under Mobile payment industry workgroup (MPIW). These agencies work on and provide support on consumer protection, security and efficiency of payment system, data security and privacy, and accessibility. They also continue monitor non bank development in the evolving ecosystem by collecting and analyzing information from non bank industries.

CONCLUSION This regulatory framework as discussed is of international character and provides a fair overview of the legal restrictions that must be kept in mind while designing mobile applications. As per statistical survey and data, countries make their own regulation and law for making transaction through Mobile devices. But these regulations play an important role while doing the business in international market. There is a need to make the regulations for cross border business at individual level, as the techniques 188

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and development along with political condition of a nation play a very important role while making transaction through mobile devices. The different countries have different subscribers which also have a role in success of M-Commerce.

REFERENCES Bergstrom, R. (2001). Promoting an open environment for mobile commerce in Europe. In Mobile commerce conference. WDM. BMWA. (2004). E-Commerce Rechstrahmen-WegweiserZu den Informations-and Kommunikationsdienste-Gesetzen. German Ministry of Economics and Labour. Retrieved from website: http://www.iid. de/iukdg/ecommerce.html BMWA. (2005). E-Commerce and Recht. Information by the German Ministry of Economics and Labour, Retrieved from website: http://www.bmwa.bund.de Depali, S., Diatha, K., & Sundar Krishna, M. (2012). Evaluating the Impact of Government Policies and Regulation on m-commerce in India: A system dynamics modeling approach. International Journal of Business and Management, 7, 54–80. EU. (2005). Law & E-commerce. Internet portal of the European Union for regulatory framework of Electronic Commerce. Retrieved from website: http://europa.eu.int/information_society/topics/ebusiness/ ecommerce/8epolicy_elaw/law_ecommerce/index_en.htm European Commission. (2012). Europa Report. Retrieved from website: http://ec.europa.eu/internal_ market/e- commerce/communication_2012_en.htm Gartner Report. (2010). Annual Report. Retrieved from website: http://investor.gartner.com/phoenix. zhtml?c=99568&p=irol-irhome Gartner Report. (2015, Jan 28). Digital Marketing Strategies. Retrieved from Website: http://www. gartner.com/newsroom/id/2971917 Ghosh, A. K., & Swaminatha, T. M. (2001). Software Security and privacy risks in mobile commerce. Communications of the ACM, 44(2), 51–57. doi:10.1145/359205.359227 Green, P. (2004, June 4). Eastern Europe’s Foray into M-commerce. The New York Times, pp. 3, 8. GSMA. (2007, September 21). Global Mobile Tax Review 2006-2007. Retrieved from: http://www.gsma. com/publicpolicy/global-mobile-tax-review-2006-2007 GSMA. (2012, October 10). Annual report: Mobile money for unbanked. Retrieved from: http://www. gsma.com/mobilefordevelopment/wp-content/uploads/2012/10/2012_MMU_Annual-Report.pdf Heinemann, A., Ranke, J., & Straub, T. (2004). For quite sound technological basis of m-commerce application. Retrieved from web site: https://scholar.google.co.in/citations?view_op=view_citation&h l=en&user=jTz9KjMAAAAJ&citation_for_view=jTz9KjMAAAAJ:ufrVoPGSRksC

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Hiroyuki. (2011). The rise of m-commerce in Asia: the booming Japanese market. Communication news letter. Retrieved from: file:///C:/Users/PC-1/Downloads/19978063.pdf Hope-Rose, D. (2001). Successful E-Business Deployment: Beyond Software (No.COM-14-5080). . Retrieved March 31, 2004 from http://www.gartnergroup.com ISO. (2012). ISO/IEC 18092:2004 Information technology -- Telecommunications and information exchange between systems -- Near Field Communication -- Interface and Protocol (NFCIP-1). Retrieved from website: http://www.iso.org/iso/catalogue_detail.htm?csnumber=38578 John, G., & Flora, O. (2008) System’s Design and Implementation for Easy Creation of Mobile Commerce Systems. Third International Conference on Internet and Web Applications and Services. Athens, Greece: IEEE. Jongwook, W., & Minseok, J. (2008). The Comparison of WML, cHTML and XHTML-MP in Mcommerce. Journal of Software, 3(7), 22–29. Jupiter Research Corporation. (2002). Jupiter Consumer Survey European Retail. Retrieved from website: http://yaikiqux.blog.com/2013/07/01/jupiter-consumer-survey-report-european-retail-2002-download/ Nadesan, M. H. (2001). Post-Fordism, political economy, and critical organizational communication studies. Management Communication Quarterly, 15(2), 259–267. doi:10.1177/0893318901152005 Neworks, J. (2012). Corporate citizenship and sustainability Report build the best. Retrieved from website: http://www.juniper.net/us/en/local/pdf/fact-sheets-backgrounder/3000071-en.pdf OECD. (2007). Working Party on the information. Retrieved from http://www.oecd.org/sti/38393115.pdf Office of Consumer Affairs (OCA). (2010). Mobile commerce-New experiences,Emerging Csumer Issues. Office of Consumer Affairs,Industry. Pew Internet & American Life Project. (2006b). The Future of Internet-II. Author. Report, E. (2011). Europa Report. Retrieved from website: http://ec.europa.eu/information_society/ activities/roaming/docs/roaming_report_11 Sausser, G. D. (2003). Thin is in: Web based systems enhance security, clinical quality. Healthcare Financial Management, 57(7), 86–88. PMID:12866161 Shelley, S. (2014, October 21). Companies devise new strategies to keep pace with rapid rise of mobile commerce. Economics Times. Retrieved from: http://articles.economictimes.indiatimes.com/2014-10-21/ news/55279623_1_hdfc-securities-aseem-dhru-amazon-india Shortliff, E. H., & Barnet, G. M. S. (2001). Database Technoologies: concepts,methodologies,tools and applications. IGI Global. Simpson, R. L. (2003). (003).The patient’s point of view-IT matters. Nursing Administration Quarterly, 27(3), 254–256. doi:10.1097/00006216-200307000-00013 PMID:13677191 Tarasewich, P., Nickerson, R. C., & Warkentin, M. (2002). Issues in mobile e-commerce. Communications of the Association for Information Systems, 8, 41–64.

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TRAI. (2014, March 20). The Indian Telecom Services Performance Indicator. Retrieved from website: http://www.trai.gov.in/WriteReadData/PIRReport/Documents/Indicator%20Reports%20-%20Mar-14.pdf TRAI Report. (2010, August 10). The Indian Telecom Services Performance Indicators. Retrieved from website: http://www.trai.gov.in/WriteReadData/PIRReport/Documents/finalperformanceindicatorReport9agust.pdf Veijalainen, J., & Weske, M. (2003). Modeling Static Aspects of Mobile Electronic Commerce Environments. In Mobile Commerce Technologies (pp. 137-170). IDEA Group Publishing. Venkatesh, V., Morris, G., Davis, G. B., & Davis, F. D. (2003). User Acceptance of Information Technology: Toward a Unified View. Management Information Systems Quarterly, 27(3), 115–139. Yampel, T., & Eskenazi, S. (2001). New GUI tools reduce time to migrate healthcare applications to wireless. Healthcare Review., 14(3), 15–16. Zhao, P. C. (2003). Limitation of Mobile Commerce. Retrieved Jan 29, 2010 from: http://pczhao.netfirms. com/elimit.html

ADDITIONAL READING Crisil Research Telecom Services Crisinfac. (2010b May). Annual report on Telecom Data Services. Mumbai: India. Retrieved from: http://www.crisil.com/pdf/research/research-industry-informationreport-telecom-data-serv-contents.pdf Mayer, R. C., Davis, J. H., & Schoorman, F. D. (1995). An integrative model of organization trusts. Academy of Management Review, 20(3), 709–734. Powell, M. (1997). Electronic Commerce: An overview of the legal and regulatory issues. International Trade Law and Regulation, 3(3), 83–93. Sawma, V., & Probert, R. (2003) Specializing the NIST security service model for electronic commerce systems Paper Presented at Federal information systems security education association (FISSEA) annual conference, March 4-6 silver spring MD,USA. Schwartz, G. (2011, January 6).Mobile Security: the elephant in the room. Mobile commerce daily Retrieved from website:www.mobilecommercdaily.com/2011/01/06/mobilesecurity-the elephant in the room.html Ziebia, T. (2001). Have Mobile Phone, Won’t Shop. Retrieved from http:/www.shopguidecom/news/ article_report1-07-25-01.asp.

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KEY TERMS AND DEFINITIONS Customer Protection: The protection of data and personal information of consumer from unauthorized theft or misuse. M-Commerce: Extension of electronic commerce and making sale and purchase of product and services using mobile devices. Mobile Payment: The making or paying amount to any vendor or service provider in exchange of purchasing any product. Regulatory Framework: These are rules and regulation that is required to make successful mobile transaction.

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Chapter 10

Analysing Architecture and Transaction Model in Securing Mobile Commerce Poonam Ahuja Narang Guru Tegh Bahadur Institute of Technology, India Basanti Pal Nandi Guru Tegh Bahadur Institute of Technology, India

ABSTRACT Mobile communication is becoming one of the most popular and high growth area in recent times, credit for this rapid growth goes to new research and inventions in all areas of mobile and wireless technology. Use of 3G is growing rapidly; on the other hand, 4G lead the way for next generation of mobile communication. This chapter describes the Mobile Architecture Layers and flow of transactions and shows comparison between Existing Transaction models. Threats and Risks associated with mobile transactions are primary concern along with the security techniques on various payment modes. Database security is also a part of the discussion of this chapter.

INTRODUCTION Mobile communication is becoming one of the most popular and high growth area in recent times, credit for this rapid growth goes to new research and inventions in all areas of mobile and wireless technology. A mobile device is a wireless communication tool, including mobile phones, handheld personal digital assistants (PDA), wireless tablets, and mobile computers. Mobiles now a day have a huge processing power having high quality multimedia and graphics. Evolution of mobile from 1G, 2G, 3G and 4G have given faster and better connections, multimedia processing and broadband experiences. Use of 3G is growing rapidly and seems to very common these days, on the other hand 4G lead the way for next generation of mobile communication. 4G uses a network based IP address system. It is a platform for both internet access with computer and the cell phone communication. Statistics revealed that mobile overtook fixed internet access in 2014 which shows that mobile marketing, advertising, M-Commerce have become key services of mobile industry. DOI: 10.4018/978-1-5225-0236-4.ch010

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 Analysing Architecture and Transaction Model in Securing Mobile Commerce

Mobile commerce (M-commerce) can be defined as any electronic transaction or information interaction conducted using a mobile device and mobile networks, which is used for transfer and exchange of information and services. M-commerce is an emerging method of shopping in today’s society which offers consumers convenience and flexibility of mobile services anytime and at any place. Earlier cellular phones were used for making and receiving calls. But as technology has advances, now a days Smartphone is not only a device for just making and receiving calls, also basic to advance web services can be easily hosted on smart phones, In recent years share of web services has also increased significantly. Nowadays we can find Apps for everything from online shopping to Apps which keep track of personal fitness and list is never-ending. M-Commerce interlocks two independent industry components; E-Commerce and Wireless technology which in themselves have their own security challenges. Although these are very welcoming technologies but ability for offer safe and secured enticement for communication is becoming an area of focus in the venerable mobile network. Mobile Security has become a priority for the service providers to give reliable services to the customers. Mobile Transaction risks are not only straightforward but they can be vulnerable for cross channel risk factors. This chapter will focus on mobile transaction models and risks associated with payment modes like SMS, NFC and WAP. Security issues of existing algorithms will also be covered in the chapter. With the advancement of M-Commerce and M-Banking, we are actually carrying the cash and cart with us. This brings privacy threats such as Malware, Spyware, information collection application, phishing scams which are applicable for the fixed network and also for mobile devices. Threats are to be analyzed for varying transaction process which is an essential element towards secure payment processes. Secure transaction includes authentication, confidentiality, integrity, repudiation which are discussed on the security technologies deployed in current scenarios. Mobile Database Systems (MDBS) requires equal amount of security concern in mobile transactions. For both fixed and mobile transactions the same database is used with different requirements. This chapter describes the database architecture to support the mobility, its ACID properties and security features. Execution framework for current transaction strategies also reflects the distributions of mobile database within mobile network nodes.

BACKGROUND With the advancement of mobile technology mobile transaction is used not only for voice traffic but also for data centric transaction. Wu et al. (2002) designed a framework for seamless integration of heterogeneous wireless system which considers challenging issues on mobile IPV6 support, QoS management over IP, location management, routing, handoff and security. Gu et al. (2004) proposed a service oriented context aware middleware (SOCAM) architecture for building and rapid prototyping of context aware mobile services. Zhang (2012) has proposed Trusted Stack Model which is based on Design Science Research Methodology (DSRM) Process Model. It provides secure, flexible, scalable and extendible environment for mobile transaction which also supports security service which is the primary concern of this chapter. Mobile transactions have special features such as mobility and frequent disconnection. It is different from distributed transactions. Chrysanthis (1993) discussed a concept of multidatabase service in mobile transaction which is an open nested transaction model. It is based on Global Database System available 194

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at each base station to control mobile transaction management. But it does not support disconnection operation. MDSTPM (Yeo et al., 1994) is an integrated distributed database system architecture in which queuing mechanism is used to resist frequent mobile host disconnection. Interactive mobile transactions are not supported in this model. Kangaroo, Dongle, Semantic transaction models are discussed later in this chapter. Huge potentialities of mobile services are captured by different business models where customers are willing to pay for valuable services. Camponovo and Pigneur (2003) presented mobile business market provisions and actor’s description and activity with revenue flow for various mobile services. Classification of business model and designs are discussed further in business model section. With the advancement of mobile payment process which is now-a-days a favorable choice of customers brings question towards security of payment transactions. Polla et al. (2013) discussed high level attacks mainly on user applications. Nambiar et al. (2004) gave an analysis of security issues and security technologies such as WAP, SAT, J2ME. Possible security issues on GSM, GPRS and NFC technologies as well as presently used security algorithms are included in this chapter. Mobile transaction security in turn incorporates mobile database security. Serrano-Alvarado et al. (2001) made a survey on database client server framework for different transaction model. Abdul-Mehdi and Mahmod (2008) identified weaknesses in security mechanism for transaction processing between BS and the MHs and devised a security management solution for MCTO model.

MAIN FOCUS OF THE CHAPTER This chapter is divided into five sections. First section describes the Mobile Architecture Layers and flow of transactions. Mobile transaction framework of various enterprises shows stack model involved in end to end as well as user to merchant communication. Stack model is explained to get the view of working of each layer in the framework. Second section makes a comparison between Existing Transaction models and Payment modes. ACID properties are used to compare various transaction models such as Kangaroo Model, Clustering Model, Pro-Motion Model etc. Payment modes such as NFC, SMS, WAP, Barcodes and SMSWAP are also discussed to get the flavor of architectures that comprises these communication models. Third section depicts a picture of Threats and Risks associated with mobile transaction. Mobile payment systems such as account based payments or mobile wallets involves the security management for clients, merchant, payment server authentication, mobile session management, certification, mobile key and data integrity management. A Vulnerabilities and weaknesses of M-Payment technologies are discussed in this section. In the transaction flow of M-Payment each part of the chain, from which users interface on a Smartphone to back end payment system can have threats which affect the whole system. This study involves the issues of all branches of the chain. Traditional and emerging both types of mobile payment risks are identified for payment technologies in this section. Fourth section explains the implemented security techniques on various payment modes. Business to Business (B2B) and Business to Customer (B2C) models are bank centric mobile ecosystems. Mobile payment services are driven by such business models. Consumers and customers both side securities have to be maintained by authentication, confidentiality, integrity and non-repudiation. Security of each element involved in transaction chain is the major concern of this section. Various approaches like “Security by design”, “Privacy by design” defines the correct security requirements to 195

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mitigate the likely threats. Security algorithms are classified according to transaction technologies like SAT, WAP etc. as well as this section is extended towards encryption, authentication algorithms and its reliability factors. The aim of this section is to capture every aspect of transaction security models. Fifth section provides information about database security in mobile transaction layer. Database operations in various phases of mobile transaction are described in this section. Role of databases in execution of different strategies are accompanied by security measures of the mobile databases.

MOBILE ARCHITECTURE LAYERS AND FLOW OF TRANSACTIONS Mobile devices should be available to client without time and place constraint. While designing architecture for a mobile service, we need to consider some constraints such as battery life, memory size, processor speed, network bandwidth and security. Main focus should be limited usage of CPU so that battery life can be saved. These limitations are the areas of concern for the formation of framework. Global perspective of mobile architecture model is to design a framework that: • • • • • •

Supports intelligent and adaptable service across heterogeneous execution environment which delivers services to different operator domains, networks and terminals. Assists easy and seamless access to electronic services and applications. Provides end-to-end communication based on an open architecture which gets user acceptance and trust. Facilitates open platform that can customize services and device. Gives distributed communication over multi terminal and multi access environment. Enhances middleware by semantic understanding.

Architecture Layer The study reflects different layering architecture of various enterprises such as Microsoft, and Nokia. Layers separate the functionality of mobile into different areas of concern. Mobile framework should support multilayer architecture which should have simpler UI as well as the communication between layers must have modular interface. In broad perspective the layers are divided into presentation layer, business layer and data layer. The technical objective of these layers is to enhance mobility service platform architecture and inter service platform roaming mechanism.

Presentation Layer User interface and user interaction are main jobs of presentation layer. Simpler user interface will provide an easy way for users to interact with application. They also acquire and validate data input by the user. For complicated user interface, separate user process components implement common user interaction patterns.

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Business Layer Purpose of business layer is to process complex business rules transforming, caching of data, applying functions and promote reusability. The functionality of business layers depends upon designing of business components, business entities, caching facility, security, exception management, logging and validation policies and validation. Business layer is used to centralize common business logic.

Data Layer Data access layer comprises of data access logic components, data helpers/utilities and service agents. Data access logic components describe underlying data stores such that it centralizes the data access functionality. Data helpers/utilities maximize the data access performance. Service agents manage the semantics of communicating with the business components. Distributed communication manages user over the platform. Distributed communication management configuration supports transparent remote access facility. Service intelligence provision takes care of context awareness functionality and intelligent knowledge. Multiplatform service execution engine integrates service creation environment and supports tools for automatic service for fast deployment. Security to share information between stakeholders is a base of trust and privacy management. Even delivery of multimedia content should be user friendly and secure.

Enterprise Mobile Application Framework MICROSOFT Mobile Application Architecture Microsoft Mobile Application architecture is based on user experience, business and data layers. Multilayer may be located on device depending upon the application type. Application that requires local processing and occasionally connected scenario should be designed as rich client. But if the application can depend on server processing and is always fully connected then it should be designed as the thin client. In a thin web-based client, the business and data layers are located on the server whereas in rich client, the business and data layers are located on the device itself.

NOKIA Mobile Application Architecture NOKIA mobile software strategy is based on Open Mobile Architecture which is an engine for market growth. Open Mobile Architecture initiative enables emergence of non-fragmented global market for future generation. It provides the stimulation of innovation and growth of mobile service which enhances seamless user experience as per freedom of choice. It also enables an eco-system with its stakeholders. In current scenario there is one-to-one communication from operator to 3G over its layers and viceversa. Study reflects that NOKIA wants to achieve a target in which one-to-many communication between operators and uniform standards will be possible.

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Service 60 platform is being used by NOKIA which is Open Mobile architecture. It provides a user friendly UI for various Mobile applications such as Intelligent browsing, messaging, downloading and also for M-commerce applications. Service 60 platform Governance model enhances Innovation, Differentiation and Interoperability for next generation mobiles. According to Zhang (2012), Trusted Stack Model provides secure mobile transaction system which supports transactions such as mobile banking and mobile commerce. The idea behind proposing the Trusted Stack Model is the limitations of GSM, 3G and 4G technology. Limitations of GSM GSM Network does not provide adequate security. Main issues that can occur in GSM are SMS fraud, Eavesdropping, MITM (Man-In-Middle-Attack), location attack, flooding etc. 3G and 4G limitations Mobile internet security which is provided by WTSL (Wireless Transport Security Layer) is not sufficient for mobile internet transactions, specially financial transactions which require security between WAP gateway and backend server.

Trusted Stack Model Trusted Stack Model Layers Communication service and security services are the key factors to enhance the mobile Service-Oriented Architecture (SOA). The Trusted Stack Model proposed by Zhang (2012) is based on these services. It supports seven layer architecture. • •

Chip: The Chip contains a microprocessor and a small phone memory. It works as Secure Element (SE) which stores important information such as credit card number and private keys. Applets: Applets which invoke and provide functions to the upper stack are installed in the chips.

Figure 1. Trusted stack model architecture

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• • • •

•

Middleware: It provides APIs for upper layer. Mobile Applications: It consists of secure mobile applications and mobile operating system. Secure mobile applications provide functionality to users. Communication Network: It comprises of various mobile communication channels and networks, such as SMS, GPRS, Bluetooth, Wi-Fi etc. Message Distribution Server: It consists of communication switch and service switch. Purpose of communication switch is to provide communication services to mobile service consumers. Various transaction requests are processed by communication switch and then forwarded to service switch, which translates those requests and provide services. Application Service Provider: It comprises of all service providers and APIs. It also contains database for transaction.

Architecture of Trusted Stack Model The Trusted Stack Model is the base for designing the secure mobile SOA which is a 6-tier architecture. The first-tier comprises of various client components, the second-tier is the various mobile networks and the corresponding communication protocols. The third-tier supports communication services at the network layer. The fourth-tier comprises of mobile application servers. The fifth-tier supports all financial transaction using back-end server. The final sixth-tier provides security services at the application-level for mobile transactions. There are four components that are inclined with each other to provide various services for mobile transactions. Layers 1 to 4 of Trusted Stack works as the client component of secure mobile client. Communication which is at layer 5 provides communication services at network level. Security service providers at layer 7 are responsible for security of registration, identity management services, m-PKI and smart card management and authorization services.

Scope of Improvement Discussed Trusted Stack Model architecture does not include security of mobile applications. Privacy issues of user information related to various services are needed to be considered also.

MOBILE TRANSACTION MODELS AND PAYMENT MODES Transaction Models The Transaction Model in Mobile Architecture should address the mobility behavior so that the state of the transaction and its progress must also move transparently. Beside that transaction model must support ACID properties along with recovery. Disconnection failures and mutual consistency among replicated data in Mobile DBMS environment is an extension of distributed system. This can be viewed as a dynamic type of distributed system where links between nodes in the network change dynamically.

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Requirement of Mobile Transactions 1. 2.

Mobile Transactions are different from distributed transactions in terms of its physical nature of connection and its mobility from one hop to another. The mobile situation during execution of transaction should be handled properly through transaction models. In mobile environment it is possible that transaction execution disconnects the Mobile Unit, which may result in transaction coherence and should also be taken care of.

Kangaroo Model Kangaroo transactions capturers the necessity of dynamically changed behavior of mobile transactions. Kangaroo model works in Heterogeneous multidatabases. KT model supports the split transaction to adapt the mobile environment. Splitting of the transaction is based on serialization order as well it dynamically splits on request basis. In Kangaroo transaction, Dunham et al. (1997) have created one extra layer over Global Database System (GDBS). This layer is called DAA (Data Access Agent). Each transaction in Kangaroo Model splits itself in sub transaction (Joey Transaction) at every base station. For the mobility management of transactions, each sub transaction is stored as a doubly linked list. For different processing modes such as compensating model and split mode, these sub transactions are processed differently. Kangaroo model partially satisfies the Atomicity but remaining ACID properties such as Consistency, Isolation and Durability are not supported.

Dongle Model Dongle Model (Priya & Dhanpal, 2013) is used for mobile database transaction management using mobile agent. It works in client-server wireless network. It supports the development of new database applications involving mobile device and wireless data access, which also satisfies ACID properties. Dongle architecture consists of three parts: 1. 2. 3.

Mobile host or client. Mobile Support Station. Server.

Server system works as a fixed unit and client system works as mobile unit which is called Mobile host. Mobile Support System is intermediate agent between mobile host and server. The disconnection problem of server with mobile host is taken care by storing temporary files on Mobile Support Station in Dongle model. The new transaction is not entertained until the same query is executed after reconnection of server. The Dongle agent is based on 2-phase locking protocol, which locks the entire system until the query gets fully committed. This model supports Atomicity, Consistency, Isolation, Durability of ACID property through Mobile Agent.

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Dongle transaction model shows better I/O performance for sequential and random retrieval of records. It always shows efficient performance for transaction insertion, deletion and modification compared to Kangaroo transaction.

Properties/Features of Other Mobile Transaction Models • • •

Pro-Motion Model: Supports fully distributed database but requires central database server as an additional infrastructure. It can perform on MU or fixed network. It completely satisfies the ACID properties. Semantic Model: Is based on Distributed Multidatabases. This model works on fragmented simple objects of a complex object. The completion of the transaction happens by merging of fragments returned to the server. It also completely satisfies ACID properties. Toggle Model: Supports Heterogeneous Multidatabase system. It can be executed in both MU and fixed network with an additional requirement of Global Coordinator layer and Site Manager Layer. ACID properties are fully supported in this model.

Payment Modes Mobile Payments can be carried out using handheld devices such as a mobile phone or a PDA as a POS (Point of Sale) in E-Commerce and in M-Commerce.

Mobile Payment Technologies Supporting technologies for Mobile Payments are: 1.

2.

3.

4.

SMS Payments: Due to simple nature of SMS Payments, a user prefers to have this facility. It is a text service and was introduced in the GSM and later supported by all other digital based mobile communication systems. SMS messages travel to the cell phone over the system’s control channel separate from the voice channel. A short code is a 5 or 6-digit code which is useful to start a mobile shopping session. WAP: The WAP is a standard developer by the WAP forum, a group founded by NOKIA, Ericsson, Phone.com and Motorola. WAP Payments uses internet over cross platform distributed computing. The online payment methods such as PayPal, Google Wallet or Yahoo Wallet are used in WAP Payments. NFC: Near field communication payments is a growing area of Mobile Payments. A set of protocols enables smart phones and other devices to establish radio communication with each other by touching the devices together or bringing them into proximity to a distance typically 10 cm or less. In China NFA is accepted as a means of payment on all public transport and in Japan NFC is also being used to provide identity card information. Mobile Wallet: It is m-payment application software that resides on the mobile phone with details of the customer and bank account detail or credit card information. Using these software customers can make payments using mobile phone. In this mobile wallet system, customers can use multiple debit or credit payment instruments in a single wallet.

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Classification of Mobile Payment Methods 1. 2.

3. 4.

Internet Payment Method: In this method user can use their phones to complete their transactions on internet and be charged on their mobile carrier phones bill. It is a fast and secure method with no need of credit card or merchant invests for special components or equipments. POS Mobile Payment Method: Mobile payment system to pay at a POS (Point of Sale) with a mobile phone requires customer synchronization with the merchant system to complete a transaction. It supports micro payments. But the disadvantage is that it needs mobile phone modification, installation of a device in the merchant payment system and a prepaid account. Payment for Mobile Commerce Applications: This system refers to full mobile commerce having the transactions with a secure mobile payment system. The advantage is that consumers can buy goods anytime, anywhere at a virtual point of sale. Person-to-Person Mobile Payment: Person-to-Person (P2P) mobile payment can be used to transfer amount from one user account to another. It is a real time money transfer, facilitating money exchange between two persons anytime, anywhere. The disadvantage is that the two parties must be registered to this service.

THREATS AND RISKS IN MOBILE TRANSACTION PAYMENT SYSTEM High speed data communication is in high priority along with mobile voice communication. Smart phones with 3G capabilities are in high demand because of the internet, banking applications in messaging facilities. It is expected that mobile service will increase in high volume by 2016 due to increasing demand for mobile data communication. This demand brings along new IP based threats on mobile core network. Figure 2. Mobile transaction flow

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Security is a paramount importance in mobile payment system. While designing m-payment system it is important to analyze various security issues for the platform, device or technologies chosen for the financial transaction. Transaction chain from customer to databases of financial sector includes mobile device, mobile transaction architecture with internet facility, gateway, web services and databases. Security is needed for each and every node. 1.

2.

Mobile Device Vulnerabilities: Customer’s hand held devices such as mobile devices are not only used for mobile payment transactions but also used as a Smartphone. So there are risks involved which exist for standard desktop and laptop computers. Key risks associated with mobile device include Malware, Malicious applications, SMS vulnerabilities, Hardware and Operating System vulnerabilities, improper management of proper tools and controls. The vulnerabilities may include Man-In-Middle attacks or Replay attacks or Impersonation due to design flaws in mobile standards or use of weak cryptographic algorithms. Mobile Cellular Network Vulnerabilities: Mobile Cellular Network threats can have different directions. In M-Commerce transaction, the impacts of packet with vulnerabilities are more than circuit switched ones. Mobile Cellular network can be damaged by paging attacks on the border of mobile operator’s network. The link between the Internet and cellular network can be considered at first border where as 3G network link to subscriber is the second one.

DoS and flooding attacks could affect the traffic dramatically. TCP SYN based attack is also a possibility as there is TCP based traffic from internet to our 3G subscriber’s subnet. Similarly UDP based attacks can also increase the number of paging and amount of CPU usage hugely. IP address spoofing, IPV4 exhaustion, worms/viruses, Malware or botnet members are the threats included into Cellular network due to inclusion of Internet. CS paging channel can also be affected due to PS channel attacks. While using Internet, the firewall protection is not always present in mobile devices. Mobile devices are connected with other devices and Internet through communication ports. If the communication ports are not secured with firewalls, security vulnerability may occur through intruder. All internet browsing threats are applicable to this network also. Various Internet Security threats are: • • • • • •

Botnets can spread all type of malware and viruses. It can be used for Denial of Service attack. Hacking can find the weaknesses of security setting and can install Trojan horse to access information. Malware can steal, alter or delete sensitive files, can give false information about security problem or can take control of your computer. Pharming, Phishing and Spoofing are another types of online frauds which are used by cyber criminals to steal personal and financial information either by giving an impression of working on real site or by sending fake e-mails and text messages. Trojan horse is a malicious executable program that can hack and delete file from computer by installing itself and running automatically once it is downloaded. Wi-Fi Eavesdropping is used by a cyber criminal to listen information virtually that is shared over an unsecured Wi-Fi network.

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Figure 3. WAP model

•

SQL Injection allows the attacker to execute malicious database queries without the need to authenticate the web site.

Payment Gateway and Web Services Vulnerabilities Wireless application gateway of merchant is the next node of an electronic business using the internet. Wireless application protocol functionality is adopted by mobile devices for the web contents. WAP supports WML (Wireless Markup Language) and WML script for the lightweight features to be able to run on low memory, low bandwidth availability of mobile devices (E. Chien, n.d.). • • • • • • • •

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WML viruses are unlikely as there is no HTML viruses present currently. Joke or Trojan type contents are possible for WML. WML Scripts also rule out the possibility of viruses where as infinite loops, fake content, joke or Trojan type content can be carried through WML Script. WML files are stored on a traditional web server. A malware infected web server may inject malicious code into WML Script files to spread malicious code to many WML (Script) hosting sites via a traditional virus. WAP Push Architecture allows information to be transmitted to a device from Push Proxy Gateway to the client. Malicious executable content can be transmitted if the acceptable content-type is not checked properly. The error in verification of client’s requested service may result spamming, denial-of-service, malicious code transmission vulnerabilities. Price manipulation attacks can be done on web application proxy by modifying the payable amount. Remote command execution can be devastating when an attacker can execute operating system commands due to inadequate input validation. The resultant is unauthorized access and replay attacks. An attacker can also sniff the traffic to discover user’s authentication and/or authorization if the authentication parameters or session ID’s does not pass over SSL (Secure Socket Layer).

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Database Vulnerabilities In mobile transaction chain, database can be of two categories: • •

Database in mobile platform. Database in Web services platform.

Databases in mobile platform (Ghorbanzadeh et al., 2010) works as a client server model where mobile devices carry a light database and serve as a client. Mobile database system is a distributed database system where nodes move from one base station to another to give continuous connected operation possible. The database can be distributed among wired and wireless components. Due to this distributed nature the issues that are involved in mobile database are data confidentiality, identification, authentication and access control. Access to dysfunction the provider services by targeting HLR, content servers and signaling nodes can be of types DoS, SYN Flood, application layer attacks such as SIP Flooding, buffer overflows, RIP flooding. Over billing attack can be on operator’s management elements for example AAA, HLR, and VLR etc. Database on web servers have the traditional attacks which also affect the chain of the mobile financial transaction. • • • • • • • •

Brute Force attack for password hacking. Cross-Site Scripting to capture context of user’s current session. Data tampering to violate the integrity in a data store by modifying the local data. Dictionary attacks to access username, password and coding methods. SQL injection to gain access to the database with unavailable privileges to steal or modify information or destroy data. Weak Audit Trial can lead to leakage of sensitive data which may represent organizational risk. Default accounts and configurations parameters may exploit or discover databases for attacking purpose. Data Security Control required to be in pace to handle massive data growth which is primary requirement to enforce policies.

MOBILE TRANSACTION SECURITY TECHNIQUES Business Models Business model is logical architecture of product, service and information flows through the involved actor and their role in it. M-payment services must support the transactions between one customer to another customer (C2C) or from a business to customer (B2C) or between businesses (B2B). Business models in internet Ecommerce are also applicable to mobile commerce. EShops, EAuctions, Third party market place, Value Chain integration model, The Hub or the portal model, Value chain service providers, Information brokerage, Trust services, Process outsourcing model and Virtual organizations are some of the E-commerce business models. M-Commerce have all 205

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the business models of E-Commerce with its wireless net facility. Besides that M-Commerce business models includes mobile portal, WAP gateway providers, and content providers for contacting customer directly or via mobile portals. The actors in mobile electronic transactions are customers, merchant, banks and mobile network operators. A survey conducted by members of Smart Card Alliance contactless Payment Council, Mobile Payments Work Group proposes four potential mobile payment business model scenarios: • • • •

Operator Centric model which faces several frauds as well as lack of business relationships between merchant and operators. Bank centric model which may not likely to be successful due to added cost of installation to the bank or customers also be reluctant as there may not be permission to add other applications. Peer to Peer model is a way to use mobile phones to eliminate the existing payment ecosystem. The service providers also experience the risk of theft / fraud. Collaboration Model has greatest potential for long term success. Here also service manager have risk of managing sensitive customer data and authentication.

Design Technology The complex transaction between the business model actors needs safe exchange of information. Two approaches Privacy by Design and Security by Design are applicable to address information security and privacy for operation of business or organization. Strong security is essential for privacy on the other hand privacy principles is important for information security. Privacy refers to protect personal information where as security refers to protect activities and assets of both people and enterprises. The fundamental principles of privacy by design are also supported by security of design with its approach towards people and enterprises. The principles are: • • • • • •

Proactive not reactive, Preventive not remedial. Privacy through default setting or secure by default. Embed privacy or security into design of architecture. End-to-end security for confidentiality integrity and availability of all information for individual or for all stakeholders. Visibility and transparency will strengthen the business practices. Respect for the users will protect the interest of individual for privacy by design and for security by design both individual and enterprise interest will be protected.

Security Algorithm M-payment system can be broadly classified as account based payment system and mobile POS payment system. Account based payment system may be mobile phone, smart card or credit card based. The other real time, pre-paid or post-paid may be the timing of the payment. Short Message Service (SMS), Wireless Application Protocol (WAP), Unstructured Supplementary Service Data (USSD) and K-Java on GSM network and NFC are the methods for m-payment services.

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SMS Security Algorithms The main security algorithms (Shital & Prasad, 2015) used now-a-days are: 1. 2. 3. 4. 5.

Data Encryption Standard Algorithm (DES): DES uses large keys to provide integrity and the authentication. The variant of DES such as triple DES are also used to encrypt the data for SMS transfer of information. Advanced Encryption Standard Algorithm (AES): AES is a symmetric key algorithm where same key is used for encryption and decryption. It provides better security than DES. Authentication and integrity is provided by this algorithm. Diffie-Hellman algorithm is used for secure key exchange. Rivest Shamir Adelman Algorithm (RSA): RSA is a public key encryption algorithm. The plain text of SMS is encrypted in blocks. Many attacks are prevented by the RSA algorithm. Elliptic Curve Cryptography: This algorithm contains smaller key than the other public key algorithms and hence suitable for mobile environment. Based on Abelian group addition and multiplication asymmetric public key process is applied in Elliptic Curve Cryptography. SIM Application Toolkit (SAT): Used for communication between mobile client and payment sever using SMS. Data integrity and authentication is maintained by message digests like SHA and MDS5 with triple DES data encryption standard.

The disadvantage is that for the protection, network security should be trusted, no end-to-end security is provided by the system.

WAP Security The security in WAP maintains through Wireless Transport layer security (WLTS), Wireless identity Module, WAP public key infrastructure, WML Script Sign Text, and End-to-End Transport layer security. The WLTS protocol provides security on the transport layer between WAP client in mobile device and WAP server in the WAP gateway. Wireless Identity Module (WIM) is used for storing secret keys for authentication and non-repudiation. WML Script Sign Text allows user to digitally sign a transaction. WPKI is used for wireless environment analogous to traditional PKI which has three levels of transport layer session security. WLTS class1, WLTS class2 provides encryption and gateway authentication. WTLS class3 provides encryption and two-way authentication. ‘WAP gap’ (Nambiar et al.,2004) is a security problem of WAP gateway where encrypted message sent by end system can become a clear text while processing.

GSM, GPRS, and UMTS Security GSM network grants a call after verifying the subscriber identity. Subscriber identity IMSI authentication is done by HLR/ AuC using authentication algorithm (A3) and authentication key (Ki) whereas ciphering is done by encryption key (Kc) which in turn generated by A8 algorithm. Data and signaling encryption uses A5 algorithm with key Kc. UMTS is the evolution in GSM network through GPRS with enhanced multimedia application. UMTS and GPRS both use the concept of Authentication vector which comprises of:

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1. 2. 3. 4. 5.

A random number. The expected response. Key for encryption. Integrity key. Authentication token.

After VLR/ SGSN authenticate the user from HLR /AuC cipher key is applied for further processing to encrypt the user data and signaling information.

NFC Security NFC is used as POS technology which enables electronic devices to establish radio communication with each other within a predefined distance between them. For the communication NFC uses tags with digital signatures. The tags can be authenticated online or offline basis using tag’s information. For secure communication encryption is done by AES keys of 128, 192, or 256 bits. Key exchange on insecure channel is done by Diffie-Helman algorithm. Kavya et al., (2014) have proposed an architecture to handle the security problems of NFC technology such as eavesdropping, data modification, man-in-the-middle attack, replay attack. Whereas data corruption and spoofing has not been considered in this proposal.

MOBILE DATABASE SECURITY In mobile computing network fixed host which is the wired part of this network communicates with Mobile Unit (MU) or Mobile Host (MH) via base station. Base station serves in an area called cell. Within the cell base station is the medium between wired part (FH) and the wireless part (MU) of the mobile network. The data exchange between mobile host (MH) and data base station (FHs) should be consistent. Mobile Host (MH) database server architecture is further classified as: • • • •

Thin client architecture. Full client architecture. Flexible Client-Server Architecture. Client-Agent Server Architecture.

Mobile transaction depends on the Mobile Database System (MDS) which consists of Database servers (DBSs). MHs access data from database servers installed at MSS or FH. A logical unit of database processing is called transaction. A transaction must have ACID properties. The ACID properties are: • •

208

Atomicity: Transaction is either fully completed or not performed at all. Recovery technique should undo any effect caused by a failed transaction. Consistency: A transaction takes the database from one consistent state to another. The database should be consistent after the transaction processing.

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Figure 4. Mobile database system architecture

• •

Isolation: The isolation property ensures that the concurrent execution of transactions happen in such a way that it may happen if the transaction were executed serially. Providing isolation is the main goal of concurrency control. Durability: Durability means after transaction commit the database state will remain same even on power loss, crashes or errors.

ACID properties must be maintained in mobile environment also. The mobile distribution introduces the concept of Location-Dependent Data (LDD). LDD distribution depends on geographical locations, so it is defined as spatial distribution while the conventional distribution is called temporal distribution. The temporal distribution mainly considers local availability of data whereas in spatial distribution the geographical location must also be included.

Effect of Mobility on ACID Property • • • •

On Atomicity: If the transaction fails the partial result is removed from the database by transaction execution log stored in server. In mobile transaction a mobile unit gets connected and disconnected to several servers as it is difficult to get a compact transaction log. On Consistency: For the presence of location dependent data (LDD) mobile transaction requires two types of consistency namely spatial consistency and temporal consistency. On Isolation: In mobile environment a mobile unit goes through different cells which in turn results in Location Dependent Data (LDD). So concurrency control mechanism must enforce isolation for each region separately and also for entire transaction. On Durability: Mobile System supports regional as well as global durability. Regional durability is enforced for spatial replica while global durability is enforced for temporal replica.

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Characteristics of Mobile Transactions As compared to conventional database transactions, • • • • • • •

Mobile transactions are long-lived transactions because blocking of transactions takes place due to frequent disconnections and mobility of data and users. Currently executing transactions may move to new cell with the movement of MH. This may result in updating of routing table as well as handling of hand over processes. Distributed transactions processing is required in mobile environment. Also the output of committed transaction must be saved at stationary database server. Environmental factors and limited computing capacity of MH may interrupt transaction execution which may result in abortion of transaction. Mobile environment supports disconnected transaction processing due to long blocking at mobile host if required data is not available. Mobile transaction should have concurrency control mechanism to avoid inconsistency of data. Mobile transaction should also support recovery mechanism.

Issues in Mobile Database Transactions as Compared to Conventional ACID Transactions Mobile database transaction may have many issues as compared to conventional ACID transactions such as: Mobility of mobile host, unpredictable hand off, forced disconnection, presence of LDD, limited battery life of mobiles etc. To resolve the above mentioned issues, Relaxing ACID properties are used which may result in: • • • •

Reduction of abort frequency in mobile transactions. Long blocking mobile transactions should be minimized which may increase concurrency. Mobile host should process and commit transactions locally after disconnections. Wireless environment limitations and restrictions make it difficult to retain consistency of data while sharing takes place. Mobility requires more logging for DBMS recovery process. Caching at MH provides the data but cache consistency should be maintained.

DBMS Execution in Transaction Models Different transaction models show varied support on ACID properties (Serrano-Alvarado et al., 2001).

Kangaroo Transaction Model Mobile transactions in KT are entirely executed at a multidatabase system or wired network. KT transaction model is based on open nested and split transaction. Mobility is considered by splitting of transaction in Joey transactions. ACID properties are not affected by mobility as transaction execution is done at SH. MH mobility and disconnection is handled by linked BS database.

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Clustering Model It is based on fully distributed system divided into semantically related clusters. Transaction validation is done in two steps. At MH local commit of weak transactions is done in disconnected mode and in connected mode two phased commit protocol is used strict transaction. Strict and weak versions of data are used to achieve full consistency by merging different copies of same data located at different clusters. To control concurrency 2PL protocol is used. It cannot guarantee durability before commit.

Pro-motion Model Pro-motion model supports transaction processing using compact agent and compact manager which are basic units of caching and control. The compact agent and compact manager at each MH provide cache management, transaction processing, concurrency control, logging and recovery. The mobility manager at BS is responsible for transmissions between agents. 2PL protocol is used for concurrency control.

Semantic Model Semantic based uses object semantic information to manage MH autonomy in disconnected mode. This approach splits large and complex data into smaller manageable fragments as a solution to concurrent operations. Atomic or non-atomic transactions are supported by MH. (On database system global atomicity is maintained by autonomy of each database system.) Consistency depends on the careful splitting and merging operations of fragments. Two phase locking is used to ensure serealizability. Semantics based model ensures durability.

Security in Mobile Database Mobile databases are distributed databases having features to support mobility of MH in wireless environment. Depending upon the transaction model database evolve different strategies. To support handoff and frequent disconnections which are the main characteristics of mobile transaction log is maintained in MH as a well as in FH databases. This important information require secure environment. The unauthorized access to the mobile databases in MH or in FH server can lead to hacker attacks like leak, change or damage data etc. Viruses can damage mobile terminal equipment and backend databases.

Authentication While connect or disconnect mobile clients mobile databases need to verify identity and can permit to query, modify the cache. WPKI (Wireless public key system) can be used in transaction process to ensure the confidentiality, integrity and no repudiation to complete the authentication of communication triple encryption authentication is also public key cryptosystem to authenticate the user. Use of dual authentication mechanism increases the confidentiality of data. Dynamic authorization is used for flexible control of database security. Security in mobile device is difficult as authentication mechanism should be distributed and various components of the authenticator in the network need to communicate with each other to authenticate a user. Open System Environment (OSE), Portable Operating System Interface (POSIX), and the Government Open Systems Interconnections Profile (GOSIP) are the standardization efforts for the transparent authentication across network. 211

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Data Confidentiality Data in the mobile database system need to be encrypted to prevent leakage. The local database on the mobile device is encrypted so that from the stolen device the data leakage can be prevented. The client application applies symmetric key encryption algorithm such as AES for the data and password encryption. C-SDA is a client based security component used for querying encrypted data while preserving personal privileges. Encryption can be done either within the databases if DBMS features permits or outside the DBMS where encryption processing and key storage and protection are the job of encryption servers.

Access Control To protect data integrity user privileges to change data need to the monitored by access control mechanism. Rules can be centralized or distributed. Data at different security levels can be accessed and shared in Multilevel Secure database management system (MLS/ DBMS). Security policies of MLS/ DBMS can be classified into Discretionary Access Control (DAC), Mandatory Access control (MAC) and Role Database Access Control (RBAC). MAC model is better than DAC whereas RBAC is a new technology with less complexity and cost of security administration.

FUTURE DIRECTIONS The existing transaction models cover partial requirements of mobile transaction behavior such as Dongle model fulfills all ACID properties but concurrency may get affected due to the existence of mobility manager. The improvement of transaction model can be in the direction of cache consistency, prolonged disconnection management or transaction with minimum intervention of database server by affiliating various surrogate objects (Ravimaran & Mohamed, 2011). The need of security also varies with the payment technology types and its architecture. Cryptographic algorithms such as RSA or SHA-1 are used for current systems are also not reliable in terms of performance, security weaknesses or storage requirements. An ID based client authentication with key agreement protocol (Debiao et al., 2012) for client-server environment on ECC can be an alternative solution for better network security. The standardization efforts on security measures like Public Key Infrastructure need to be more enhanced for large scale heterogeneous mobile system. So there is a need of robust transaction security framework which can hold all the security issues discussed in this chapter. Besides that new challenges such as big data, cloud computing requires suitable architectural development in mobile technology.

CONCLUSION In this chapter mobile transaction layers, mobile transaction models and payment modes have been covered. The chapter identifies threats associated with elements involved in transaction flow. Security measures were discussed for each part including databases for mobile transaction. There is immense scope for improvement to secure the mobile transactions while mobility is taken into consideration.

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Goyal, V., Pandey, U. S., & Batra, S. (2012). Mobile banking in India: Practices, challenges and security issues. International Journal (Toronto, Ont.), 1(2), 56–66. Gu, T., Pung, H. K., & Zhang, D. Q. (2004, May). A middleware for building context-aware mobile services. In Vehicular Technology Conference, 2004. VTC 2004-Spring. 2004 IEEE 59th (Vol. 5, pp. 2656-2660). IEEE. doi:10.1109/VETECS.2004.1391402 Hnaif, A. A., & Alia, M. A. (2015). Mobile payment method based on public-key cryptography. International Journal of Computer Networks & Communications, 7(2), 81. doi:10.5121/ijcnc.2015.7207 Kavya, S., Pavithra, K., Rajaram, S., Vahini, M., & Harini, N. (n.d.). Vulnerability Analysis And Security System For NFC-Enabled Mobile Phones. Academic Press. Khan, W., & Ullah, H. (2010). Authentication and Secure Communication in GSM, GPRS, and UMTS Using Asymmetric Cryptography. IJCSI, 10. La Polla, M., Martinelli, F., & Sgandurra, D. (2013). A survey on security for mobile devices. IEEE Communications Surveys and Tutorials, 15(1), 446–471. doi:10.1109/SURV.2012.013012.00028 Madria, S. K., & Bhargava, B. (1998, July). A transaction model for mobile computing. In Database Engineering and Applications Symposium, 1998. Proceedings. IDEAS’98. International (pp. 92-102). IEEE. doi:10.1109/IDEAS.1998.694363 Misra, S. K., & Wickamasinghe, N. (2004). Security of a mobile transaction: A trust model. Electronic Commerce Research, 4(4), 359–372. doi:10.1023/B:ELEC.0000037082.39182.3a Mobarek, A., Abdelrhman, S., Abdel-Mutal, A., Adam, S., Elbadri, N., & Ahmed, T. M. (n.d.). Transaction processing. Techniques in Mobile Database: An Overview. Nambiar, S., Lu, C. T., & Liang, L. R. (2004, November). Analysis of payment transaction security in mobile commerce. In Information Reuse and Integration, 2004. IRI 2004. Proceedings of the 2004 IEEE International Conference on (pp. 475-480). IEEE. Piao, C., Wang, S., Wen, J., & Luo, Y. (2012, September). Mobile Commerce Trust Model and its Application for Third Party Trust Service Platform. In Commerce and Enterprise Computing (CEC), 2012 IEEE 14th International Conference on (pp. 120-125). IEEE. Priya, A., Dhanapal, D. R., & Dinesh, S. (2012). A Method of Implementing Dongle Transaction Model in Mobile Transaction Systems using Mobile Agents. European Journal of Scientific Research, 536-549. Rautkar, S. D., & Prasad, P. S. (n.d.). An Overview of Real Time Secure SMS Transmission. Academic Press. Ravimaran, S., & Mohamed, M. A. (2011, June). An improved kangaroo transaction model using surrogate objects for distributed mobile system. In Proceedings of the 10th ACM International Workshop on Data Engineering for Wireless and Mobile Access (pp. 42-49). ACM. doi:10.1145/1999309.1999319 Rondeau, L. (2014). Mobile Device Vulnerabilities & Securities. Academic Press. Selvarani, D. R., & Ravi, T. N. (2012). A survey on data and transaction management in mobile databases. arXiv preprint arXiv:1211.5418

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Serrano-Alvarado, P., Roncancio, C., & Adiba, M. E. (2001, October). Mobile Transaction Supports for DBMS. In BDA. Singh, A. (2013). Managing malicious transactions in mobile database systems. (Doctoral Dissertation). University of Missouri, Kansas City, MO. Smith, P., & Sankaranarayanan, S. (2012). Smart Agent based Mobile Shopping and Secured Payment. International Journal of Emerging Trends & Technology in Computer Science, 1(3), 240–254. Starnberger, G., Froihofer, L., & Göschka, K. M. (2009, March). QR-TAN: Secure mobile transaction authentication. In Availability, Reliability and Security, 2009. ARES’09. International Conference on (pp. 578-583). IEEE. ur Rehman, S., & Coughlan, J. (2013, January). An Efficient Mobile Payment System Based On NFC Technology. In Proceedings of World Academy of Science, Engineering and Technology (No. 78, p. 1680). World Academy of Science, Engineering and Technology (WASET). Valcourt, E., Robert, J. M., & Beaulieu, F. (2005, August). Investigating mobile payment: supporting technologies, methods, and use. In Wireless And Mobile Computing, Networking And Communications (WiMob’2005), IEEE International Conference on (Vol. 4, pp. 29-36). IEEE. Wu, G., Mizuno, M., & Havinga, P. J. (2002). MIRAI architecture for heterogeneous network. Communications Magazine, IEEE, 40(2), 126–134. doi:10.1109/35.983919 Wu, H., Li, X., Dai, W., & Zhao, W. (2010, July). Mobile payment framework based on 3G network. In Proceedings of the third international symposium on electronic commerce and security workshops (ISECS’10), (pp. 172-175). Xu, J., Pan, T., & Zheng, L. (2012, May). Design and Implementation of High Security Mobile Payment System. In Communication Systems and Network Technologies (CSNT), 2012 International Conference on (pp. 493-497). IEEE. Yeo, L. H., & Zaslavsky, A. (1994, June). Submission of transactions from mobile workstations in a cooperative multidatabase processing environment. In Distributed Computing Systems, 1994, Proceedings of the 14th International Conference on (pp. 372-379). IEEE. Younas, M., & Awan, I. (2013). Mobility management scheme for context-aware transactions in pervasive and mobile cyberspace. Industrial Electronics. IEEE Transactions on, 60(3), 1108–1115. Zhang, F. (2012). Secure Mobile Service-Oriented Architecture. Academic Press.

ADDITIONAL READING Lin, Y., & Chlamtac, I. (2000). Wireless and Mobile Network Architectures. Wiley. Mookhey, K. K. (2010). Common Security Vulnerabilities in e-commerce Systems. Retrieved July 7, 2015, from http://www.symantec.com/connect/articles/common-security-vulnerabilities-e-commerce-systems

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Schiller, J. (2003). Mobile Communications. Boston, MA: Addison-Wesley Longman Publishing Co., Inc. Strassmann, P. A. (2009). The Internet’s Vulnerabilities Are Built Into Its Infrastructure. Retrieved July 8, 2015, from http://www.afcea.org/content/?q=internets-vulnerabilities-are-built-its-infrastructure

KEY TERMS AND DEFINITIONS Authentication: Authentication is the process of verification of user identity for system access. Business Model: Business model is representation of an organization to analyze its components for products and its revenue. Confidentiality: Confidentiality provides rules for secure access of information by authorized users. Integrity: Integrity prevents alteration of data in transient state of the system by specified set of rules. M-Commerce: M-commerce is selling and purchasing of items electronically using wireless technology. NFC: Near Field Communication is a wireless technology that connects devices within a short distance for data sharing. Non-Repudiation: Non-Repudiation is a method of guaranteeing a user identification which user cannot deny later. Rich Client: A rich client depends on the resources installed locally as well as distributed on the network. Thin Client: A thin client requires most of the information from network resources. WAP: Wireless Application Protocol provides a platform for wireless network to access internet facilities by a set of communication protocols.

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Consumer Perception to Mobile Commerce Neeru Kapoor Delhi University, India

ABSTRACT Consumers’ perception and opinion about mobile commerce activities play a very important role in their success. Industry people should understand consumers’ worries, fears and phobias Slow connections, privacy and threat of government regulation has played an important role in limiting the growth of mobile commerce. Lack of information about mobile commerce is also one of the biggest problems being faced by the industry people. Moreover, most consumers are not totally convinced about buying something from their mobile devices as they do not consider it a satisfactory experience. Sticking to the traditional ways of shopping is another major factor in the slow growth of mobile commerce. Mobile customers have raised expectations in terms of service, convenience, speed of delivery. The difficult tasks for m-commerce is to ensure consumers’ trust by making them feel comfortable with wireless transactions. It is important to find solutions to their consumer problems and serve them better than the competitors and provide them with relevant incentives to keep them coming back again.

INTRODUCTION Mobile commerce is a fast developing concept. Just a decade before, nobody could image that there will be a concept called mobile commerce. But over the last few years, there has been enormous progress in the development of digital technologies. This has led to the massive spread of mobile devices in our society, in particular the mobile phones and that too smart phones. People use these devices for many reasons starting with communicating with each other, taking pictures, listening to music, playing games and many others. Thanks to mobile internet access using mobile phones in the decision making process of product purchase is also becoming increasingly popular and is making deep roads into the day to day lives of the common man of the country. The high penetration rate of mobile phones has even given companies an opportunity to affect consumers in different ways. More and more businesses choose to use this tool to carry out marketing functions. Mobile advertisements, as one of the most important marketDOI: 10.4018/978-1-5225-0236-4.ch011

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 Consumer Perception to Mobile Commerce

ing activities have been around for many years now. But, along with growing abilities of mobile phones and increasing access to mobile internet the phenomenon of mobile commerce is gradually becoming more and more important. In recent years, people use their mobile phones more frequently to connect to the Internet. This is the effect of the upcoming of 3G and 4G services, reducing telecommunications charges for the use of mobile Internet access, including in particular the introduction of special tariff plans allowing unlimited data transfer. With the technological developments taking place at a fast pace, mobile phones are constantly evolving resulting in the upcoming of the smart phones of today, which are very much like small computers. Mobile technologies allow companies to carry out various activities, usually aimed at communicating with current and potential customers. Customers can be reached using a wide variety of mobile communication channels. Short text messages (SMS) campaigns have been there for many years as the most popular type of mobile advertisement. Nowadays, they are increasingly being replaced by multimedia messages (MMS) campaigns, which can contain graphics, audio or video messages. With the upcoming of various mobile applications, the utility of this medium for mobile commerce has increased many-fold. According to a report by Boston Consulting Group, there is an ample scope of mobile commerce in India. At present, India has over 800 million mobile subscribers, including 240 million with bank accounts, and 20 million with credit cards; there are 88,000 bank branches and 70,000 cash points. The additional fact is that the half of Indian households is still unbanked, including 42 percent holding at least one mobile phone. The latest BCG report has also projected that the fee-based revenue from mobile commerce could be well over $4.5 billion by 2015 in India. Banks, mobile service providers and device manufacturers all have considerable opportunity to generate this revenue and popularize the concept of m-commerce in our country. It has been found that more and more people use their mobile phones to make purchases. Indeed, contemporary consumers increasingly use mobile phones in the decision making process of the purchase of goods and services. With built-in web browser or a dedicated application, mobile users can search for information about products and even make a purchase. It is a new trend that can lead to fundamental changes in contemporary business. Mobile commerce (or simply m-commerce) refers to conducting any transaction through a mobile device using mobile technologies. Transactions can be initiated or completed by using different portable devices, such as mobile phone or tablet. M-commerce has also given rise to the concept of “showrooming”, which happens when a customer goes to the retail outlets to check out about the product, its features, price, promotional policies, and takes the live demonstration of the product, but instead of buying it from that store, they find the same product at cheaper prices on various mobile apps and finally prefer buying product from those apps.

People’s Perception about M-Commerce Over the past several years, the world has made enormous progress in the development of digital technologies. Thanks to mobile internet access using mobile phones in the decision making process of products is also becoming increasingly popular. The high penetration rate of mobile phones gives companies an opportunity to affect consumers in a different way. Hence, more and more businesses choose to use this tool to carry out marketing functions. In a study conducted by Krzysztof Kapera (2012) titled, “Consumer Perception of Mobile Commerce in Poland”, the author analyzed consumers’ perception of mobile commerce in Poland. The study conducted a survey of 118 Cracow University of Economics students 218

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and presented the findings. Due to the nature of the issues, a specific group of consumers was selected to the study. They were usually young people, more familiar with digital technologies and using them intensively. Their survey findings confirmed that the Polish mobile commerce market is still at an early stage of development. Although surveyed students seek information about goods or services on the Internet using their mobile phones, so far only a few of them have ever made a purchase through mobile phone. It seems the main barrier to the development of mobile commerce in this group of consumers is lack of awareness and knowledge about this form of shopping. Another important factor is also the negative attitude of surveyed consumers, who regard purchases made by mobile phones as complicated and not very safe for buyers. Therefore, further development of mobile commerce in Poland, will depend to a large extent on the intensity of awareness-raising activities, aimed at showing the benefits of using mobile devices to support purchases. The study confirmed that the Polish mobile commerce market is still at an early stage of development. Currently, only a relatively small percentage of consumers use mobile phones to make purchases of goods or services. The main reasons for this state of affairs include lack of awareness and knowledge among consumers about this form of shopping and their negative attitude. Sachin Gupta and Anand Vyas (2014) conducted a study titled, “Benefits and Drawbacks of Mcommerce in India”, and tried to identify through their research paper the factors affecting the adoption of M-commerce in India. Their observation was that there is significant growth of M-commerce applications in India. More and more consumers are opting for m-commerce to achieve better and fast transaction into market. M-commerce is complex in nature and includes changing procedure in market. M-commerce is at the emerging level in India. There is astounding rate of growth in mobile penetration in India. Higher mobile technology and networking is coming day by day. Now a mobile phone is not only used for text SMS or phone call but also be used for many other activities like browsing of internet, chatting or other virtual activities. This research paper identifies the factors affecting the adoption of m-commerce. This paper’s theoretical contribution is to explain as to how m-commerce is developing in India and to identify clear contexts and assistant mechanism. Another study was conducted by Zhi-shuang Chen, Rui Li, Xi Chen, Hao Xu (2011) from China titled, “A Survey Study on Consumer Perception of Mobile-Commerce Applications”. In their study they found out that mobile commerce (m-commerce) can have an important influence on business and society in the future. Hence, m-commerce developers and practitioners must understand consumers’ perception of m-commerce applications in order to better design and deliver m-commerce services. This paper studied Chinese consumers’ perception of m-commerce applications by using the survey methodology. Firstly, 44 mobile applications were adopted on the basis of related study work, and then the web-based questionnaire was employed for obtaining online Chinese consumers’ importance ratings with regard to each mobile application. The survey results found out that there is an increasing interest on m-commerce and its related subjects; however, the consumers’ perception of mobile applications is a less concerned issue. The aim of this work was to investigate how the consumers perceive the m-commerce applications in China. The survey results showed that the Chinese consumers prefer more of the mobile applications because of their convenience, “always on”, and always portable features. This permits its users to engage in activities such as meeting with people or traveling while conducting transactions through their Internet-enabled mobile devices. These results can be useful to m-commerce developers and practitioners to better understand m-commerce from the point view of customers, as well as to better design innovative and satisfying m-commerce applications for meeting customers’ needs. 219

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Clarke, III I. (2001) in his study titled, “Emerging value Propositions for M-commerce”, found out that the mobile devices have been the fastest adopted consumer products of all time with more mobile phones shipped annually than automobiles and PCs combined. Guerley, W., (2000), in his article, “Making Sense of the Wireless Web”, observed that just as is the case for e-commerce in the early years when its unique characteristics were not well understood, m-commerce is in very early stages of development now and little is known about factors that influence consumers’ attitudes and value perceptions about them. Urbaczewski, A., et al., (2002) in their article “Exploring Cultural Differences as a Means for Understanding the Global Mobile Internet: a Theoretical Basis and Program of Research”, emphasized on the fact that while a growing body of literature has pointed out the main value-added elements of m-commerce, the primary drivers for adopting and intending to adopt mobile services remain unclear. Current e-commerce providers, engaged through mobile devices, will find advantage in developing unique m-commerce value propositions founded upon the specific dimensions of “always on,” location centric, convenience, customization, and identifiability as found out by Wen J., Mahatanankoon P., (2004) in their study titled “M-commerce Operation Modes and Applications”. Another interesting study was conducted by Kanwalvir Singh and Himanshu Aggarwal, (2013) in the name of, “Critical Factors in Consumers Perception towards Mobile Commerce in E-Governance Implementation: An Indian Perspective”. Their observation was that mobile commerce (m-commerce) tools and its services are growing at a much faster pace in this digitized world. The competitive race between the various mobile phone companies and the products that they make, offer much competitive price and services to the citizens in their day to day lives. But the common man and the government in every country are all confused and helpless with this dynamic state of the mobile technology and its mservices. The need is so as to be par with or have equally capable standards viz. m-commerce technologies with such new innovative and technological wonderful services so as to offer efficient services to the common citizens. This paper provides an opportunity for the common citizens perceptions based on mobile commerce to be studied and also, finding the critical factors in consumer’s perception towards mobile commerce in e-governance implementation. Aldan Duane and Philip O’Relley (2012) wrote an article on, “Mobile Commerce: Consumer Perceptions of Smart Mobile Media Services (SMMS) and M-Payments”. The focus of their writing was to find out the Irish consumer’s perception about the smart media mobile services and the various m-payment methods. They found out that the preferred m-payment model for Irish consumers is one facilitated through an application provided by banks, whereby the payment would simply be debited automatically from their own bank account. Forty seven percent of consumers indicated that they are willing to pay a surcharge for making an m-payment, from anywhere between 0.25 percent and 2 percent. Consumers are currently most willing to make an m-payment for events, cinema tickets, transport and flight ticketing; booking accommodation; and, parking and road toll fees. Purchasing books, CDs, DVDs, and music downloads feature prominently in the survey results, while fast food purchases, such as for pizza and drive-through, also rank highly. Clothing purchases also rank very highly. Consumers are most willing to make an m-payment: to avoid queuing to pay for a product/service; to avail of special offers not available elsewhere (e.g. early booking of concert/cinema tickets) and, to avail of a discount for paying for purchases using an m-payment. After going through the observations of various people on mobile commerce in India and abroad, it has been found that the concept is emerging fast and is here to stay. Everyone is clear about the success of this concept in future. Thus, it is important for the industry people to understand the various 220

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dimensions of m-commerce clearly for its effective implementation. As discussed, mobile commerce is usually regarded as a form of e-commerce, having its own specific features. Although currently, mobile commerce constitutes a relatively small percentage of the overall e-commerce market, according to the survey findings of Ericsson Consumer Lab, The changing mobile broadband landscape, India 2015, it is expected to account for 24.4 percent of the overall e-commerce revenues by the end of 2017.

M-Commerce vs. E-Commerce While e-commerce continues to impact the global business environment profoundly, technologies and applications are beginning to focus more on mobile computing and the wireless web. In simple terms, M-commerce = E-commerce + Wireless Web. Though m-commerce is relatively new, it has taken the world by storm and is being increasingly used by consumers having mobile phones with Internet facility. Technically speaking, m-commerce is a part of e-commerce which allows a person to conduct transactions using his mobile phone. It is sometimes called as the next generation commerce. Despite obvious similarities, there are many differences between the two concepts: • • • •

• • •

• •

In m-commerce transactions are done using cellular or mobile phones that have access to the Internet, while e-commerce does business transactions using a computer or a laptop. In e-commerce, it is available only at those places where there is net connectivity, while with m-commerce we are free from all such boundaries because the internet is available in the mobile phone itself. E-commerce needs electricity besides the net connectivity whereas there is no such requirement with m-commerce. M-commerce is very portable because mobile phones are very easy to carry. One can do their business transaction from anywhere as long as they have an access to the internet connectivity on their phone. Laptops are also portable but not as light as mobile phones. One has to look for a place to do any transaction because it would be highly uncomfortable using your laptop from anywhere or while one is standing. M-commerce is charged through the caller’s rate, deduction of user’s credit, and mobile banking. E-commerce is charged through the use of credit cards that are swiped in credit card machines or online banking. The GPS services on mobile phones help the marketers locate the m-commerce users and personalize the available services accordingly. This is a significant advantage of m-commerce over the wired e-commerce. People are no longer constrained by time or place in accessing m-commerce transactions. At times they are able to utilize their time better by handling m-commerce transactions while travelling in metro, waiting in line or struck up in traffic jam. All this is not possible so easily through e-commerce. A mobile phone has a built-in ID to support secure transactions whereas a PC is virtually anonymous. Mobile devices are typically used by a sole individual, making them ideal for individualbased target marketing. Mobile phones have a much higher penetration than PCs, so m-commerce producers can be more creative and customizable in designing segmented, lifestyle tools. For instance, using demographic information collected by wireless service providers and information on the current location of 221

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mobile users, more targeted advertising can be done. The advertising messages can be customized based on information provided by consulting the user at an earlier stage or by the history of users’ purchasing habits.

Reasons for the Growing Importance of M-Commerce for Consumers The scope of m-commerce is increasing by leaps and bounds. In a country where there are 930 million mobile subscribers against the figure of 160 million Internet users, it is quite possible for m-commerce to grow bigger than e-commerce. Some of the prominent e-commerce players have clearly recognised this fact and are developing special mobile websites and apps. Some of the examples of m-commerce transactions include: booking of air and railway tickets, buying e-tickets for movies and theatre, conducting banking transactions, and getting recharges done. Several apps are coming up for selling clothes, accessories and shoes etc, such as, Amazon, Myntra, Jabong, Paytm, FlipKart, Snap Deal, Shop Clues etc. Mobile banking is another very good example of m-commerce, which is coming up in a big way. Various factors are held responsible for the growth of m-commerce in India, some of the important ones are depicted in Figure 1and discussed as under: 1.

Increasing Speed and Efficiency: Mobile commerce enhances speed and efficiency with which mobile transactions take place. It provides more flexibility of entering into transactions from anywhere and anytime of the day, ensuring 24*7 availability of the medium. People do not have to reach home or to a cyber cafe to pay their bills or make an online purchase.

Figure 1. Reasons for the growing importance of m-commerce

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2.

Availability of Affordable Mobile Devices: It has been found that mobile devices like, cell phones and tablets are available at far more cheaper prices than computers and laptops. So majority of people in India are opting to purchase these mobile devices and get connected with the world through internet on these devices. 3. Speedy Internet Connectivity: In the last 3 to 4 years the Internet connectivity on mobile devices has increased tremendously. With 3G and the arrival of 4G, it has increased the speed of internet connectivity many fold and this would definitely have an impact on the growth of m-commerce in India. Now m-commerce customers are not bound by limited wired and Wi-Fi Internet connections on computers and laptops. Even places, where there is no broadband or no computer, people can buy goods and services with the help of their mobile internet connectivity. 4. Low Tariff Rates: Mobile data tariffs in India are the cheapest in the world. This is one of the reasons for the growing usage of mobile Internet and eventually m-commerce. 5. Increased Security: Mobile apps are considered relatively more secure and free from viruses and other threats, thereby increasing their credibility and reliability. Even if some fraudulent activity takes place, it is comparatively easier and quicker to track the credit with the help of GSM/GPRS/ GPS services on mobile devices. 6. Personalised Services: M-commerce keeps an account of the personalised information of their regular customer, so are able to provide them with more personalised services. 7. Affordable Prices: Generally mobile apps provide affordable prices and variety of sales promotion incentives to their regular customers. This is one of the most important reasons for the pricesensitive Indian consumers. 8. Improved Data Security: Is provided through mobile apps which has helped them a lot in winning over the faith of the consumers. 9. Variety of Payment Options: Mobile transactions provide variety of payment options to the consumers. They can pay by credit or debit cards or the option of cash on delivery is also provided to them. a mobile payment can also be made by an app, data connection, IVR and even SMS, so anyone who has a bank account can make a transaction. This has really helped in reducing the dependencies of people on cash to a large extent. 10. Government Policies: To bridge the digital gap in the country, in September this year, the Indian government had proposed a scheme to spend INR 7860 crore to distribute 2.5 crore mobile phones and 90 lakhs tablets specifically to the rural population. Moreover, government wants to give tablets to the college students. As mentioned earlier, these devices are more affordable than computers but still serve the primary functions. If these schemes are successfully implemented, then the mobile device user base will further grow and in turn increase the customer base for m-commerce services. In addition to this, since reducing cash-dependencies of Indians is one of the biggest challenges of the government to alleviate the status of Indian Rupee, mobile transactions could come as a big relief. As RBI is already encouraging people to use credit cards and debit cards, together with m-POS systems, m-commerce has a bright future in India.

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Figure 2. Difficulties in implementing m-commerce

Problems or Difficulties Faced by Consumers in M-Commerce Slow network connections, lack of Internet connectivity, privacy, information security and even the threat of government regulation has played an important role in limiting the growth of mobile commerce in India. There are various reasons due to which m-commerce is not growing at the speed at which it is expected. An attempt has been made to list out some of the important ones in Figure 2, as under: 1.

2. 3. 4.

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Lack of Information: About mobile commerce is one of the biggest problems being faced by the industry people. Majority of consumers are unaware about the various mobile applications which are available to them. There are others who might be aware of m-commerce applications but they do not know how to install them on their devices due to lack of knowledge and experience. Not Very Popular: Mobile apps are not very popular in India as majority of the mobile phone users are using the basic models of mobile phones which are not well equipped to operate such apps. Lack of Faith: People are sceptical about the reliability of m-commerce transactions as it’s an emerging medium. Most consumers are not totally convinced about buying something from their mobile devices as they do not consider it a satisfactory experience. Old Habits: Sticking to the traditional ways of shopping is another major factor in the slow growth of mobile commerce in our country. People are used to having face to face interaction with their sellers and they do not believe in buying the merchandise before touching it and having the firsthand feel of it.

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5.

Selected Coverage: M-commerce is not considered as suitable for merchandising all types of products. Only some specific types of goods or services are generally considered suitable for mobile transactions. 6. Non-Impressive: Limited screen, memory and computing powers of mobile phones is also one of the limiting factor for m-commerce. Some of the people are of the view that the small screen of mobile phones does not give a very impressive view of the goods or services and is not able to highlight their various features clearly. 7. Language Barrier: In India, mostly people are not well-aware about the English language and are not very comfortable in understanding and corresponding in English. So for those people it becomes really difficult to carry out transactions over internet through mobile devices. Language becomes one of the major limiting factor to purchase, hire and sell a particular product or services through m-commerce. 8. Lack of Trust: One of the difficult tasks for m-commerce is to ensure consumers’ trust by making them feel comfortable with wireless transactions. People are not very comfortable entering their personal information into their mobile phones, fearing loss or theft of their devices or exposing their credit card information to public wireless networks. 9. Connectivity Issues: Slow network connections and lack of internet connectivity is one of the major hurdle in the way of the success of m-commerce. Even there are connectivity and stability issues in mobile services due to failure in the network delivery. At times there is limited speed and efficiency offered by mobile service providers. 10. Insufficient User Experience: Lack of information about the availability and utility of various mobile apps, insufficient user experience and lack of training are other important bottlenecks to be taken care off. 11. Fear of Loss of Money: The chances of losing money through mobile payment are many in mcommerce. At times consumers are not able to receive the refunds in time, which is capable of shaking their faith in the system. 12. Threat to the Safety: Fear of hacking, virus or spam is there. Threat to the safety of user’s privacy information constantly bothers them.

Consumer’s Perception about Mobile Commerce Consumers’ perception and opinion about mobile commerce activities play a very important role in their success. It is expected from the industry people that they should understand consumers’ worries, fears and phobias and should make an effort to satisfy them. It is very important for marketers to find out as to why people buy and what are their aspirations and expectations. It is very important for marketers to give personalised services tailored to the needs of each and every customer keeping their basic profile, location, and need into consideration if they want mobile commerce to be a success. It has been noticed that mobile customers have raised expectations. They expect higher standards in terms of service, convenience, speed of delivery, competitive price and choice. Customer service rather than the price of the product is considered as the number one reason for the customers remaining loyal to a company in mobile marketing. With the m-payment services, paying all types of utility bills such as water, electricity and gas bills has become much more convenient via mobile phone. People can pay their bill from anywhere and anytime via their mobile phone, thereby they do not need to stand in a queue therefore they can save their 225

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lots of time. Mobile commerce services also enable users to book movie tickets via a mobile phone. Now, people can enjoy watching movies by planning for that anytime in an easier and hassle free manner. Now, scheduling any trip to anywhere and anytime has become convenient with the m-commerce services available in India. People are now able to book train or flight tickets via their mobile phone and have the pleasure of the journey. Consumer expectations and perceptions about mobile commerce are generally formed by their past experiences. It depends to a large extent on the ease with which they are able to look for the product by searching or browsing on their mobile. Price, product specifications and availability information has to be competitive and correct. Speedy and timely delivery of the products is a must to ensure a satisfied consumer. Privacy and security of the personal information provided plays a very important role. Above all a satisfactory return policy enabling straightforward return or replacement becomes equally significant in forming consumers’ perceptions in mobile commerce. Thus, it is important to create an environment in which consumers perceive their m-payments to be safe and secure. The cash on delivery option is generally included in mobile commerce to take care of this safety and security option to the consumers. It is expected from the telecom service providers to take care of the slow network connections and lack of internet connectivity. They should work hard to provide regular and smooth connectivity and stability in mobile services to increase the efficiency of m-commerce transactions. Mobile commerce has an enormous potential as a new technology even though it is still in its infancy. In this case marketers need to keep ideal customers for life by building strong emotional and rational bonds with them. It is important for the industry to effectively find solutions to their consumer problems and serve them better than the competitors and provide them with relevant incentives to keep them coming back again and again. In the light of all this discussion, we would like to discuss the 7C’s framework, as given to us by A.T.Kearney (2000), which goes a long way in increasing the efficiency of m-commerce transactions.

The 7C’s Framework The 7 C’s Framework outlines the major components that add value and can contribute to the quality of m-commerce experience, as depicted in the Figure 3. In essence these seven factors play a significant role in improving the consumer’s perception towards m-commerce: 1.

2.

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Convenience: Convenience of buying through mobile is one of the most important reasons for the success of mobile-commerce. The customers can have an easy and quick access to display information on their mobile screens. Ease- of- use, ease-of-navigation, and fast response times are among the most important factors in establishing m-commerce options, whereas a slow response time will have a significant negative impact. Content: Content is relevant and useful information directed at the needs and wants of the target audience provided by the various mobile apps. Companies have the opportunity to provide rich, up-to-date information, expert insights, and a wide range of products, which can enhance the brand’s value proposition. Content is considered to be a ‘sticky’ application as it invites visitors to spend larger periods of time on the site. It can help educate prospective buyers and create a sense of belongingness for the specific brand.

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Figure 3. The 7C’s framework

3.

4.

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Customisation: Customisation involves tailoring the presentation of product information through mobile apps to individuals, based on their profile information, demographics, or prior transactions. M- Commerce companies can track a customer’s purchase history and modify their services, types of information provided, and targeted benefits. At times even they customise the product as per their requirements. As a result of all this, customisation creates the feeling of a one-to-one relationship and highly brand loyal customers. Community: Online communities are emerging on mobile phones as new gathering places for consumers with similar interest. These apps, such as Facebook, Twitter, What’s app allow members to interact with one another, share information and access a wide range of services. A unique characteristic of an online community network is that the app includes both editorial content and the member driven content. These communities foster a sense of belonging among the members and bring them back to the app. It allows the customers to deepen their experience with a brand and build more personal connection, as depicted in the Figure 4 and can create emotional loyalty. Connectivity: Connectivity is concerned with user-to-app connectivity. User-to-app connectivity focuses on providing incentives for users to connect back to the app. The development of incentive programmes, loyalty programmes, which provide targeted and unique benefits to customers, serves this purpose and helps to build strong brand loyalty and satisfied consumers. Customer Care: M-commerce often require assistance and reassurance. As customers share their personal information on various mobile apps, they have a strong security and privacy concern. Therefore m-commerce companies need to provide constant reassurance to all their customers that the information provided by them will be kept fully confidential and will not be shared with anyone

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else. Offering better customer support services at all stages of the interaction is equally important, and can be provided through e-mails, online chat, toll-free telephone numbers, and FAQ (Frequently Asked Questions). Customer care activities, such as, providing variety of payment options, delivery and return options, gift-wrapping facility etc. help in building strong consumer relations. Communication: M-commerce provides companies an opportunity to establish a regular dialogue with customers through e-mail, live chat, and mobile surveys. Communication can be tailored to specific user interests and should allow for two-way interaction. It is important in building relationships, as well as informing and reminding customers of special offers, news up-dates, activities, events and subjects of interest to the customers, which help in building strong consumer preference.

The Interactive Brand-Building Model for Better Consumer Perception According to A. Kierzkowski, S. McQuade, R. Waitman & M. Zeisser (1996) the stages in building a strong brand and better consumer perception in m-commerce are outlined in Figure 5, which is basically a reformulation of the Innovation-Adoption Model (Awareness, Interest, Evaluation, Trial, Adoption) used in traditional marketing, modified to take into account of the interactive dynamic of mobile commerce. The model consists of five stages- Attract, Engage, Retain, Learn and Relate. Figure 4. The community hexagon

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Figure 5. The interactive brand building model

1.

2.

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Attract: The critical first step of mobile commerce experience is to attract ‘eyeballs’, and make people download the specific mobile app for the first time. The company must build awareness and communicate its value proposition to its target customers. Therefore, visibility relies solely on communication, which is done with the help of e-mail notifications, banner advertisements, affiliate programs with other apps, television adver`tising etc. Engage: With the multitude of choice available on the mobile network, it is important to quickly engage consumer’s interest before they move on. The key factors at this stage are convenience combined with interesting content. Strong connectivity, variety of promotional incentives, loyalty bonuses are given to constantly engage the consumers with a specific app and increase their satisfaction. Retain: Maintaining ongoing contact is essential for building relationships. It is the extension of engaging and focuses on keeping a customer on the app through the use of ‘sticky’ applications. Content is the basic driver of retaining customers on an app, and must be continuously up-dated due to multiple visit nature of customers. The objective is to increase the conversion rate and retain customers. It can also help in increasing product purchase opportunities and learn more about the consumer profile resulting in relationship marketing. Learn: The m-commerce applications provides extensive opportunities to learn about consumers (their demographic, psychographic and behavioural variable). The initial registration at the app provides an early opportunity to obtain useful information. Building up a knowledge database

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5.

on each customer- who they are, why they shop through mobile apps, what additional products and services are they interested in- provides companies with valuable information which, if used properly, can create value for the customer and help build the brand-customer relationship. Relate: By leveraging the multi-dimensional data gathered from mobile interactions with individual customers, a company can create value by providing a personalised experience. This helps in creating more brand loyal customers and making them spend more time and money at the app.

So to conclude, it can be said that given the high acquision cost of m-commerce customers, it is critical for companies to build long term relationships with their customers. With the help of the 7C’s framework and the interactive brand-building process, m-commerce companies will be able to build high brand loyalty and create favourable consumer perception.

Suggestions and Recommendations Following are some more recommendations to improve the consumers’ perception towards mobile commerce: • •

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Proper training and guidance should be imparted to the technology deprived sections of the society particularly illiterates so as to get them acquainted with the latest in the field of m-commerce technology and m-services which will generate more awareness. Incentives should also be given for using m-commerce in options (like government web portals or paying utility bills), thus ultimately leading to the saving of time and resources. Like in the case of BSNL (Bharat Sanchar Nigam Limited) – Govt. of India telephony service, 1 percent discount is given to the customers who make use of online services to pay their utility bills. Below poverty line citizens and other deprived sections of the society should be given more facilities in order to increase their awareness about mobile services, helping them to uplift their standard of living. The Internet facilities need to be provided free of cost so that they could make use of various facilities such as Net-banking and Internet banking, making efficient use of mcommerce options. The maximum bandwidth and speed available to the common citizens residing in urban and rural regions for accessing the internet services is still costly, especially 3G and 4G services – which have been launched in India. India is already part of the Internet super path but bandwidth, speed and cost issues need to be sorted at the earliest so that it can have the widest impact on all the sections and regions of the country. Proper knowledge about the security aspects of m-commerce/mobile services should be ensured and training should be imparted in order to make customer fearless while availing these services. Awareness about keeping passwords confidential and using best encryption techniques (third party authentication mechanism) can ensure security at the maximum for the client when availing mobile services. Building consumer trust is essential to get consumers to make m-payments using Smart Phones. More specifically, building consumer trust requires retailers and m-payment providers/processors to actively engage in efforts to develop an m-payment environment that consumers perceive to be safe, reliable, and transparent. M-payment environment must be effectively governed and regulated in order to maintain high levels of consumers trust.

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•

•

Improving consumers’ perceptions of the security and privacy controls employed by marketers is also a critical element in increasing consumer’s willingness to make an m-payment. Thus, marketers need to employ the latest technologies to protect the privacy and data of consumers, and once again, to actively communicate to consumers that all m-commerce transactions are protected by e-commerce legislation. Another major obstacle to m-commerce in India is meeting the Know Your Customers (KYC) norms. Though, following Kenya’s National ID system which propelled its m-commerce to a huge success, if India gets its Unique Identity Development Authority of India (UIDAI) or Aadhar project successfully implemented, mobile commerce will rise in India to become the next generation m-commerce for its mass adoption.

CONCLUSION To conclude, it can be said that mobile commerce is still in its infancy. A lot has to be done for creating a favourable environment for m-commerce in India. It is a new Industry. Internet connectivity and mobile networking is still not accessible to the entire population. But this industry can see an astounding rate of growth. It has tremendous potential for marketers as well as consumers. M-commerce market will grow many-fold in the years to come because of various growth drivers, such as, changing youth’s perception, greater initiatives by telecom companies, banks and government participation, growing number of smart phone users, 3G services and the adoption of unlimited data service plans. In few years from now the mobile commerce will become more secured as the cell phone companies are putting in efforts to protect their customers and also their information from intrusions and hacking. Mobile commerce can be further expanded to different fields and also can play a huge role in effecting human life. Its future seems to be extremely safe and bright and its upgraded version will emerge as the leader in the 4G technological version. So we can conclude with this that the future is here and we need to accept it with open mind. Following the guidelines suggested in the study, the scope and potential of m-commerce can be increased many-fold in a country like India.

REFERENCES Chen, Li, Chen, & Xu. (2011). A Survey Study on Consumer Perception of Mobile-Commerce Applications. Procedia Environmental Sciences, 11, 118–124. doi:10.1016/j.proenv.2011.12.019 Aidan & O’ Reilly. (2012). Mobile Commerce: Consumer Perceptions of Smart Mobile Media Services (SMMS) and M-Payments. Smart Mobile Media Services Research Group (SMMSG). Bhasin, M.L. (2005). E-commerce and M-commerce Revolution: Perspectives, Problems and Prospects. The Chartered Accountant, 828-829. Clarke, I. (2008, Fall). Emerging Value Propositions for M-commerce. The Journal of Business Strategy, 25(2). Deshmukh, P. (2013). Deshmukh. S., Thampi G.T., “Transformation from E-commerce to M-commerce in Indian Context. International Journal of Computer Science Issue, 10(4).

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Eastlick, M. A., & Lotz, S. (1999). Profiling potential adopters and non-adopters of an interactive electronic shopping medium. International Journal of Retail & Distribution Management, 27(6), 209–223. doi:10.1108/09590559910278560 Grewal, S. (2012, November-December). M-Commerce and its Growth: An Analysis [IJTR]. International Journal of Technical Research, 1(2), 32. Guerley, W. (2000). Making Sense of the Wireless Web. Fortune. Available at: http://www.fortune.com Gupta, & Vyas. (2014). Benefits and Drawbacks of M-Commerce in India: A Review. International Journal of Advanced Research in Computer and Communication Engineering, 3(4). Huang, R. Y. (2011, June). Value, Interest and Power: A Three Dimensional Model for Mobile Marketing Stakeholder Analysis. International Journal of Mobile Marketing, 6(1), 109–119. Huh, Y. E., & Kim, S.-H. (2008). Do Early Adopters Upgrade Early? Role of Post-adoption Behaviour in the Purchase of Next-generation Products. Journal of Business Research, 61(1), 40–46. doi:10.1016/j. jbusres.2006.05.007 Kanwalvir, & Aggarwal. (2013). Critical Factors in Consumers Perception towards Mobile Commerce in E-Governance Implementation: An Indian Perspective. International Journal of Engineering and Advanced Technology, 2(3). Kearney, A. T. (2000). Creating a High -Impact Digital Customer Experience. White Paper. Kierzkowski, A., McQuade, S., Waitman, R., & Zeisser, M. (1996). Marketing to the Digital Consumer. The McKinsey Quarterly, (2), 180–183. Retrieved from www.mckinseyquarterly.com Kotler, P. (2003). Marketing insights from A to Z: 80 concepts every manager needs to know. John Wiley & Sons Inc. Liang, T. P., & Wei, C. P. (2004, Spring). Introduction to the Special Issue: Mobile Commerce Applications. International Journal of Electronic Commerce, 8(3). Mahatanankoon, P., Wen, H. J., & Lim, B. (2005). Consumer-based m-commerce: Exploring consumer perception of mobile applications. Computer Standards & Interfaces, 27(4), 347–357. doi:10.1016/j. csi.2004.10.003 May, P. (2001). Opportunities, Applications, and Technologies of Wireless Business. Cambridge University Press. doi:10.1017/CBO9780511583919 Mobile Trends: Consumer Views of Mobile Shopping and Mobile Service Providers. (2011). Oracle. Retrieved from http://www.oracle.com/us/industries/communications/oracle-atg-mobile-wp-345770.pdf Mole, C., Mucahy, M., O’Donnell, & Gupta, A. (1999). Making Real Sense of Virtual Communities. Price Water House Coopers. Okazaki, S., Li, H., & Hirose, M. (2012, March). Benchmarking the Use of QR Code in Mobile Promotion: Three Studies in Japan. Journal of Advertising Research, 52(1), 102–117. doi:10.2501/JAR-52-1-102-117

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Santiago. (2004). M-Modeler: A Framework Implementation for Modeling M-commerce Applications. 6th ACM International Conference on Electronic Commerce (ICEC), The Netherlands, ACM International Conference Proceeding Series. Siau, K., Lim, E. P., & Shen, Z. (2001, July-September). Mobile Commerce: Promises, Challenges, and Research Agenda. Journal of Database Management, 12(3), 4–13. doi:10.4018/jdm.2001070101 Tandon, R., Mandal, S., & Saha, D. (2003). M-commerce-Issues and Challenges. The 10th Annual International Conference on High Performance Computing (HiPC), Hyderabad, India. Urbaczewski, A., Wells, J., Suprateek, S., & Koivisto, M. (2002). Exploring cultural differences as a means for understanding the global mobile internet: a theoretical basis and program of research. Proceedings of the 35th Hawaii International Conference on System Sciences (HICSS-35). IEEE Computer Society Press. doi:10.1109/HICSS.2002.993946 Valcourt, E., Robert, J., & Beaulieu, F. (2005). Investigating mobile payment: supporting technologies, methods,and use. Proceedings of IEEE International conference on Wireless And Mobile Computing, Networking And Communications (WiMobapos). doi:10.1109/WIMOB.2005.1512946 Wen, J., & Mahatanankoon, P. (2004, May–June). M-commerce operation modes and applications. International Journal of Electronic Business, 2(3), 301–315. doi:10.1504/IJEB.2004.005144

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Chapter 12

Exploring Barriers Affecting the Acceptance of Mobile Commerce Priyanka Gupta Delhi University, India

ABSTRACT With the continuous increase in numbers of users of mobile devices, the adoption of M-commerce is still far from reaching its full potential. There are various barriers that hinder the proliferation of mcommerce such as mobile devices inefficiency, lack of consumer’s trust, incompatible networks, poor network coverage, limited bandwidth, low speed, lack of security & privacy, high cost of handsets and cost of establishing the necessary wireless infrastructure and lack of awareness. Perceived usefulness, perceived ease of use and gender differences were other influential factors in m-commerce. Recently, Mobile Payment (m-payment) is a promising and exciting domain that has been rapidly developing. However, Consumer adoption of mobile payment (m-payment) solutions is low compared to the acceptance of traditional forms of payments. The chapter discusses these above m-commerce’s barriers in details.

INTRODUCTION M-commerce is a new business opportunity that designates the use of wireless handheld devices such as cellular telephones, personal digital assistants, and pocket and tablet computers to make business transactions such as product ordering, fund transferring and sending or receiving of messages through communications networks that interface with these devices. M-commerce refers to the market activities where wireless devices (particularly mobile phones) are exploited to conduct electronic business transactions, such as product offering, fund transfer, and stock trading (Kalakota and Robinson, 2001). Its unique characteristics are anytime anywhere faster access to applications by its users. It enable millions of people to access information where they are without being confined to static terminal of PC and fixed networks. Easy expansion, quick design and cost efficient implementation in the areas with difficult geography or poor economic conditions are the advantage of mobile network over fixed network (Dholakia DOI: 10.4018/978-1-5225-0236-4.ch012

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 Exploring Barriers Affecting the Acceptance of Mobile Commerce

and Dholakia, 2004). With the rapid increase in the use of mobile devices and anytime-anywhere connectivity leads to significant growth of M commerce. A huge number of applications can be imagined for mobile commerce, including banking, shopping, betting, trading, ticketing, entertainment, gaming, and logistics. A lot of these applications will have one thing in common is the consumer has to pay for services he has used or goods he has purchased. Karnouskos and Fokus (2004) say that “Any payment where a mobile device is used in order to initiate, activate, and/or confirm this payment can be considered a mobile payment”. The impact of mobile payment has a noticeable effect on mobile commerce. However, mobile payments face a number of problems, both from a technological and business point of view. This may affect the consumer adoption of m commerce. Here author studied several factors affecting the use of M commerce and m-payments by consumers.

Devices Incompetence The major differences between traditional PC and Handheld or phone devices is latter’s smaller screen sizes and limited input capabilities (Tarasewich et al., 2002). Based on their study of Finland, Carlsson and Walden (2002) opined that limited screen size is a barrier in growth of m-commerce. Many handheld devices display few lines of text and do not have traditional keyboards. Devices with small screen size cannot display information rich content in a useful way. The lack of space on smaller screens means that the search for the dynamic organization of space is one of the most challenging tasks to the design process (Zwick and Schmitz, 2005).There are various techniques emerged to increase the display size. These techniques include zooming, panning and dialogue boxes. Apart from size of screen of mobile devices, resolution and color capabilities are usually less than those found on desktop computers (Tarasewich, 2003). These limitations make it difficult to display graphic-based output (e.g., maps, charts, or Web pages). There are also tradeoffs in improving the screen characteristics of mobile devices. Increasing screen size will increase the size and weight of a device. Many mobile devices usually rely on a more limited keypad for input. They use a standard 12-button numeric keypad augmented by several special purpose keys such as “clear” and “ok”. The problem with this keypad is that a user must adjust to smaller keys, oftentimes learning to type messages with both thumbs. Data entry and error rates can suffer with smaller keys as well. One way to eliminate the use of a keypad is to use a stylus to write input directly on the screen of the device (a process known as gesture recognition) or use a virtual keyboards, with each key being “pushed” by touching it with a stylus. Such keyboards are implemented in section to save screen space as well. Mobile devices are suffered from lack of memory, disk capacity and less computational power than traditional computing devices. Other limitation is that their operations rely on finite energy provided by batteries. The advantage of small mobile devices, such as portability and small size, become the biggest disadvantage when they are lost or stolen (Tarasewich, 2003). Venkatesh et al. (2003) also argues that limitations of screen size/resolution and cumbersome input mechanisms hinder customers’ shopping experience and lead to a major setback in many m-commerce applications. In using mobile internet, all lists of available options cannot be drawn within the small screen’s display area cause user to repeatedly scroll through the menu list, select an option, scroll through a sub-menu, select an option, and so on. They are required to perform multiple key presses and may commit numerous navigation errors (Albers and Kim, 2000). Chae and Kim (2004) investigate how screen size of mobile devices and information structure affect user navigation activities and perceptions as well as identify the moderating effect of

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task complexity on the above relationship. Their study concludes that to perform complex comparative task such as buying goods in an online shopping mall which involve complex search operation, the user may perform more scrolling action as well as move between pages because of less information can be viewed on smaller screen. It is difficult for the user to refocus on the page as information changes more extensively. The small screens of mobile Internet devices, combined with the increasing complexity of mobile tasks, create a serious obstacle to usability in the mobile Internet. The above mentioned limitation of the user interface in terms of screen size and resolution requires the personalized mobile commerce applications that present the information in compact and interactive form (Tsalgatidou and Pitoura, 2001).

Limitation of Network Infrastructure Mobile commerce applications and services depend heavily on the underlying network infrastructure. Two of the most critical factors that influence the development and the quality of certain applications and services are the available bandwidth offered by the wireless networks, and the network coverage (Varshney et al., 2000). Anckar et al. (2003) found that poor coverage of network is the road block in m-commerce growth. The low bandwidth allows less data to be exchanged between servers and the mobile devices, thus prohibit multimedia content delivery. The poor network coverage maximizes the complications of connection losses when a mobile device moves beyond a network boundary or crosses from one network to another. Carlsson and Walden (2002) found that slow transmission speed of internet services restrain users from using m-commerce facility. Anil at al. (2003) also states that slow speed is a prime concerns. The other factors that need to be included are connectivity, coverage area characteristics, security, authentication, billing schemes, delays, loss of data etc. The wireless networks have more limitation than their wired counterparts. The key issues related to the wireless networks that influence the performance of the various mobile systems are the low bandwidth, higher delays, interference, frequent disconnection, low security (Schiller,2000, Samtani et al.,2003). Andreou et al. (2005) says that these limitations of underlying networks reduce the performance of m-commerce application and services. For example, in mobile auction, frequent disconnection may seriously affect the usefulness of this service. Limited bandwidth of wireless networks affects the content richness of advertising in mobile advertising applications. There is break in ongoing communication when user enters a physical area of weaker signal strength. There are various reasons for weaker signal such as handsets inability of receiving signal, physical obstruction (like tall building, in-building areas, tunnels, hills, trees etc.), antenna angle etc. The other reasons for unsuccessful communication would be cell interference, limited cell capacity, lack of network coverage and unsuccessful hand-over between base stations. TRAI’s Consultation Paper On Issues related to Telecommunications Infrastructure policy 2011 states that, In India, one of the main reasons for lack of network coverage and poor quality of mobile services could be no erection of new telecom tower by telecom service providers, which can provide coverage over the areas of no coverage or areas of high call drops and poor voice quality and also share the load of existing tower. The other cause could be huge investments for setting up new mobile tower, inability of mobile service providers to install towers in residential areas where Resident Welfare Associations (RWA) and civic authorities are concerned about safety of people and surroundings, hefty charges for seeking permission from state and local bodies, complicated approval procedure and clearance required from multiple agencies, hazardous effects of Electro-magnetic Radiation (EMF) emitted from towers.

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According to the TRAI’s Indian Telecom Services Performance Indicators report for the quarter ended March 2015, the latest available, the audit of quality of service performance of mobile service providers found that 23 of the 184 2G mobile networks in the country-exceeding the benchmark rate of 3 per cent for call drops (TRAI, 2015). However, this is a marginal improvement over the previous quarter ended December 2014 when 25 of the 183 2G mobile networks failed to keep their TCH call drop rate below 3 percent. Referred to as “TCH (traffic channel) failure” or “TCH drop” in industry parlance, it clearly means the service providers have insufficient technical support to maintain connectivity. This could be due to an overload on the existing towers, inadequate number of base transmitting stations (BTS) which are unable to meet the demands of rapidly growing subscribers. Nevertheless, this report of March 2015 quarter indicate that performance of other Quality of service parameter such as base stations not being available for service, connection with good quality and point of interconnection congestion has improved as compared to December 2014 quarter. Disconnections seriously affect the quality offered by the mobile application (Sharma et al. 2003). High Bandwidth of mobile system is one of the important factors in the emergence of m-commerce (Senn, 2000). Existing Cellular network such as GSM and Some Satellite networks provide the transmission speed of 19.2kps.The faster, packet-switched networks such as GPRS and its advanced version EDGE provide the transmission speed of 115kbits/second and 384kbits/second. Nevertheless, Speed of these access technologies does not matchup with speed of dial-up connections. In India, there was no quality of services standards for mobile data services (TRAI, Annual Report 2012-13). TRAI has received so many complaints regarding poor downloading speed experienced by mobile phones users. On 4th December 2012, Telecom Regulatory Authority of India issued the Standards of Quality of Service for Wireless Data Services Regulations 2012. Although, the Authority was unable to set any standard for quality of service parameter-“minimum downloading speed”. Speed of downloading is majorly affected by quality of mobile devices, allocation of restricted spectrum per operator, lower signal strength areas (tunnels, basements etc) and number of users (TRAI, 2014). Low speed of transmission is not favorable for creating extensive consumer participation in m-commerce. With the limited speed more amounts of time and money is incurred by mobile users to obtain the desired contents (Coursaris & Hassanein, 2002) With the third generation (3G) networks such as Universal Mobile Telecommunications System, one can attain higher-bandwidth, packet based transmission of text, voice, video, and multimedia needed to support data intensive applications. It also provides more sophisticated m-commerce interaction. As 3G technologies are just emerging, research has started on fourth-generation (4G) technologies. But if spectrum is not available then these networks cannot be deployed. Lack of interoperability among wireless products and technologies create barriers to growth and adoption of m-commerce. Variety of network communication standards and limited capabilities of hand-held devices is a major issue for m-commerce applications providers (Varshney and Vetter, 2002). Applications those are reliant on underlying wireless access technologies and device functionality affects the convenience to adopt m-commerce. However, the interoperability of different m-commerce services has a lower impact on adoption process (Mahatanankoon and Vila-Ruiz, 2007).

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Perceived Cost Cost is also major road block in the adoption of m-commerce. Perceived cost is defined as how much a user perceives that using m-commerce is costly for him. Cost includes price of handset, ongoing usage cost (subscription fee, service fee and communication fee), maintenance cost and upgrade cost (Luarn & Lin, 2005). The high transmission speeds of networks can be achieved through high power consumption and high initial cost for set up the infrastructure which causes high initial charges to be paid by the users for services present an important barrier to adoption of mobile commerce (Barnes, 2002). Similarly, Ramakrishnan (2001) say that investors have to pay high cost for buying licenses from government for radio frequency spectrum. High operating cost (costs of subscriber connection and mobile services) and high initial cost that is the cost of acquiring mobile device is one of the reasons for public rejection of m-commerce (Anchar et al., 2003). In Singapore, Anil et al. (2003) study also reveals the same that the adoption of m-commerce is affected by the high cost factor. Bina et al. (2007) use the Triandis model to find the barriers affecting the use of mobile data services like m-commerce, communication, information and entertainment services. Researcher states that confusing billing scheme and initial higher expenses emerge as major obstacles in the consumer’s take up of such services. Wei et al. (2009) opined that perceived cost has a negative effect on consumer intention to use m-commerce in Malaysia. U.S.A, a global leader in fixed-line internet access, has lower number of mobile internet users than Western Europe because accessing internet through mobile phone is costly and largely metered (Dholakia et al., 2004). In India, there are 4 to 7 mobile operators in each licensed service area which is one of the highest in the world. Each operator is acquired very limited part of spectrum. In order to provide maximum coverage, improving quality of voice and data and serve rapidly growing wireless subscribers, Operators needs to install the more number of base transceiver stations (BTSs), thus incur higher total and unit costs. According to TRAI, 2, 30,000 new towers will be required by 2014. Considering the average tenancy ratio of 1.5 and average cost per mobile tower about 2.5 million in rupees, the total expenditure required for constructing new mobile towers would be 575 billion in rupees (TRAI, 2011). From the above findings author can conclude that the perceived cost (price of handset, subscription fee, and communication fee) has an inverse relationship with the speed of adoption of m-commerce. Higher is the cost, lower is the proliferation of m-commerce.

Security and Privacy Issue Smart cellular phones and personal digital assistants (PDAs) with Internet access were not originally designed with security as a top priority. A mobile Operating system is needed for the multi-functional mobile phones in order to manage its resources among multiple applications and security of operating system is essential for achieving secure m-commerce (Ghosh & Swaminatha, 2001). Recently, a mobile threat report Q1 2014 by F-Secure (an IT security company based in Finland) states that Android operating system which has huge global market share accounted for 99 percent of all new malware threats (www.f-secure.com). Inability to authenticate the user to the device, lack of access control to prevent unauthorized access to confidential information, and failed to provide memory protection among application are major threats to security and privacy of applications.

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Data transmitted wirelessly is more susceptible to eavesdropping. Users and organization using the wireless technologies like mobile commerce transaction, email, want assurance that their sensitive wireless communications and transactions are not intercepted. Therefore wireless security is becoming an important area of product research and development. The wireless devices available today primarily use two technologies: WAP and SMS. WAP (wireless access protocol) is open and global standard for mobile solution, used to access the internet and other networking services via mobile devices. WAP specifies WTLS (wireless transport layer security) which provide authentication, data integrity, and privacy services within wireless technologies’ limited processing power, memory capacity, and bandwidth. It is observed that there is flaw in WAP called “WAP gap”. When the client request from mobile device reached WAP gateway which act as proxy server to client, it gets translated from WTLS protocol to SSL (Secure Sockets Layer) protocol. During translation at WAP gateway the data is decrypted and then re-encrypted, which make WAP vulnerable to hacker’s attacks. Security aspects such as digital signatures and non-repudiation are not supported by WAP (Barnes, 2002). WAP adopts WML as the format for displaying Web pages over the WAP phone. Malicious WAP script can access the personal information stored in device and disclose it to other sites (Ghosh & Swaminatha, 2001). They identify online application duplicity and email virus attacks that are possible using malicious WML script. Application developer must consider the following limitation such as security, high cost (until networks become packet switched and the pricing model changes) and limited infrastructure (from networks and devices) before designing the application for WAP-based phones (Barnes, Liu, & Vidgen, 2001). Chen et al. (2011) conducts a survey on Chinese consumers to judge their perception on 44 m-commerce applications and results shows that consumers vastly use the application for searching information, sending and receiving emails, reading and receiving news etc. However, they are least interested in using the application which involves their money. This shows that insecure mobile transactions are the barrier to mobile application. Privacy is defined as “the moral right of individuals to be left alone, free from surveillance or interference from other individuals or organizations, including the state” (Laudon & Traver, 2001). Privacy concerns are very important barriers to adoption of m-commerce. Users got worried about personal information they provide to m-commerce application can be read, copied or disclosed without their consent. The Lack of proper privacy policies that convince the users that mobile vendor are not exploits their personal and transaction information. However, Users is unlikely to read the privacy policies written on wireless website because of Small screen of displays of hand-held devices (Ghosh & Swaminatha, 2001). Varshney and Vetter, (2002) discussed the mobile financial applications where a user can execute financial transaction (such as money transfer, banking and payments) with his mobile device. However, the security of such transaction is a major concern for the wide deployment of such services. They also discussed about the various m-commerce applications that provide information to the user using his geographic location and personalized needs. For example, mobile advertising applications use the user’s location to inform about discounts and sales in their nearby shops, malls and restaurants. The advertisements can be personalized based on information provided by the user in the past or by the history of users’ purchasing habits. The other services which use geographic location as well as the user preferences and behavior are shopping, location tracking of goods and people, car navigation software, emergency etc. These services have proved beneficial for marketing; provide just-in-time delivery of goods, locating friends and family and locate a store where a certain product which user wants to buy is to be found.

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However, Zhang et al. (2002) explain the driving forces for M-commerce success states that privacy is crucial for location-based services. User’s security and privacy concerns are the main barriers to location-based services (Chang et al., 2007). Similarly, Sheng et al. (2008) findings indicate that user of personalized services which require user’s personal information, user’s location, time etc. collected from user’s previous interaction and preferences are highly concerned about their privacy. They always have fear of misuse or disclosure of their information to the malicious person. The concern about privacy in turn negatively affects the intention to adopt (location based) personalized services. India, with the wireless subscriber base of more than 867 million which is far exceed than fixed line 30.21 million subscribers, has one of the largest mobile telecommunication system. Wireless Teledensity stands at 70.85 and subscribers who access internet through wireless phone counts to 143.20 million (Telecom regulatory authority of India, 2012-13). As per the TRAI annual report 2012-13, the total revenue of Telecom Service Sector went up from Rs. 19,54,420 million in 2011-12 to Rs. 21,25,920 million in 2012-13 indicating a growth of 8.77%. Competitions among many service providers provide affordable call price to consumers. However, uses of mobile phones is limited to small amount transactions like bill pays, buy movie tickets, buy books etc. because security of transactions is the major concern in using m-commerce services in India (Jahanshahi et al., 2011,). Mobile banking is one of the services of m-commerce where customer use their mobile devices to takes the services of bank like account balance check, transfer of funds, bill payments, share trading etc. Security and privacy is the main concerns among the user of mobile banking (Bamoriya & Singh, 2011; Goyal et al., 2012). Therefore service providers (banks and mobile network operators) should well informed their customers about security and privacy policy so that customers do not feel hesitate before using mobile banking.

Lack of Trust According to Rousseau et al., (1998), trust is defined as “a psychological state comprising the intention to accept vulnerability based upon positive expectations of the intentions or behavior of another”. User trust will play a crucial role in acceptance and widespread deployment of mobile commerce. Trust building is one of the issues in commerce (Varshney & Vetter, 2002). Salam et al., (2003) says that trust can be developed by the trustee (the party being trusted) to positively create trustor (the party placing trust) perception that the trustee possesses characteristics that would benefit the trustor. Siau and Shen (2003) argue that customer trust (m-trust) in m-commerce is secured by trust in mobile technology and trust in mobile vendors. Less secure wireless network cause inverse effect on trust in mobile technology. Poor reputation of mobile vendor, Lack of customer familiarity, low quality information, absence of third-party recognition and certification and no attractive rewards negatively affect the customer trust in mobile vendors. Therefore importance of trust is relatively high in m-commerce because security concerns are more in m-commerce than e-commerce (Lu et al., 2003). Lee and Benbasat (2003) and Chae and Kim (2003) agreed that limited system resources (e.g. smaller screens and lower multimedia processing capabilities) can hinder the development of trust in m-commerce. According to Lee (2005), responsiveness is important in leading to trust in m-commerce. Untimely response to customer’s request and question can negatively affect the customer trust. His study also concludes that perceived contextual offer has strongest influence customer trust in m-commerce. This means that lack of timely and context-based information based on customer profile and location provided by mobile internet sites can hinder the development of trust in m-commerce.

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The results from study of Wei et al. (2009) indicate that lack of trust has a negative effect on intention of Malaysian users to use m-commerce. Lack of trust affects the user’s intention to use m-commerce to make payments using mobile devices as well as restrain user to provide personal information in an uncertain environment of m-commerce. Siau and Shen (2003) suggest for continuous trust building, a well-designed mobile Web site which acts as the interface between company and customer should have sufficient information for making purchase decisions, ease of navigation and smooth vendor interaction. Li and Yeh (2010) have found in their study that the design aesthetics (such as color, photographs, font style and layout) had a very important impact on the website characteristics components, particularly customization, effectiveness and user-friendly environment, all of which had a huge impact on customer trust. Lack of appealing element in mobile website make it difficult to operate which in turn have a negative impact on m-trust. An unprofessionally designed website which does not provide information and product according to customer preferences negatively affects the customer trust in m-commerce. Most importantly, Siau and Shen (2003) suggested customer trust, as one of long-term relationship builders, is crucial for the growth and success of m-commerce as well as transition from initial trust formation to continuous trust development.

Impact of PU, PEOU, and Gender The researchers has been used the TAM Model (Davis, 1989) to better understand the factors responsible for slow uptake of m commerce. TAM suggests the two fundamental determinants of technology adoption--perceived usefulness and perceived ease of use. Davis defined Perceived usefulness (PU) as “the degree to which a person believes that using a particular system would enhance his or her job performance” while Perceived ease of use (PEOU) is defined as “the degree to which a person believes that using a particular system would be free of effort”. According to Okazaki et al. (2014), Perceived ease of use of m-commerce is strongly affected by two intrinsic attribute of mobiles device-- portability and interface design, and the three extrinsic attributes of mobile device—simultaneity, speed, and searchability affect Perceived usefulness. As M-commerce is a complex process involving a series of operations, therefore perceived ease of use of this technology is an important factor in its adoption (Wei et al., 2009). Wei et al. (2009) research on Malaysian users reveals that Perceived usefulness significantly affects users’ intention to use m-commerce. According to Zarmpou et al. (2012) also, the intention to use m-commerce is influenced by perceived usefulness. Kalinic and Marinkovic (2015) study on determinants of users’ intention to adopt m-commerce reveals that behavioral intention to use m-commerce is directly influenced by Perceived ease of use (PEOU) and Perceived usefulness (PU). The researchers listed out four factors that have an effect on PEOU and PU like Social Influence, Personal innovativeness, customization and mobility. Social influences means user finds those services important that are recommended by his friends and acquaintances. The keenness of a user to gain knowledge and learn out new products or services defines Personal innovativeness. Customization is a tool that provides high quality services to fulfill users’ expectation and made them loyal to service providers (Wang & Li, 2012). Mobility, the inherent feature of m-commerce enables users to access services anytime, anywhere irrespective of users’ place and time. The results of study indicate that social Influence has significant effects on Perceived usefulness whereas personal innovativeness and mobility have significant effects on Perceived ease of use. Customization is the only factor that has significant effect on both Perceived ease of use and Perceived usefulness. 241

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Therefore adoption of m-commerce will only increase when users can easily carry their mobile device to conduct transactions from anywhere. The more quickly and immediately consumer performs activities simultaneously with other communication and transactions will improve his performance on work front, then more they are likely to adopt it. From the above findings author can conclude that complex methods to learn skills to use m-commerce services have a negative impact on user’s performance and productivity make him reluctance to use these services in future and not even recommend these services to their family members, relatives and friends. Gender difference is also an important factor in adoption process of mobile based technologies such as m-commerce. Gender is often used as a part of the social and cultural meanings associated with developing a marketing strategy, because the male–female dichotomy is the most fundamental dichotomy in society (Prakash et al., 1985).Okazaki et al. 2014 argues that key points that drive women to use mcommerce are interface design and ease of use than men, whereas speed, searchability and simultaneity are the key to motivate men’s use of m-commerce. They says that women found mobile easy to use but they feel a certain reluctance and hesitate to engage in online transactions. Bamoriya and Singh, (2011) study reveal the same that Indian males are more willing to adopt transaction based services than their female counterparts. However, According to Faqih et al. 2014, gender has no moderating effect on the adoption process of m-commerce technology.

Lack of Awareness Literacy plays an important in overall growth of individuals enabling them to understand their social, political and cultural environment better and respond to it appropriately. Higher levels of education and literacy lead to a greater awareness and also contributes in improvement of economic and social conditions. In India, about 70% of population lives in rural areas whose literacy rate is 67.77% where as overall literacy rate is 72.99% (Census of India, 2011). Literacy rate in India is low as compared to developed countries. People use widely their mobile phones for reading and sending SMS, listening music, gaming, reading and sending news rather than just make and receive calls (Srivastava et al., 2007). Nevertheless, in India, illiterate peoples are anxious and unaware of the use of mobile phones to make purchases, banking etc (Goyal et al., 2012; Gupta & Vyas, 2014). M-commerce players need to provide solution to this obstacle because huge population in India’s rural areas adds more to their revenues. In other developing countries like Bangladesh, literacy rate is very low. Customers are not able use SMS based m-commerce services without the help of customer care point. From the perspective of stakeholders, Lack of literacy creates a big setback in using m-commerce (Rahman, 2013). Recently, Khan et al. (2015) carry out the research on barriers to proliferation of m-commerce in Qatar mentions that lack of awareness programs by service providers which will provide better understanding of m-commerce services and its advantages to the customers is the one of key barrier in the adoption of m-commerce.

M-Payment: Barrier to Proliferation of M-Commerce There are various mobile commerce (m-commerce) applications, such as mobile advertising, mobile gaming, mobile entertainment services, mobile distance education, and mobile offices, mobile payment (m-payment) systems, which offer the advantage of anytime, anywhere payment services through mobile phones are perhaps the most vital (Varshney & Vetter, 2002). Chandra et al. (2010) say that the 242

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mobile payment is of two types: remote payment and proximity payment. Remote payment means that users need to connect to remote payment servers in order to conduct payment. It includes mobile banking and mobile internet payment services. Proximity payment means that users conduct payment via their mobile phones on the spot. It is often based on technologies such as radio frequency identification (RFID) and near filed communication (NFC). There are various examples of SMS payments, NFC payments and WAP payments from around the world. The earliest mobile payment is short-messages based, in which users download ring tones, news, etc., service providers then send a short message to inform them about the charge. If users confirmed the message, the fees will be charged from their accounts. In China people can pay for all public transport using NFC payments. In Nice visitors and residents can use NFC to purchase goods and services at restaurants, supermarkets and other stores as well as to buy tickets for public transport. Vodafone ‘s Mobile Pay in UK, PayPal Mobile, launched by PayPal, Google Wallet, Apple Pay are the example of WAP payments(http://www.mobiletransaction.org). Vodafone‘s M-Pesa in India allows for money transfer, deposit/withdrawal of money, along with bill payment. The other mobile payment apps in India are Paytm, Mobikwik, and FreeCharge. Ding et al. (2004) argues that mobile payment is usually more convenient than online payment because of former’s unique characteristics-- mobility and reachability. Recently, According to Indian Media and Entertainment Industry Report 2015 by FICCI-KPMG, mobile wallets are preferred over credit cards, debit cards and net banking for buying music (FICCI-KPMG, 2015). Use of mobile wallet does not require opening bank accounts as well as entering user and card details every time to make transaction. On the other hand, Offline payment requires users to carry cash and credit cards through wallets. However, the use of mobile devices to make payment is low compared to the acceptance of traditional forms by the consumers. Many researchers have identified the various elements that affect the adoption of m-payments in turn affect the proliferation of mobile commerce services. According to Varshney (2002), the most important factors are profitability, interoperability and security. Karnouskos and Fokus (2004) argues payments made by consumers for goods and services are heavily depends on trust and security. In a survey-based study, Linck et al. (2006) asked consumers which characteristics of mobile payment applications they perceive as particularly relevant. The authors present an analysis of frequencies, indicating that consumers prefer simple, secure, and inexpensive payment services. Au et al. (2007) survey discovered that user would not adopt m-payments for the following reasons: “perceived lack of security, preference for other payment instruments, and unfamiliarity with m-payments, and lack of transaction tracking ability in m-payments, complexity and fears of unauthorized transactions”. Lack of Security of mobile devices as well as wireless networks is one of the primary obstacles in the adoption of m-payments. Authentication, integrity, confidentiality, message authentication, and nonrepudiation are the challenges in mobile payments. Mobile payment may involve greater uncertainty and risk because of vulnerable mobile networks. Mobile middleware offers limited support for security. For example, the wireless application protocol only provides security between the mobile device and WAP gateway. Mallat (2007) stated that complexity of mobile payment services such as complicated SMS formats, complex registration process and maintaining separate accounts for mobile payments emerged as a barrier to adoption of m-payments. The high initial cost deployed for building payment services by the banks and other financial institutions present a significant hurdle in offering m-payments services. Mobile equipment cost, access cost and transaction fees associated with the adoption of new technology may affect the adoption of mobile 243

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payment services (Wu & Wang, 2005). Mallet (2007) study finds that high transaction cost refrained customer from using mobile payments. Similarly, Gunasekaran and McGaughey, (2009) found that the high costs of wireless transactions related to mobile commerce represent a potential obstacle to deploy it. In India, customers use their mobile phones to shop for products and services and prefer to pay for products and services at the time of receiving them. In India, cash-on-delivery (CoD) is the popular payment mode for online purchases. According to Ernst & Young (E&Y), CoD accounts for 50 to 80 per cent of online transactions in India (www.ey.com). There are various reasons why CoD is preferred over payment using credit card, net banking and mobile payments. First, Credit-card penetration is low. According to Reserve Bank of India, currently there are about 21 millions credit card holders only (RBI, 2015). Second, security concerns while using credit card and net banking for online payments. Third, lack of familiarity in using mobile wallets. For healthier adoption of m-payments services and robust m-commerce technologies, there is a need of more end to end security of current mobile transaction, simple and easy procedure to make payments and low cost per transaction.

CONCLUSION M-commerce is a new wave technology-driven commerce, uses mobile phones and personal digital assistants (PDAs) equipped internet facility for banking, booking or buying tickets, shopping and realtime news. M-commerce brought a lot of opportunities to mobile network operators, service and content providers, financial industry and consumers. However, Mobile commerce, also known as mobile e-commerce or m-commerce, faces the same problems concerning e-commerce—plus a few of its own. This chapter discusses the major barriers affecting the spread of m-commerce. Mobile Payment (MP) is a promising and exciting domain that has been rapidly developing. However, mobile payment has not received wide adoption among users. There are several factors affecting its adoption by users. Here author has discussed some of them in brief.

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Vishwakarma, S., Samant, P. K., & Sharma, A. (2015). Attacks in a PKI-Based Architecture for Mcommerce. In Computational Intelligence & Communication Technology (CICT), 2015 IEEE International Conference, 52-56.

KEY TERMS AND DEFINITIONS Cost: An amount that has to be paid by customers in order to get services of m-commerce. It includes the cost of mobile device, subscription charges, service charges, voice rates per minute and data rate per MB etc. M-Commerce: A new and forthcoming approach of doing business by means of small, easy to use, portable and internet-enabled mobile devices. Privacy: The personal and transaction information provided by the customers could not be exploited by the service providers. It should be kept confidential and not shared and sold to the other firms or persons. Security: Protecting the customer’s information and money against the threats such as fraud, hacking, stealing of mobile device and viruses. Trust: Customer’s belief in the m-commerce that any monetary transaction carried out by mobile device would be safe and sound. It is customer’s confidence that personal information provided by the customers in order to avail the facility offered by m-commerce would not be shared with anyone.

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Services of Mobile Commerce Mukta Sharma Teerthanker Mahaveer University, India

ABSTRACT Mobile phones have been coined by Martin Cooper with a thought of staying connected anytime anywhere. With the development of mobile phones in 1973 and its commercialization later; has proliferated not only the big business houses but also small businesses and individuals. Mobile phones have come a long way from talking on a mobile phone, texting a message to efficiently using internet. These days mobile commerce is the booming technology which has enhanced industries visibility and the way of conducting business. The customers are getting benefited by using these Apps they can shop anytime, anywhere; they get good discounts, companies are offering good return policies for better CRM and above all the customers have a provision to compare the cost before ordering and can pay COD. The study will focus on the concept of mobile phone, mobile commerce, characteristics of M-Commerce, Drivers affecting the mobile commerce, various services offered on mobile. The chapter focuses on potential of mobile commerce, how the customer is benefited from these services.

INTRODUCTION Alexander Graham Bell invented the telephone in 1876. After that many researches have been conducted to make telephone portable and available anytime, anywhere. The first such research was initiated way back in 1900, on December 23 on the outskirts of Washington, D.C.; an inventor named Reginald Fessenden accomplished a remarkable work: He made the first wireless telephone call. He was the first to transmit the human voice via radio waves, sending a signal from one radio tower to another. In 1947, an engineer named William Rae Young, who used to work with AT&T, proposed that radio towers arranged in a hexagonal pattern could support a telephone network. Young’s design allowed for low-power transmitters to carry calls across the network. AT&T offered few customers to use radio phones; phones were very basic and work more like a walky-talky. In year 1973, Martin Cooper, who was associated with Motorola, one of AT&T’s competitors designed the first practical cell phone. It was called the Motorola DynaTAC.

DOI: 10.4018/978-1-5225-0236-4.ch013

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 Services of Mobile Commerce

A mobile phone (also known as a cellular phone/cell phone) is a phone that can make and receive telephone calls over a radio link while moving around a wide geographic area. It does so by connecting to a cellular network provided by a mobile phone operator, allowing access to the public telephone network. In the era of Information Technology it is hard to find people without this magical gadget called Cell/ mobile phone. The cell phone is a tool of the smart-working elite, a way to squeeze more valueadded time into long commutes, to check with clients, or to verify stock prices, weather forecasting, closest eating joints, malls, movie halls, hotels, cabs etc. This is a wireless communication. Here wireless stands for the data being communicated without physical attachments such as microwave, infrared and radio wave. It is a convenient alternative to network cable connections and it is gaining huge popularity because of its flexibility and the freedom technology offers. Commerce is a division of trade or production which deals with the exchange of goods and services from producer to final consumer. In short, commerce means buying and selling of goods and services. Mobile as the name suggests Moveable, Portable etc. M-commerce as said by Timelabs (2000) is “selling and purchasing” of good and services using mobile communication devices” such as mobile phones, PDA’s etc. M-Commerce is a subset of ecommerce that deals with electronic transactions using mobile communication equipment’s for conducting businesses and transactions using wireless media. According to Durlacher (1998) M-Commerce can be described as “any transaction with a monetary value conducted via a mobile telecommunications network”. As per Lehman Brothers (1995) M-commerce incorporates the use of mobile hand-held devices to communicate, inform, transact and entertain using text and data via connection to public and private networks. Mobile commerce is different from electronic commerce in at least one aspect: its unique feature is “user mobility”, which makes M-Commerce dynamically dependent on the location in which the mobile user operates (Schneiderman, 2000).

Definition of M-Commerce M-commerce can be defined as “any electronic transaction or information interaction conducted using a mobile device and mobile networks that leads to transfer of real or perceived value in exchange of information, services or goods (Abott, n.d.). It is very convenient and efficient way to transact. It is being seen as a new wave and dimension of making business. M-Commerce applications involve using a mobile phone to carry out financial transactions. According to Durlacher (2001) this means user can pay online via mobile phones instead of visiting the bank in personal. M-Commerce systems and applications should be used to enhance and boost up the forms of existing applications.

History of M-Commerce Wireless communication was invented way back in 1895, when a 21 year old; Italian named Guglielmo Marconi, successfully transmitted radio waves without using wires. He had win Nobel prize in physics for his contribution in year 1909. He is also known as the father of “wireless communication”. In 1940s, after world war-II; two-way car radios were installed by police, government etc. to stay in touch. There were many problems like they have only one central transmitter, one antenna via which the transmission was not powerful. It could be used by only 250 users. In year 1969, with the progress and advancement in mobile transmission, companies like AT&T and Bell introduced a commercial cellular radio operational on running trains from New York City to Washington, DC. In 1978, AT&T and Bell introduced Analog-based cellular telephone to general public. 252

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Table 1. Generation of digital cellular technology Gen

Time

Services

Protocols

1G

1981-1996

Analog voice

• Nokia Mobile Phones (NMP) • Total Access Control System (TACS) • Advanced Mobile Phone System (AMPS) • Personal Handy phone System (PHS)

2G

1992-2001

Digital Voice

• Global System for Mobile (GSM) • Time Division Multiple Access (TDMA) • Motorola iDEN technology (iDEN) • Personal Digital Cellular(PDC) • Code Division Multiple Access (CDMA)

2.5G

1984-1996

Packet radio data

• General Packet Radio Service (GPRS) • Global Spatial Data Model (GSDM)

2.75G

2003-2005

Light multimedia

Enhanced Data GSM Environment (EDGE)

3G

2003-now

Full multimedia and data

• Wideband CDMA (W-CDMA) • Universal Monile Telecom System (UMTS) • Time Division Synchronous CDMA (TD-CDMA) • CDMA2000 1* EV-DO • CDMA 2000 1*EV-DV

3.5G

2005- now

Full multimedia and data

High Speed Downlink Packet Access (HSDPA)

3.75G

2006-now

Full multimedia and data

High Speed uplink Packet Access (HSUPA)

4G

2010- now

Full multimedia and data

• Software Defined Radio (SDR) • Orthogonal Frequency Division Multiple Access (OFDMA)

Mobile commerce has emerged after the introduction of electronic commerce. Mobile Commerce Services were first delivered in 1997, when the first two mobile-phones enabled Coca Cola vending machines were installed in the Helsinki area in Finland. The M-Commerce server developed in late 1997 by Kevin Duffey at Logica. Since the launch of the iPhone, mobile Commerce has moved away from SMS systems into actual applications. Cell phones and most other wireless multimedia devices connect to cellular networks. Throughout the world, the frequency spectrum allocated for cellular transmission systems ranges from hundreds of MHz to GHz. Cellular Technology use licensed frequency bands within radio spectrum. Digital cellular communication was introduced in late 1990s. Today, cellular deployment is global.

MAIN FOCUS OF THE CHAPTER Characteristics of Mobile Commerce Nayak, Nath, Goel (2014) defines m-commerce as an area which is rapidly changing the way people conduct their financial transactions According to the author M- commerce is characterized by many unique features as compared to the conventional form of commercial transactions. Mobile computing has two major characteristics that differentiate it from other forms of computing: mobility and broad reach. These two characteristics break the barriers of geography and time. They create the following five value-added attributes that helps in the development of m-commerce: ubiquity, convenience, instant connectivity, personalization, and localization of products and services (Petrova, 2004).

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1. 2. 3.

4. 5.

6. 7.

Mobility: Mobile computing and m-commerce are based on the fact that users carry a mobile device anywhere they go. Mobility implies portability. Therefore, users can initiate a real-time contact with other systems from wherever they happen to be if they can connect to a wireless network. Broad Reach: In mobile computing, people can be reached at any time. Of course, users can block certain hours or certain messages, but when users carry an open mobile device, they can be reached instantly. Product and Service Localization: Positioning technologies i.e. GPS (Global Positioning Services) allows companies to offer goods and services to the user as per his/her current location. Mobile phones display the nearest hotels, restaurants, hospitals, petrol pump or whatever customers look for as per the user’s current location. Instant Connectivity: Introduction of the GPRS (General Packet Radio Service) mobile has given convenience to the users. Users can always stay connected/online. Product Personalization or Pro-Active Functionality: M-commerce brings opportunities for the companies like push marketing, where user can opt for ‘Opt-in advertising’ so that they are informed about new products and services in the form of SMS. (Nayak et al., 2014) Companies are customizing the end-user experience based on the previous searches and orders. Like amazon designs a new page which shows the latest collection of books and other products as per customer tastes and preferences based on the previous history. Ubiquity: Users can avail the services and carry out transactions independent of the geographical location (‘anywhere’ features). Easier way to access information in real- time. Convenience: Users can buy the goods anytime, without waiting (‘anytime’ feature). Mobiles applications are becoming more user friendly so that anybody can easily use its features. Mobile phones are coming with better data storage so that the handheld device is sufficient as a camera, calculator, notebook, calendar, birthday reminder, social networking, shopping etc.

Drivers of Mobile Commerce Tiwari, Buse, Herstatt (2006) discuss many factors which drive the development of mobile commerce. For example, technology innovations such as faster data transmission technologies, more capable mobile devices equipped with improved computing capacity, enhanced data storage, and better user-interfaces. In addition, factors like the increasing penetration and diffusion of mobile phones into society and their associated affordances, and the integration of world economies have also increased the focus, need and dependency on mobility (Tiwari et al., 2006). The emergence of electronic commerce has caused a revolution in the commercial environment through fundamentally altering the end-to-end process of undertaking commercial transactions through electronic means - for example, sending product orders and invoices though a network (Tiwari et al., 2006). However, with the advent of wireless networks, the rapid proliferation of mobile devices in recent years, and the demand for associated value-added services, the area of mobile commerce has also emerged. This emergence is causing another revolution in the commercial environment. In a talk, Lidderdale (2009) focused on how mobile commerce has made business mobility a reality. For example, e-shopping, e-banking, and e-stock trading are gaining popularity in wireless communication. However, there are several new applications that are possible only in the mobile environment. In addition to the above mentioned value-added attributes, m-commerce is driven by the following factors (pongaston, 2009).

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1.

2.

3.

4.

5.

6.

7.

Widespread Availability of Mobile Devices: A potential mass market is available for conducting discovery, communication, collaboration, (e.g., “Global Mobile,” a special report, Computer World, May 14, 2007), and m-commerce. As shown in Figure 1, the number of wireless users has immensely grown from 886.30 million, Dec-13 and reached up to 904.51 Million, March, 2014 (Telecom Regulatory Authority of India [TRAI], 2014). Cell phones are spreading quickly even in developing countries. Exponential growth of consumer interest and adoption of the Internet and e-commerce. No Need for a PC: Today’s PDAs and some cell phones have as much processing power as personal computers did just a few years ago. Cell phones and PDAs also possess the range of software available to PC users. The use of smart-phone has proved that there is no need for a PC, all the work can be easily accomplished by a smart-Phone. The unique features of the mobile device such as its compactness for convenience and personalized functions; subsequently, people have become quite attached to their devices. These days’ people are connecting and exchanging notes, photographs with their friends and family via smart phones. The Handset Culture: The evolution of the handheld devices incorporating WAP and now GPRS. Another driver of m-commerce is the widespread use of cell phones; especially the youth is spending a larger amount of money in purchasing the latest cellphones with better technology, application, features and camera. The youth constitute a major force of online buyers. The use of SMS and specially applications like whatsapp, Stayconnected etc. are often used especially in the youth market. Declining Prices and Increased Functionalities: In the recent years, it has been observed that the prices of wireless devices and per minute pricing of mobile services are declining. It has been witnessed that the functionalities are increasing. Also, a flat fee (e.g., monthly) encourages more use of mobile devices. There are so many brands who are giving lucrative offers to their online customers using their App. Cost of entry into mobile e-commerce is low for most entrants; for example, a bank can implement a sophisticated m-banking solution in under six months for around $1 million. Improvement of Bandwidth: To transmit text, voice, video, and multimedia, in short to properly conduct m-commerce proper bandwidth is required. The 3G (third-generation) and 3.5G technologies provide the necessary band width. Development of real-time transfer of data over 2.5G and 3G networks will enable faster data transmission and ‘always-on’ connectivity. Tremendous growth in mobile telephony; however, voice has become a commodity and will no longer fuel revenue growth for operators. The Centrino Chip: A major boost to mobile computing was provided in 2003 by Intel with its Centrino chip. This chip, which became a standard feature in most laptops by 2005, includes three important capabilities: a. A connection device to a wireless local area network; b. Low usage of electricity, enabling users to do more work on a single battery charge; and c. A high level of security. The Centrino (Centrino 2 in 2008) is making mobile computing the common computing environment. Availability of Internet Access in Automobiles: There is an exponential growth in the number of cars equipped with high-speed Internet access. The cars are offering features like Navigation, Play list etc.

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Figure 1. Characteristics (Turban, 2006).

◦

◦ ◦◦ ◦ ◦

Usability: Small screens (micro browser) and keypads of mobile devices, limited messages and browsing of information. Technical: Limited memory and computing power, insufficient bandwidth and Limited data transfer capacity, low battery backup. Have to develop a mobile application or site for different devices (like android phones, Iphones, Microsoft, etc. With a host of device operating systems and platforms, middleware solutions and networks, make application development for the wireless Internet a formidable task, versus the level operating environment of the wired Web.

Issues and Solutions of Mobile Commerce There are certain issues as per A GS1 Mobile Com (2008), and Jahanshahi, Mirzaie, & Asadollahi (2011) which is a matter of concern to both customer and organization:

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1.

Input and Output: If compared with laptops or desktops, mobile devices have smaller screen sizes (micro browser). They don’t have classic keyboards & large size screens to be able to display all information. So the current design on the APPs need to focus to enhance the usability but not at the expense of battery.

As we know if a desktop site is rendered on a mobile device it won’t give the same good quality of look & feel to the user. Thus few specific input controls like text field, radio buttons, checkbox, picker etc. are shortlisted to provide the User the best suited UI for Mobile site or the Mobile App. Let’s see with a real life mobile app of goibibo how the input is taken using only menu options, text field, buttons. 2.

3.

4.

Bandwidth: The increasing demand of bandwidth for new & existing network applications. Bluetooth & IEEE 802.11 & few others standards may recommend to use the same frequency range but it may cause interference. 4G is fast, typically offering speeds up to 30Mbit/s on its regular service and up to 100Mbit/s using an LTE-A (Long Term Evolution – Advanced) service such as ‘4GEE Extra’. It is much faster than 3G & provides the following features in best way. a. Better quality video calling. b. Faster video downloading and streaming. c. Create a personal WiFi hotspot. d. Upload large files on the move. e. Speedier web browsing and apps. Security: Security has always been a major concern area for both the user & the business houses. Security is one of the most important key factors from a customer’s viewpoint, companies/ banks concerns and nation’s privacy. Therefore, extensive research is going on to ensure security. As mobile phone is a portable and a small device it can be easy for a thief or snatcher to snatch or steal the phone; mobile phone can go in wrong hand easily. Crimes like data hacking, cracking, etc. can be easily done. When user is transacting online and sharing important personal data like credit card details, it can be hacked easily for which banks are coming up with new ideas like OTP, 3D Pin, Grid Matrix etc. While transacting users don’t need to give the credit card information every time the user is shopping; users can make use of e-wallets like MobiQuick, etc. As Security and privacy are critical issues for both M-commerce consumers and sites, but this does not diminish the importance of the rest issues for the expansion and success of M-commerce. a. Security Transaction over the Web Browser: According to Linck, K. (2006); SchwiderskiGrosche, S. (2000) and Weiss, S. (2006) when a customer is using mobile transaction through a web browser the customer is protected by inactivity lock out, this technology logs out the user automatically when the connection is lost. Researches are in process to provide better security. b. USSD: The authors such as Linck, K. (2006); Schwiderski-Grosche, S. (2000) and Weiss, S. (2006) believes about Unstructured Supplementary Service Data, as a technology will make sure that all kind of transaction been made does not fall on the wrong hands and it is very powerful. Extensive work is in process in this domain. Connectivity: The mobile devices have the craze to do all tasks on the go. The user wants to shop on way to home, wants to navigate to a travel destination, book hotels, buy flight tickets etc. The connectivity of the mobile devices across the globe defines the utility of the applications built for mobile commerce. 257

 Services of Mobile Commerce

Figure 2. Illustration of a real life mobile app of goibibo

Mobile phone owners like the convenience and ease of connectivity, but rue that they can be interrupted more easily, have to pay the bills, and face bad connections. The mobiles service providers are offering the Wifi, 3G & 4G services for the better connectivity. 5.

Device Stability: The mobile devices also need to maintain some basic level of stability to execute the mobile applications. Stability in the sense of not wasting the battery, have options to switch device on power saving mode, do not let APPs make changes to their Kernel in a way that it deteriorates the performance of the device & any way compromise the security of the device & data on it.

Here, the device stability of iphones & ipads can be taken as an example. Even though the android phones are relatively easily accessible & available to the users. But the apple products beat them on the grounds of hardware & iOS. The product offers the solutions of hanging problems & the security also. The other android or windows devices can also follow the same pattern to make the devices more stable & secure.

Views on M-Commerce from Varied Countries Mobile Commerce in UK UK leads the world in Mobile Commerce in the second Quarter of 2015 (Criteo’s Q2 2015 State of Mobile Commerce Report). UK Mobile transactions cross 45% share: And it’s much higher for top quartile retailers. Apps generated almost 50% of mobile transactions for retailers* who have made their app experience a priority: Mobile apps perform better than any other channel, including desktop. Cross-device usage is now enormous. Cross-device purchasing powers 45% of eCommerce transactions. iPhone makes up the majority of smartphone transactions in the UK at 68.8%, up from 64.9% over the last two quarters.

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Mobile Commerce in Japan Mobile phones are a way of life in Japan. Rapid innovation and huge investments by network operators have led to the emergence of one of the world’s most dynamic and valuable mobile economies. Japan was leading the world in mobile Commerce during last year in the quarter2 as criteo (2015). Its first mobile network went live in 1979 and it was one of the first countries to launch 3G services. Mobile internet access is the norm, with the majority of Japanese citizens using phones and other portable devices to connect to the web. Consumers are buying on mobile devices, not just researching. Smartphones have overtaken tablets in mobile sales. Mobile average order value is reaching desktop level, and mobile conversion rates are catching up with desktop too.

Mobile Commerce in India Mobile Commerce in India is increasing at a very fast pace. According to TRAI (2014), subscribers who access the internet through wireless phones are 904.51 Million. Many new E-Commerce applications are possible using wireless and mobile networks. These applications are termed as ‘Wireless E-commerce’ or ‘Mobile Commerce’. With the increase in the number of wireless internet subscribers and advancement in the operating systems of mobile phones, mobile commerce has reached to every corner of the world. Figure 4 depicts the use of telephone subscribers (wired and wireless both) used in Urban and rural context of India. Figure 5 shows the usage of internet on mobile phones, fixed lines and wired networks.

Figure 3. Mobile share of online retail transactions quarter 4, 2014, by country Source: (Criteo, 2015).

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Figure 4. Composition of telephone subscribers in India Source: (TRAI, 2014).

Figure 5. Composition of Internet subscribers in India Source: (TRAI, 2014).

Mobile Commerce from Different Viewpoints •

•

260

Mobile Commerce from Customer’s View: The customer wants to retrieve information, purchase goods and services 24*7 at any location through their mobile device. Users can use their mobile device to purchase tickets, do shopping, download content and even order books and CDs, can transfer funds, pay bills etc. He should be offered appropriate payment methods. Mobile Commerce from Provider’s View: The future development of the mobile telecommunication sector is heading more and more towards value-added services. It is forecasted by the analysts that soon half of mobile operators’ revenue will be earned through mobile Commerce. Innovative service scenarios will be needed that meet the customer’s expectations and business models that satisfy.

 Services of Mobile Commerce

Figure 6. Impact of cell phone Source: (Smith, 2012).

Services of Mobile Commerce The advent of ecommerce fostered in an evolution in the way of customer’s trade with businesses. Mobile Commerce is a revolution. Mobile commerce has opened a big new window of commerce. M-commerce is not just about selling- it is much, much more and it enables users to access the internet without needing to find a place to plug in. In today’s technical world a mobile phone works as an accountant, concierge, health advisor, navigator, shopping buddy, security guard, rewards, optimizer, appointment reminder and much more. It is widely speculated that m-commerce will surpass wire line e-commerce as the method of choice for digital commerce transactions. Content delivery over wireless devices becomes faster, more secure, and scalable. M-Commerce is an emerging discipline involving applications, mobile device, middleware, and wireless networks. While most of existing e-commerce application can be modified to run a wireless environment, M-Commerce creates opportunity to deliver new services to existing customers and to attract new ones (Varshney and Vetter, 2002). Chang (2007) express that services of similar nature can be clustered together. Applications needs to be integrated and cooperate, as the provisioning of service involves several parties or industry sectors, the development of application requires the synchronization and good cooperation between entities. This includes defining of industry standards, migration to such specifications, content definition, mapping of milestones (the road map of the parties). It can be broadly categorized into information based consumer services, Transaction Services (financial services, telecommunication service etc.), Location-centric personalized services. According to Ovum’s research, m-commerce applications can be classified into three categories: Goods, Services and Information. 261

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Figure 7. Types/classes of m-commerce applications (Source: Varshney, U., & Vetter, R., 2000)

Types of Mobile Commerce Business to Business (business houses are dealing with other business units for procurement, trading, contracts and quotations etc.), Business to consumer (business is offering consumers to shop online), Consumer to Consumer (consumers are selling their old products to others customers), Business to government (business houses are filling for government trading, contracts and subsidies), Government to consumer (Passport, aadhar card(india), Personal Identification card, Income tax, Driving license, etc.). 1.

262

Mobile Banking or Financial Services: Mobile banking enables customers to use their mobile phones to receive alerts, manage their accounts, pay bills, and transfer funds (VeriSign, 2007). It is an extension of Internet banking (or home banking), allow customers to use digital signatures and certificates, manage personal account information (account history, transfers); transfer funds in bank accounts or pre- paid accounts, receive alerts regarding bank information or payments due, and handle electronic invoice payments. Each of these services is secured end to end and, can be performed from the handheld units which could be a smart phone, PDA or any mobile terminals. The consumer would no longer need to go to an automatic teller machine, to wait for a call center operator or to log on to a computer. As for the banks, they can enhance their service level and reduce cost by minimizing calls at call centers. Financial services includes mobile banking (when customers use their handheld devices to access their accounts and pay their bills) as well as brokerage services, in which stock quotes can be displayed and trading is conducted from the same handheld device.

 Services of Mobile Commerce

Figure 8. Ovum

Table 2. Mobile applications Applications

Examples of Services Offered

Mobile Banking

• Mobile Accounting • Mobile Brokerage • Mobile Financial Information • Utility Bills • Electronic Fund Transfer

Mobile Entertainment

• Gaming • Download Music and ring tones • Download Videos and Digital Images • Location based entertainment services • Download Movies and songs

Mobile Information Services

• Current affairs (Financial, Sports, Movies and any other news) • Travel information • Tracking Services • Mobile Search Engines and directories • Mobile Office • Advertisements • Education • Health Care • Traffic

Mobile Marketing

• Mobile Couponing • Direct (context-sensitive) marketing • Organization of mobile events • Mobile Newsletter

Mobile Shopping

Mobile purchasing of goods and services

Mobile Ticketing

• Public Transport • Sports and Cultural events • Air and Rail Traffic • Mobile Parking

Telematics Services

• Remote diagnosis and Maintenance of Vehicles • Navigation Services • Vehicle Tracking and Theft Protection • Emergency Services

(Source: Tiwari et al., 2006).

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2.

3.

264

Mobile Entertainment: One of the most appealing groups of applications for mobile ecommerce is likely to be entertainment. Mobile entertainment includes content services such as downloads videos, music, gaming, and ring tones, as well as text-based messaging services such as audience voting (VeriSign, 2007). The service provider will supply a means for users to pay or sign contracts electronically. This might involve the user of payment or charging mechanisms such as prepaid games, or direct charging via the user’s pone bill. All manner of gambling is possible with pay-pergame or betting features. Online games, adventure games, and other services with pay-per-game features should also port well to mobile e-commerce. Mobile Information Services: a. Travel and Tourism: With enhanced messaging and location based mobile service, offered by mobile operators and enterprise travel companies, travelers get in touch with all traveling tips, news, financial information, weather and ticketing anytime and anywhere. For example, if a crisis arises while traveling (a flight delay or diversion), new mobile phone services can enable travelers to better cope with disruptions, services could include displaying and booking alternative flights. Location specific services such as listing nearby hotels with room availability, local restaurants and taxi, movie halls, shopping malls etc. will also attract travelers. b. Traffic: Traffic is the movement of vehicles or pedestrians through an area or along a route. The passengers in the vehicles and the pedestrians are all mobile objects, ideal clients of mobile commerce. Also, traffic control is usually a major headache for many metropolitan areas. Using the technology of mobile commerce can easily improve the flow of traffic in many ways. For example, a mobile handheld device can have the capabilities of a GPS, such as determining the driver’s exact position, giving directions, and advising on the current status of traffic in the area. A traffic control center could also monitor and control the traffic according to the signals sent from mobile devices in the vehicles. Maps can be downloaded as an App, which will help customer locate the areas with heavy traffic so that they can avoid that route. c. Education: Similar to other wired technologies, mobile wireless technologies have first been used in industry sectors such as business. (Levine, 2002; McGhee, 2001; McKenzie, 2005) shared their opinion about the movement of mobile wireless technologies in education and as per them it is a recent trend, and is now becoming the hottest technology in higher education. Many universities, colleges and even corporates are providing online training. E-learning is helping people to learn at their own pace (24*7) can repeat the lecture till the time user is not sure about, can ask question and get answer within 48 hours. d. Health Care: Banitsas (2002), Chau et al. (2004), Larkin (2001) Varshney (2004) shed light on how the cost of health care is so high and how mobile commerce can actually help reduce it. By using the technology of mobile commerce, physicians and nurses can remotely access and update patient records immediately, a function which has often incurred a considerable delay in the past. This improves efficiency and productivity, reduces administrative overheads, and enhances overall service quality. Mobile technologies such as PDAs, Laptops or Tablet PCs can be of great value in hospitals and healthcare facilities by allowing better access to critical information – e.g. patient status, staff and patient location and facilities availability Healthcare facilities that choose to adopt such technologies may be able to not only perform better but ultimately provide more efficient and better quality of care for patients (Bahlman et al. 2005). Apps like Dr., helps to locate the doctor urgently.

 Services of Mobile Commerce

e.

4.

5.

6.

7.

Personal Information Management (PIM): PIM applications allow users to manage their daily information and events easily and in a simple way. Examples include e-mail (with or without voice capability), dictionary checking, clearing, contact list, To-do list, event reminder and data storage management. Typically, PIM cooperates with third party software or modules like Lotus Notes and mail messenger. Synchronization of handheld information (like contact list, email and task list) to personal computer or laptop computer is essential. An embedded capability is usually installed in mobile device, especially PDAs. Applications such as ActiveSync and HotSync are very popular in today’s handheld devices. There are various Apps available to manage daily finances (accounts) of an individual. Mobile Marketing and Advertising: Mobile operators and other companies are using targeted mobile advertising and mobile coupons to connect advertisers with specific demographics. Recent mobile campaigns have enabled users to quickly search various categories of products and services in their immediate area, and then access, save, and redeem related discounts, promotions, and coupons—all via their cell phone (Fanning, 2007). Mobile Shopping/Retail: Consumers are increasingly comfortable with paying for goods and services and transferring money via mobile devices. In the retail trade industry, the possible uses of wireless Internet access devices are almost limitless. Shopping applications will enable regular Internet e-commerce via a mobile phone, that is, the booking and ordering of, and paying for, physical goods and services from e-shops, virtual malls and portals. Another possible use is the confirmation of payment for goods in the physical world. In Austria, subscribers use their mobile devices to pay for home-delivery shopping services, vending machine and in-store purchases, taxis, and purchases at fuel stations and other retail outlets. In South Korea, subscribers can pay for purchases by using mobile devices that contain a smart chip linked to their credit card account. The device functions as a contactless card at the point of sale, using either radio frequency or infrared technology to complete the transaction. Mobile Ticketing: An electronic ticket for an event or travel results from transactions that involve booking, purchasing, invoicing, payment and receipt. Optional service delivery could supply virtual tickets. These could be used with a wide range of businesses- airlines, railways, mass transit, toll way authorities, theaters, sporting event organizers, theme parks and so on. Telematics Services: a. Inventory Tracking and Dispatching: Just-in-time delivery is the need of today’s business. It is very critical for the success. Mobile commerce allows a business to keep track of its mobile inventory and make time-definite deliveries, thus improving customer service, reducing inventory, and enhancing a company’s competitive edge. Major delivery services such as UPS and FedEx have already applied these technologies to their business operations worldwide with great success. b. Location Based Service: Location based application is a revolutionary service for the popular mass. Users can get instant information based on their current geographical position or location district. One of the most compelling applications is the provisioning of localized shopping malls, bus stops, banks and hospitals. This kind of information can also be personalized. Automobile industry is using the benefits of GPS, Time of Arrival (TOA) and Angle of Arrival (AOA) etc.

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c.

Enterprise Resource Planning (ERP): In the coming mobile commerce era, users will want to be able to have access to the right resources and work as efficiently as possible– whether they are traveling, seeing a customer or working at other remote locations– with their ERP systems (Siau et al., 2001). Many ERP vendors are currently researching for means to provide mobility to ERP users. They attempt to connect employees to their work more effectively than ever before by enabling mobile phones and other wireless devices to become a new kind of tool to seamlessly exchange information, automate data entry and perform a range of transactions anytime, anywhere (Siau and Shen, 2003).

List of Popular Mobile Services used in India • • • • • • • • • • •

User can book train and plane tickets through mobile phone and get SMS alert or email message. Student can Register with IGNOU or any university and get SMS updates. Dr. SMS: healthcare through mobile technology in Kerala. Mobile Passport Seva Application. Mobile Application Store – Download Apps for Govt Services. App for Right to Information Act. App for Aadhaar Bank Service. Indian Post Status Tracking. App for personal treatment. SMS Translation App. Nirbhaya mobile application to assist women in distress.

Mobile Applications (APPS) With the rapid proliferation of mobile devices, including mobile phones, PDAs, and handheld computers, mobile commerce is widely considered to be a driving force for next-generation e-commerce. These days to enhance business, companies are coming up with Mobile Apps and are offering great discounts on the shopping using the APP. For Example- Flipkart, Amazon, Myntra, Jabong, etc. are offering numerous products online via mobile apps. This is a lucrative option for the customers to search and order while they are travelling and get heavy discounts, don’t need to waste time shopping and seeking for discounts. Companies have good return policies for the better customer satisfaction. Banks and financial sectors are also offering Apps like Pockets, Paytm, Pay4u etc. Today, mobile phones know the phone numbers of our friends and colleagues. They have provision to track location. Mobile phone has started replacing our wallets and credit cards. Mobile phone can connect to electronic devices and user can switch on/off the fans, lights, washing machine, microwave etc. even when user is away from home. Mobile phone is helping health cautious people to check how many kms they have walked, how many footsteps user has taken, how much calories have been burnt etc. One day, they may very well turn into intelligent assistants capable of anticipating many of our wishes and needs, such as automatically arranging for taxis to come and pick us up after business meetings or providing us with summaries of relevant news and messages left by colleagues. But, for all these changes to happen, key issues of interoperability, usability, security, and privacy still need to be addressed.

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Mobile phones have been designed not only to connect with people via calls, SMS or through internet on Google talk, messenger, Whatsapp, emails etc. Mobile Commerce, or m-Commerce, is about the explosion of applications and services that are becoming accessible from Internet-enabled mobile devices. It involves new technologies, services and business models. It is quite different from traditional e-Commerce. Mobile phones impose very different constraints than desktop computers. But they also open the door to a slew of new applications and services. They follow you wherever you go, making it possible to look for a nearby restaurant, stay in touch with colleagues, or pay for items at a store. In this competitive world organizations have turned more techno-savvy, they are giving lucrative offers to download the Apps. These APPS are created so that they can be easily downloaded on the user’s cell phone and they can easily transact and shop online. The idea was to make a portable device so that it should be handy, comfortable for the customer to navigate, access internet services, shop online, pay bills, book tickets etc. Business houses are designing and switching to Mobile Apps. There are three types of mobile sites. It has been observed that optimized sites perform better at each stage of the conversion funnel. For optimised sites, number of products viewed, add-to-basket rate and purchase rate is higher than non optimised sites. This results in a higher conversion rate [Conversion Rate = (No. of Sales) / (No. of Users)] at 4.4% for optimised sites versus 3.7% for non-optimised sites. Differences in purchase rates are not very important – the key is the experience of browsing products and comfort in adding them to the basket. • • •

Non-Optimised: The website has at least one of the following issues: content wider than screen, links too close together, mobile viewport not set or text too small to read. Usable on Mobile: The desktop website is readable and usable on mobile but there is no specific mobile website or responsive design website. Optimised: The website is either designed to adapt on all mobile devices or specifically created for mobile.

M-Commerce Applications (APPS) Apps deliver higher conversion rates because they provide a much better product browsing experience. Partly, this indicates that the user experience of apps is better than desktop and browser. It also reflects the fact that apps are used by more loyal customers, leading to higher conversion rates. In retail, consumers using the app convert at a rate three times higher than those using a mobile browser. With travel, the conversion rate for apps is almost two times that of mobile browser (Centrino.com). Each geographic market contains more than 1,000 models of mobile phones. Releasing mobile commerce applications for Android, BlackBerry and iPhone devices may cover a large proportion of your target audience in developed markets. However, in emerging markets where smartphones are the minority, you need a different strategy. In developing regions, the question is not for which smartphones you will build an app, but which mobile technology works best for your app and users. Retailers who have prioritized their mobile app as a key revenue driver see significant share of transactions via their app. For these retailers, apps generate 47% of all mobile revenue. Apps are significant for last-minute travel bookings. 42% of mobile transactions come through apps for committed app businesses. Shoppers view more than three times the number of products on apps than on mobile browsers because of a more engaging user experience. As a result of seeing these products, many more are added to the basket. This results in apps having three times the conversion rate of mobile browsers. In retail, 267

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the average order values on app, mobile browser and desktop are almost the same. Mobile order value in the travel category is lower than desktop, as mobile is used for last-minute, lower cost purchases, such as same-day hotels. Average order values on mobile browsers and apps are very similar. Let us see it from a company’s perspective •

•

•

New Sales Channels: Mobile shopping is coming, development is proceeding at full pace. Put the benefits in customers’ hands: give shoppers access to your full product range, wherever and whenever. Address a whole new customer group and make the most of a new sales channel with potential revenues on the rise. Bring together all your customer contact points in a single mobile application and embrace the advantages of multi-channel management. Customers can localize stores, display special offers and call up targeted information. Increase Customer Retention: For technical wholesalers active in the B2B sector, the focus is increasingly on the improved levels of service that m-commerce solutions can provide to customers. Be it on the construction site, in the warehouse, or on the move, customers can generate orders immediately wherever materials are needed – all from their smartphone or tablet, no paper needed. Avoid lost memos and missing deliveries, streamline the ordering process. Using a barcode scanner based on the mobile device’s camera, users can place an order as quick as a flash. What’s more, they have instant access to catalogues and the full product range, including stock levels and delivery times. The benefits for you as a supplier are simplified processes, added value for your customers, and increased loyalty to your company. Stable and Future Proof: In contrast to online solutions, applications from iEffects are unaffected by irritating delays and interruptions during the input and ordering process. This is because data is mostly accessed offline. By exploiting the benefits of standardization, the customers can be sure their applications are able to access a rich set of features that are being continuously optimized.

Mobile Commerce Architecture Collect the data-> Monitor the behavior ->Decide n help the customer’s decide-> be in touch with the customer via SMS, email etc.->Transact (Work on Payment Gateway) ->Learn (Integration and Latest things used in market for securing the data and more efficiency and growth) • • • • • • • • • • • • • 268

Bring in data (offers, location, events, customer requests/inputs etc.). Integrate the data, in real-time and prepare it for use. Monitor sensors, data sources, locations, loyalty program details, etc 24*7. Learn the nuances of the customer’s situation to help in all the right areas at all the right times. Analyze the collected knowledge about the customer. Make decisions and show those product which was mostly accessed or purchased by the user. Cue up the message for delivery. Get the customer’s attention- via alerts, messaging, emails, etc. Communicate good deals, risk of missing meetings, birthday gifts to buy, groceries needed, train delays, etc. Security and authentication. eWallet integration. HCE, tokenization, etc. QRCode generation.

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Business Models M-Commerce success depends on the ease of use, right information at right time. As mobility or portability is one of the most significant parts of mobile commerce along with flexibility, relevant information at right time and place. One of the most exciting features is customization. Websites are not free; everyone costs money to develop and maintain. The cost and potential revenue constitute a business model. It is a way of conducting business to sustain business and generate revenue. The business model in a simple way can be explained as how a company makes money by showing where it is in the value chain. Like for instance, traditional software are based on two popular business models; one is license based and the other is subscription based. Business model of M-commerce plays a significant role in the generation of revenue and making m-commerce site or App a success. Even the most brilliant service will not be commercially successful for the provider if the chosen business model is not appropriate for the service. The emphasis should be given on defining criteria for the evaluation of generic m-commerce business models and choosing the right business models for the services mentioned before. There are numerous ways to generate revenue from mobile site or mobile application. 1. 2.

3.

Selling Your Application: This is the most obvious and the one that is most widely leveraged today: Build an app that everyone will want and sell millions of licenses and reap the rewards. Freemium: It isn’t one single model for mobile; it really encompasses a number of opportunities to generate revenue. The goal of freemium is to get the app in as many hands as possible and once the app is downloaded; try to generate revenue from one of the following ways: a. Sell an Enhanced Version of App: This is the most widely used model. Limited version of the product is given with a hope that enough customers will be attracted to download it and then convert a percentage of those into paying customers. b. Sell In-App Advertising: The second most popular approach to freemium is selling advertising in the app. Using services like AddMob or Apple’s iAd is simple to implement but requires a successful product with hundreds of thousands or millions of downloads to make a decent amount of revenue. c. Up-Selling Content Packs: Once application is installed on millions of devices one can than start offering content packs (additional levels for example), additional functionality or even have people pay to remove the in-app advertisements. Extend an Existing Business into the Mobile World: There are many options for extending an existing business into the mobile world a. Enhancing an Existing Line of Business: This is about finding the one key area of an existing business and extending it to the mobile world. There are a ton of great examples here but take a look at Kayak’s iPad application for inspiration. It takes a conventional service that they already offer (flight times/schedules) and puts a different spin on it on the iPad (finds the nearest airport and shows all flights that are leaving from that airport based on what customer want to spend on a ticket). b. Extending Reach to New Customers: One of the greatest potentials of mobile is to extend the reach of product – say from TV, the web or bricks and mortar – to new customers that wouldn’t normally consume what you are selling in its current form. A perfect example is the opportunity for someone like Gary Vaynerchuk to extend his Winelibrary. TV web show

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into a wine-review app with a barcode scanner and ecommerce engine to connect to his video reviews, written reviews and to order it right from his warehouse. Now a customer does not need to watch the show every time you want to make an informed decision. Build an Application as a Service: An application can be made for offering services like MeruCab, Ubercab. This iPhone/SMS service allows you to quickly book and pay for a car service with one button. This is great example of the future of productive mobile business models – filling a need that is best-suited for our mobile lives. Build an App as a Subscription: One word: Wired. When Wired launched their iPad app version of the magazine it surpassed sales of its print version in the first month it went live – that’s disruptive. Other similar examples would be Sirius/XM satellite radio for mobiles, the New York Times Crossword puzzle game and PumpOne’s FitnessBuilder application. Mobilize an Existing Technology: Most companies are looking for mobile versions of enterprise software they have already implemented internally — things like CRM applications, HR application or business operations applications. For some, mobile is the natural extension for these services and there is opportunity to fill a very specific niche here. Take a look at Aeroprise, a company that built a business mobilizing BMC software. Instant market if the demand is there. Build an App that Extends a Web Business: The most amazing thing to emerge since the dot com bust has been the open API. Any company currently offering a legitimate web service has adopted the open API in hopes that their service will find developers who will create the next layer of service on top of theirs. Enter mobile. This is area is ripe for entrepreneurs to bring a service (or a bunch of services) into the mobile world as a new level of value. A perfect example of this is TopGuest.com using all those location based stamping services to reward hotel guests with loyalty points. Sell Affiliate Products through Your App: This one requires a very popular application in order to generate substantial revenue from the referral fees but it could compliment another stream from one of the other business models mentioned here. A great example of this model is a news service application from Blancspot. Part of the application emphasizes music and photographs – both of which are available for purchase through the app itself. If All Else Fails, Build an App for Someone Else: The old service model is still alive and kicking and one of the fastest growth segments in the mobile world is actually helping companies who don’t have the expertise to build mobile applications for them. Service for hire. One caveat here is that the price and complexity of building applications for a living is being impacted by the better development tools coming into the market that are democratization or commoditizing this business. There you go. Limiting your business model scope to just making money from selling your application is quickly becoming an outdated approach. How are you building your business in mobile?

4.

5.

6.

7.

8.

9.

Relevant factors for business modeling: • • • •

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The concept for a new mobile commerce service. The positioning of the mobile operator taking into account its strategic advantages. The target market, in terms of market segment and corresponding potential. The relationship with other strategic business partners.

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FUTURE RESEARCH DIRECTIONS Technology has significantly evaluated from ‘E-decade’ to ‘M-decade’ (Wagner, 2005). Mobile commerce involves all kind of electronic transactions by the use of mobile. The use of mobile commerce has improved and widened the market reach, cut down cost and given customers better services. The companies are focusing on providing the convenience and ease to the users. Therefore, the companies are offering customers to download the apps and get better discounts and stay connected through the mobile apps. Security and speed is always a matter of concern for both customers and organizations extensive research is going on in both these domains. Future belongs to m-commerce as everybody finds it easy, comfortable to carry a transaction online.

CONCLUSION Mobile Commerce is an evolving area of e-Commerce, where users can interact with the service providers through a mobile and wireless network, using mobile devices for information retrieval and transaction processing (VeriSign, 2007). Today’s consumer’s use their mobile phone not only as a phone but as an additional accessory which works as an all-in-one wallet, organizer, Internet connection, jukebox, game console, messaging device etc. Using mobile devices for commerce is a natural extension of this lifestyle. It offers consumers the convenience of ubiquitous access to value-added services, and gives organizations the opportunity to differentiate their services, create new revenue streams, and build customer loyalty. Over the past several years, mobile operators, merchants, content providers, and financial institutions have successfully launched a range of mobile applications worldwide. These initial deployments—and their adoption by consumers—have created demand for a larger set of commerce services that allow consumers to use their mobile device to conduct transactions flexibly and conveniently (e.g., to purchase a digital good such as a ring tone or game or video, or a tangible good, such as a book or a CD). Growth in mCommerce is unstoppable. Globally, consumers are likely to spend $119 billion by 2015 through their mobile phones, which will account for 8% of all e-commerce activity (ABI Research). Smartphones will continue to displace slower-growing tablets due to larger available screens. Apple is gaining ground on Android, but both are winners vs. a shrinking desktop. Apps are the next frontier: Advertisers will start to significantly invest in their mobile app as a way to drive more conversions than desktop and engage with their loyal customers. Best example for this could be Myntra and Flipkart.com which has completely shifted to APPs. Dealing with cross-device behaviour is the biggest challenge and opportunity for marketers in 2015. With 40% of sales already cross-device, marketers have to talk to users and no longer to devices. IPhones are much safer than Android phones and for e-commerce technology security is the key strength area.

REFERENCES A GS1 Mobile Com. (2008). White Paper on Mobile Commerce: opportunities and challenges. Retrieved from http://www.gs1.org/docs/mobile/GS1_Mobile_Com_Whitepaper.pdf Abbott, L. (n.d.). M-Commerce. Retrieved From http://www.mobileinfo.com/mcommerce/index.htm

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Bahlman, D. T., & Johnson, F. C. (2005). Using technology to improve and support communication and workflow processes. Association of Operation Room Nurses, 82(1), 65–73. doi:10.1016/S00012092(06)60301-3 PMID:16114608 Banitsas, K., Istepanian, R. S. H., & Tachakra, S. (2002). Applications of medical wireless LAN systems (MedLAN). International Journal of Medical Marketing, 2(2), 136–142. doi:10.1057/palgrave. jmm.5040067 Brothers, L. (1995). Moving in mobile media Mode. New York, NY: Lehman Brothers. Chang-tseh, H. (2007). Mobile Commerce: Assessing New Business Opportunities. Communications of the IIMA, 7(1), 87–100. Chau, S., & Turner, P. (2004). Examining the utilization of mobile handheld devices at an Australian aged care Facility. 8th Pacific Asia Conference on Information System, Shanghai, China. Criteo. (2015). Retrieved from http://www.criteo.com/media/2501/criteo-state-of-mobile-commercereport-q2-2015-ppt.pdf Durlacher Research Ltd. (1998). Mobile commerce report. Retrieved from http://www.fno.org/jan01/ wireless.html Durlacher Research Ltd. EQVITEC PARTNERS OYUMTS Report (2001). UMTS Report: An Investment perspective. Retrieved from www.durlacher.com/downloads/umtsreport.pdf Fanning, E. (2007, May 14). U.S. wireless users are taking a leap of faith when they travel abroad. Here’s what you can learn from seasoned globe-trotters. Computer World. Retrieved from http://www. computerworld.com/article/2553546/mobile-wireless/global-mobile.html Jahanshahi, A. A., Mirzaie, A., & Asadollahi, A. (2011). Mobile Commerce beyond E-commerce: Issues and challenges. Asian Journal of Business and Management Sciences, 1(2), 119–129. Larkin, M. (2001). Can handheld computers improve the quality of care? Lancet, 358(9291), 1438. doi:10.1016/S0140-6736(01)06550-3 PMID:11705509 Levine, L. M. (2002). Campus-wide mobile wireless: Mobility and convergence. Syllabus. ACM. Lidderdale, P. (2009). Importance of enterprise architecture. [Executive Talk]. Terry College of Business, University of Georgia. Retrieved from http://www.nationmultimedia.com/2009/03/24/technology/ technology_30098694.php Linck, K., Pousttchi, K., & Wiedemann, D. G. (2006): Security Issues in Mobile Payment from the Customer Viewpoint. In 14th European Conference on Information Systems (ECIS). McGhee, R., & Kozma, R. (2001). New teacher and student roles in the technology supported classroom. Paper presented at the annual meeting of the American Educational Research Association, Seattle, WA McKenzie, J. (2005). The unwired classroom: Wireless computers come of age. Educational Technology, 10(4).

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Nayak, N., Nath, V., & Goel, N. (2014). A study of Adoption Behaviour of Mobile Banking Services by Indian Consumers. International Journal of Research in Engineering & Technology, 2(3), 209–222. Petrova, K. (2004). Mobile commerce adoption: End-user/customer views. In N. Delener & C.-N. Chao (Eds.), Navigating Crisis and Opportunities in Global Markets: Leadership, Strategy and Governance. Proceedings of the 2004 GBATA International Conference. (pp. 604-615). Pongaston. (2009). Mobile Commerce. Retrieved from http://the-mobile-commerce.blogspot.in/2009/10/ attributes-and-drivers-of-mobile.html Schneiderman, R. (2000). The mobile technology question and answer book: a survival guide for business manager. AMACOM. Schwiderski-Grosche, S., & Knospe, H. (2002). Secure M-Commerce. Electronics & Communication Engineering Journal, 14(5), 228–238. doi:10.1049/ecej:20020506 Siau, K., Lim, E., & Shen, Z. (2001). Mobile Commerce: Promises, Challenges and Research Agenda. Journal of Database Management, 12(3), 3–10. doi:10.4018/jdm.2001070101 Siau, K., & Shen, Z. (2003). Mobile Communications and Mobile Services. International Journal of Mobile Communications, 1(1/2), 3–14. doi:10.1504/IJMC.2003.002457 Smith, A. (2012). Pew research center’s internet & American life project. The Best (and Worst) of Mobile Connectivity [survey]. Retrieved from http://www.pewinternet.org/2012/11/30/the-best-and-worst-ofmobile-connectivity/ Telecom Regulatory Authority of India. (2014). The Indian telecom services performance indicators. New Delhi, India: Mahanagar Doorsanchar Bhawan. TIMElabs. (2000). Winning in Mobile eMarkets. Retrieved from http://www.timelabs.de/pdf/TIMElabs_C_ mB2B_d.pdf Tiwari, R., Buse, S., & Herstatt, C. (2006). Mobile banking as business strategy: impact of mobile technologies on customer behaviour and its implications for financial institutions. Portland International Conference on Management of Engineering and Technology, Istanbul, Turkey. Turban, E. (2006). Introduction to e-commerce. Prentice Hall. Varshney, U. (2004). Using wireless networks for enhanced monitoring of patients. Tenth Americas Conference on Information Systems, New York, NY. Varshney, U., & Vetter, R. (2000). Recent Advances in Wireless Networking. IEEE Computer, 33(6), 100–103. doi:10.1109/2.846322 Varshney, U., & Vetter, R. (2002). Mobile Commerce: Framework, Applications and Networking Support. Mobile Networks and Applications, 7(3), 185–198. doi:10.1023/A:1014570512129 VeriSign. (2007). Mobile Commerce Services Driving Mobile Commerce Adoption: Best Practices for a Comprehensive. Secure Mobile Commerce Strategy. Verisign White paper. Wagner, E. D. (2005). Enabling Mobile Learning. EDUCAUSE Review, 40(3), 40–53.

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Weiss, S. (2006). Security and Privacy in Mobile Commerce. Seminar: Mobile Business. University Hannover. Retrieved from http://www.podcast.de/episode/1182192/Security+and+Privacy+in+Mobi le+Commerce+(Stefan+Weiss)/

KEY TERMS AND DEFINITIONS APPS: A mobile app is a software application developed specifically for use on small, wireless computing devices, such as smartphones and tablets, rather than desktop or laptop computers. Android Phone: The Android cell phone is a cell phone running the Android OS. A typical Android cell phone is a smartphone with a touch screen interface, multiple connectivity options, Internet browsing capabilities, support for video playback and a camera. Bandwidth: In computer networks, bandwidth is used as a synonym for data transfer rate, the amount of data that can be carried from one point to another in a given time period (usually a second). I-Mode: I-Mode is a mobile Internet service in Japan offered by DoCoMo. The service is mostly accessed directly via a menu on I-Mode-compatible devices. i-mode makes use of DoCoMo’s packetswitched technology, which provides subscribers with “always on” network access. Thus, subscribers are billed based on the amount of data sent and received, not by the time spent on the network to access the service. iPhone: iPhone is a smartphone made by Apple that combines an iPod, a tablet PC, a digital camera and a cellular phone. The device includes Internet browsing and networking capabilities. The iPhone runs on a special version of Apple’sMac OS X operating system. Mobile Commerce or M-Commerce: Refers to e-commerce conducted in a wireless environment over the Internet. This typically occurs over mobile technologies such as smartphones, tablets or other wireless devices. With this technology come two important issues and concerns we must be aware of: consumer privacy and fraud. USSD: USSD stands for Unstructured Supplementary Services Data. A gateway is the collection of hardware and software required to interconnect two or more disparate networks, including performing protocol conversion. It is a protocol used by GSM cellular telephones to communicate with the service provider’s computers. WAP: WAP (Wireless Application Protocol) is a specification for a set of communication protocols to standardize the way that wireless devices, such as cellular telephones and radio transceivers, can be used for Internet access, including e-mail, the World Wide Web, newsgroups, and instant messaging. While Internet access has been possible in the past, different manufacturers have used different technologies. In the future, devices and service systems that use WAP will be able to interoperate.

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Chapter 14

Security Risks of Mobile Commerce Ashish Kumar Bharati Vidyapeeth College of Engineering, India Rachna Jain Bharati Vidyapeeth College of Engineering, India Sushila Madan Delhi University, India

ABSTRACT Mobile commerce (m-commerce) is evolving as an alternative to E-commerce services. M-commerce is a type of e-commerce which emphases on the use of services on handheld devices. It is becoming very popular among users because of ease of connectivity and its usage. With increase in the demand, it becomes essential to provide security to the services used on mobile. The user is using the mobile devices to make their secure payments and transactions. It becomes essential to increase security layers in the m-commerce to provide privacy to the user. The security risks in m-commerce are increasing exponentially. This chapter investigates the security breaches and the solutions associated with the m-commerce. It also focuses on the network services and problem related with device and user authentication. Many algorithms are proposed to make the device and the transaction safe. It is compulsory to make m-payment method very safe and secure, so that user can trust m-commerce to use their sensitive personal information.

INTRODUCTION M-commerce is a wide term used to refer the growing practice of conducting financial and promotional activities with the help of a wireless handheld device. It is basically e-commerce where users do their business through their mobile devices on Internet in B2B (business to business) or B2C (business to consumer) markets. It recognizes the transactions which may be directed using cell phones, personal digital assistants and other hand held devices and requires Internet access for its operations. M-commerce DOI: 10.4018/978-1-5225-0236-4.ch014

Copyright © 2016, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

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allows user to directly do their business and shop directly anytime, anywhere with their smartphones. In today’s scenario, the numbers of mobile users are extending to billions as compared to desktops or laptops users. According to survey conducted by manufactures in 2014, it is observed that more than 1 billion Android devices were shipped. Based on survey and mobile device sales, one might think of emergent mobile industry and its customers. As the numbers of mobile users are cumulatively increasing m-commerce security is a major concern. It includes threat to personal and corporate security. Now a day’s most of the organisations provide mobile applications software to the customers for using their services. As of a survey conducted by Pew Research Centre in May 2013, 63% of the adult use their mobile phones to go online instead of laptops and desktops. It is primarily the responsibility of Mcommerce promoters to provide a secure platform for its user, so that customer can trust m-commerce for making their secure and private online money transactions. M-commerce offers instant connectivity and services to the customers irrespective of their geographical location with proactive functionality. IT must take the responsibility to secure user data, maintain security and privacy rules, so that more customers will be added to online business through m-commerce. Maintaining data security and privacy in M-commerce is an ongoing process with ever increasing overheads. Business through mobile is widely increasing because it is convenient to use, quick and easy, no need to carry cash and time saving. The concerns which averting it to be very popular are security and privacy, connectivity and Screen size. Security is directly proportional to inaccessibility. The NFS (Near Field Communication), Side loading are the technologies used for transferring data between devices, opening new challenges and threat for the m-commerce. Some of the risks and frauds that come with mobile commerce are access and payments based with fraudulent communications such as text message scams, security and accessibility issues. The vulnerabilities which cause security hazards to the Desktop PC, all are now affecting the mobile device too. The operating system should be made closed rather open to make it more secure. As mobile OS gains popularity, there is tremendous growth in the malware and attacks on that platform. There are various popular mobile OS available in market like Android, Tizen, iOS, Symbian etc. Android was the first mobile operating system which was affected by a worm. The most popular and secure Mobile OS are also targeted by attackers like iOS which is considered to be virus free, is also under attack. Blackberry OS which considered being totally immune to malware attacks, has been detected with infections. The virus spread through Apps downloaded from third party and this virus leaks private information of the user. The high profile security attacks are found on mobile device like Reverse Heart bleed, ShellShock, Poodle and many more.

Features of Mobile Commerce Security The mobile commerce security involves protecting device, network and transaction etc. It basically deals with all the intermediate which are involved between the customer and the services on mobile. The following are the features of mobile security which are to be considered when developing solutions (Rashad Yazdanifard & Mohamed Sayed, 2011):• •

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The m-commerce security solutions must be simple and usable. The customer must be able to customise or personalise the application as per requirement. The solution must be universal. It means that whatever environment is being used like one customer to another customer (C2C), or from a business to a customer (B2C) or between businesses (B2B), the security policy should not be changed or altered.

 Security Risks of Mobile Commerce

• • • • • •

The solution should be Interoperable. The security algorithm should not be changed when the operating system or development standard will be changed. Techniques will be developed to authenticate the user and websites on which customer provides its private information like debit or credit card number. When m-payment is being done then the privacy of customer should not be lost. Mobile payments should be transparent and unidentified as cash transactions. The system should be made resistant to malware and hackers attack. The solution will not be costlier than the existing system. If a customer is able to perform secure transactions through desktops then the same work should be accomplished in the same cost. The security algorithm should not be very heavy which alter with the speed. It should be able to process faster and secure transactions as compared to desktop applications.

Some security constraints should be taken care when proposing solution. The parameters which should be considered to deal with security in m-commerce are discussed below:1. 2. 3. 4. 5. 6.

Data Integrity: It maintains and assures the accuracy and consistency of the data sent from mobile device to server or vice-versa. Any unintended modification in the data must be identified. Data Confidentiality: It deals with preventing the sensitive information from the reach of the attackers. It must ensure that only the intended person would be able to access the information. Non-Repudiation: It must ensure that the exchange of information is non-repudiation. It is an assurance that someone cannot deny something. It helps in protecting the authenticity of a message when it is being challenged. Authentication and Authorization: Authentication is a procedure to determine the intended customer. Authorization is validating the user. Mobile application is a blend of the user authentication and device authentication both. Cost and Overheads: The cost and overheads should be maintained. The encryption algorithm should not increase the cost and overheads. High Efficiency: The security parameters must increase the efficiency so that users prefer their usage. The authentication and security algorithm must be able to make the application fast within the limitation associated with hardware mobile device.

Security Issues in Mobile Commerce The handheld devices are small and mobile. Security concerns in M-commerce are more diverse as compared to E-commerce. Mobile devices are more prone to be stolen and have limited power and storage capabilities (Alexios Vasileiadis, 2014). It requires more security at different levels. The security levels are related to data security, device security, network security and transactions security which are described below:

1. Data Security Data is very important and vulnerable assets. It needs to be protected against malicious attacks. Data security involves securing of the data at the source (transmitting device), during transmission (when transmitting information over a wireless network) and at the destination (target devices). Source com277

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prises of all components within the corporate firewall. Securing source means embracing the policies and strategies to grant, limit, or prohibit access to the corporate network. Transmission includes the authentication of the sender as well as data encryption. At the destination side, policies should be established to protect sensitive date from malicious attacks. Conventional data security solutions provide protection of data stored in the databases. Measures need to be taken to improve information security. In M-commerce, data moves inside and outside the business which means amplified access of data by its users. There are many security technologies which protects data from unauthorised access: •

•

Secure Socket Layer (SSL) is one of the security approach which prevents data while it in use. It requires a bidirectional byte stream services. It runs on small devices using J2ME platform. It considers unencrypted credit card number when data transits from the browser to the upstream IT systems and networks. With increased hacking attacks, solution must be developed to secure such private information from the users. Payment Card Industry Digital Security Standard (PCI DSS) has suggested Tokenisation, an approach to interchange credit card numbers with auxiliary values or tokens. The disadvantage of this method is that it is database centric and hence, not very prevalent. These databases grow over time, become difficult to manage, involve high maintenance cost and introduce data integrity issues.

2. Device Security Mobile devices are considered to be borrowed device. The mobile device includes mobile phones, PDA (Personal Digital Assistant), Smartphones etc. Each mobile device is characterised by certain characteristics like size and colour of display, network connectivity, and bandwidth of spectrum, operating system (Android, Window etc.) and availability of internal SIM card. The probability of security attack on mobile devices is more than computers (Desktops, Laptops etc.). Users habitually allow others to borrow their mobile devices to make a phone call, send SMS etc. The user provides its device to other in unlocked state with full access to all its private information because mobile devices are single user. There is no application with which “guest” account on the devices can be created that offers access to a limited subset of functionality. Mobile devices are more prone to be stolen. Once the device is stolen, the attacker has access to all the information and can easily brute force the encrypted password. Mobile devices should be equipped with technical capabilities to support passwords, personal identification numbers (PIN), and/or pattern screen locks for authentication. Like other devices, mobile devices should also be provided with biometric reader to scan a fingerprint or a face recogniser for authentication (Shari Trewin, Cal Swart, Larry Koved, Jacquelyn Martino, Kapil Singh & Shay Ben David, 2012). Mobile devices are more prone to spywares and malwares attack. Users may download virus unintentially, on their device as it concealed in a game, utilities or other useful application. Mobile devices do not come with security software to protect against malicious applications, spyware, and malware-based attacks.

3. Network Security When a mobile device is linked to a network, the security of the device is the responsibility of the advent technology (like GSM, CDMA etc.) used. The technology will take care of IMSI (International Mobile Subscriber Identity) confidentiality, IMSI data confidentiality on physical connections, Connectionless 278

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user data confidentiality, signalling information element confidentiality. The GSM network authenticates the identity of the subscriber through challenge response mechanism. The Mobile device calculates 32 bit Signed Response (SRES) from 128 bit Random Number (RAND) with authentication algorithm (A3) using the individual subscriber authentication key (Ki). Upon receiving the SRES from the subscriber, the GSM network repeats the calculation to verify the identity of the subscriber. The authentication key (Ki) is not transmitted over the radio channel. Various network technologies are described below:•

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High Speed Circuit Switched Data (HSCSD): A circuit switched protocol based on GSM. It transfers data at the rate of 57.6 kbps (kilo bytes per second). Data throughput has been increased by different time slots at same time and high speed by superior encoding methods. HSCSD is more expensive than other GSM technologies. Hence, it does not gain much popularity. Operators are not much willing to invest in this protocol, as it may be replaced by other technology in short span of time. Wireless Local Area Network (WLAN): Operates in the unlicensed 2.4GHz, and almost all mobile phones have this function. (Adrian Stephens, (n.d.)). It is also becoming very popular. However during the default mode WLAN is not secured which makes the device easy to corrupt, so a certain level of security is needed and In WLAN, WEP (Wired Equivalent Privacy) is used to authentication to protect the association to an AP (Access Point), Integrity protection to MAC (Medium Access Control) frames, Confidentiality to MAC frames. WLAN security attacks include jamming, client to client attacks, interception and unauthorized monitoring of wireless traffic. WLAN security standard is comprised of authentication and encryption. It uses shared key authentication which can authenticate associated APs with 40 or 128 bit key. When WEP is enabled, data frames are encrypted with RC4 cipher. WAP (Wireless Application Protocol): Has standardised a Wireless Transport Layer Security protocol (WTLS). (Niels Christian Juul & Niels Jørgensen, 2002). It provides security between a WAP enabled device and WAP gateway, which performs the protocol transformation to SSL. It is implemented in all micro browsers (used in mobile devices) and WAP servers. This protocol uses digital certificates to create a secure, trusted connection between the mobile device and the WAP server. Data transmission over a WTLS connection cannot be altered. Once a secure connection is created, this protocol cannot entrust further security. WTLS supports SHA-1, MD5 and SHA_XOR_40 which are ineffectual algorithm that cannot defend messages from unauthorized modifications. Universal Mobile Telecommunications System (UMTS)/3G: Represent the upgradation in the services and data speed from “2G generation” Mobile networks. It is developed and maintained by 3GPP (3rd Generation partnership product). (S. Kasera & N. Narang, 2005). GSM Association has given statistics that UMTS represents 70% of today’s digital wireless with more than 850 million users in 195 countries. It uses W-CDMA (Wide Code Division Multiple Access) radio technology for better spectrum bandwidth and speed. With current technologies UMTS require more power consumption as compared to other GSM networks. It uses AKA (Authentication and Key Agreement) which uses a challenge RAND, an expected response XRES, cipher key (CK), Integrity key (IK) and an Authentication token. Long-Term Evolution (LTE)/ 4G: Is a standard for wireless communication of high-speed data for mobile phones and data terminals. (Y. Leo, M. Kai & A. Liu, 2011). It is based on the GSM/ EDGE and UMTS/HSPA network technologies. It is increasing the capacity and speed using a dif279

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ferent radio interface together with core network improvements. The standard is developed by the 3GPP. It uses next generation air interface technology based upon orthogonal frequency-division multiplexing (OFDM) to have 100 MBIT/S download speed and 50 MBIT/S uploading speed. LTE-A (Advanced) refers the evolution of LTE to even higher user data rates and more network capacity. One of the key features of LTE-A is Carrier Aggregation. LTE-A continues to evolve, with a current focus on including the use of unlicensed spectrum and the optimization of mobile broadband networks for the Internet of Things. The security issues associated with LTE are illegal use of user and mobile equipment identities to access network services, user tracking based on the temporary user identifiers, signalling messages, illegal access and usage of security procedure keys to access network services and malicious modification of UE parameters (e.g. failure timers, retry timers) to lock out an UE from normal services. It uses EAP (Enhanced Authentication Protocol) Request/Response for the authentication.

4. Service Security There are many services provided by the network. They are IN (Intelligent Network), Parlay, SMS (Short Messaging Services), USSD (GSM Unstructured Supplementary Service Data) etc. These services are discussed below: •

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IN: Technology has been introduced to GSM networks. IN services includes prepaid services (i.e. call charging, data charging etc.), realise virtual private networks etc. It provides flexibility for the generation of m-commerce services. The IN handled call at MSC (Mobile Switching Center) if HLR (Home Location Register) indicates IN service subscription. The IN architecture for GSM called CAMEL (Customised Application for Mobile Enhanced Network Logic) was reformed from the fixed network standard ETSI Core INAP. The IN constituent SCP (Service Control Point) controls call and data service with CAMEL Application Part (CAP) which run with SS7 signalling Protocol. GSM or UMTS network security and specific characteristics of service application ensures security of IN services. SS7 based protocols (INCAP and CAP) are very complex and services initiation is reserved to operators and manufactures. Parlay/OSA: An Open Service Access developed by Parlay group industry, ETSI and 3GPP. (R. Corin, G. Di Caprio, S. Etalle, S. Gnesi, G. Lenzini & C. Moiso, 2005). The purpose of Parlay is to standardised interfaces to network services. Parlay APIs are specified in UML. It provides services to programming environments like CORBA/IDL, Java, web services specified by WSDL (Web Service Definition Language). It opens the network to the attackers. It provides functionality between application and SCFs (Service Capability Feature). It specifies authentication and encryption on application layer. Parlay application are portable with networks which is not possible with IN networks. Parlay defines web services for Multimedia Messaging, Payment, Account Management, Terminal Status, Terminal Location, Call Handling, Audio Call, Multimedia Conference, Address List Management, Presence, Message Broadcast, Geocoding, Application Driven QOS, Device Capabilities and Configuration, Multimedia Streaming control, Multimedia Multicast Session Management. SMS: Very popular GSM network service which is restricted to 160 characters. (F. Corell & K. Lawison, 2012). Sender and receiver of a SMS are identified by its IMSI which intruder cannot counterfeit without altering UMTS security mechanism. During transmission SMS are not en-

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crypted by default. Conventional encoding forward error protection and cyclic redundancy check are provided for SMS services. There is no end to end security mechanism. It is entrusted by network operator and SMSC (short messaging service centre). All network technologies provide the facility of SMS. If SMS is used as an authentication mechanism, then extra security must be ensured by the network. If a user is roaming, then the SMS passes through different networks. Attackers can intrude the sensitive information and use for its purpose. Secure algorithm must be designed so that information cannot be counterfeit during transmission. USSD: A very powerful protocol which ensures data communication between mobile device and either HLR, VLR, or SCP invisible to other network components. (USSD-3GPP, 2012). USSD messages are upto 182 alphanumeric characters. USSD session is more secure than SMS as it induces other network operations as well. With USSD, roaming can be offered to prepaid GSM customers. There is no separate security mechanism used in USSD it depends on GSM/UMTS. USSD string sent in plain text. The authentication depends on IMEI. Any transaction or payment operation could be initiated by USSD. The user gets immediate response in case of payment from the server because USSD is synchronous.

5. Transaction Security M-commerce comprises of the use of mobile phones for various online transactions through high speed internet. The mobile devices are used for making payments of mobile phone bills, DTH payments, transferring funds between bank accounts, trading shares and others secure transfers. With such a high end business transactions involved using mobile phones, providing security to the transactions is a major concern. Securing the passwords, credit card information and the user’s personal information while connected to a network is the responsibility of the m-commerce. When the customer executes transaction on mobile, it must be protected by inactivity lock out technology. This technology loges out the user automatically when the connection is lost which prevents the confidential information to leak out. M-commerce uses m-payment for making payment through mobile device. Transaction through mobile is becoming very popular. The reasons are personalization, easy connectivity and time efficiency. M-payment is defined as a payment for a service or a product between two vendors in which mobile is used as a hardware device for accomplishing the action. The mobile device is used by the payer or the customer for logging on the banking or financial websites for performing transactions. Mobile applications can be either be mobile web or native. Hence it requires better protocols and technologies for its security. M-payment involves uses of e-money. E-money is for those payment schemes which are anonymous, atomic and widely accepted. This money is deposited in plastic card, credit card or Master card, which contains small databases for transaction. The appropriate security policies and privacy should be implemented by financial, payment and service providers through security governance programs. All organisations (mobile device, browser, website etc.) which are in the chain of online payments must be provided two factor authentication to ensure high end security protection to the consumer and the user. The transactions initiating from unauthorized user and faked mobile must be identified and blocked. Dynamic card verification values (CVVs) must be used to identify the faked mobile so that user and service provider will be protected. Data protection must be considered while transmission and storage at various nodes which includes sensitive information like credit card number or PIN information. In case the mobile payment data will be used for marketing services, organizations could be found liable for unfair business practices if they utilize customer data for purposes not comprised in the customer notices. 281

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M-payment is also becoming popular with the facility like m-pesa and banking service like IMPS (Immediate payment services) which includes IMPS-payment, IMPS fund transfer. Banking services through mobile need to be strongly protected against security and hacking attacks. Mobile banking can be accessed through SMS or through WAP.

Security and Privacy Attacks in M-Commerce M-commerce is at potential risk because it is very tedious to provide security to the tasks and transactions done through mobile devices. (A. Mirarab & AbdolReza Rasouli kenari, 2014). In 2014, Alcatel Lucent’s Motive security labs (2015) have observed that infected mobile device number has been reached to millions. The mobile devices are infected with malware which threatens the personal and co-operate privacy. According to the reports generated by The Motive Security Lab (2014) has discussed that there is 25% increase in mobile device malware infection in 2014. There are three levels at which security should be provided. The first level security lies with the hardware component i.e. Mobile Device. The second level is with software i.e. Micro Browser. The Browser must be capable enough to run security software in it. The third level of security is most significant and most susceptible to attack. This level encompasses of carrying out online transactions and making m-Payment from mobile. This step must be made much protected because user cannot manage to pay lose their sensitive information which can be misused by attackers. Figure 1 depicts the mobile connection to the network and the security requirements at various levels. There are various categories of security attacks in M-commerce which includes spyware and malware attacks, phishing attacks, denial of service attacks and file sharing attacks. These attacks are discussed below:•

Spyware and Malware Attacks: Will affect the platform of the device which includes its operating system. (M. Giri & S. Singh, 2014). Mobile operating systems which include android, iOS, and blackberry are also becoming prevalent to the attacks. New android Trojans are detected which search the address book of the attacked mobile and start sending the sensitive data via Bluetooth to the first mobile in range. Certain new Trojans are spotted which will work with older

Figure 1. M-commerce system description

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PC viruses and send persons delicate information like mobile authorization code to others. The malware starts malicious app updates on the mobile devices. It scans for banking apps installed on mobile device and replace them with fake apps. It also disables security antivirus installed on the device. Other smartphones malware will try to access user account and perform transaction without user’s intervention. Spywares are used to spy on phone owner. It tracks the user’s phone location, spy ingoing and outgoing calls, text messages, e-mail and tracks web browsing. Bots, Rootkit, Banking Trojan are also getting intensify on mobile. Crypt currency mining malware drains out mobile battery very quickly and makes it overheated. The attacks target especially android devices. Notcompatible is a type of Trojan that acts a network proxy, permits attackers to send and receive data through the affected mobile for its own purpose. Koler is a Trojan which secretly resides in a media app which locks the affected device after deceptively reporting the happening of the illegal activity on the device. ShrewdCKSpy is spyware which acts to be an app marketplace, but the market icon disappears on first launch and the spyware initiated in the background. It diverts and tracks victim SMS, phone calls and upload them to a remote server. This spyware has the capacity to auto-accept and record calls from the victim mobile. Chargeware and Adware: Are also getting popular on mobile devices. Chargeware is those apps which charge users for content or services without any notification or its concern. (2013 Lookout Mobile Threat Report). SMSCapers and Sms4You are those apps with charges user for their services without any notification. Chargeware apps affected people in U.K. and France but has high impact in Germany. Adware are those apps that serve flashy ads which infer with mobile operating system and collect the personal information from the device more than the standard advertisement rules. Adware influence fell dramatically in 2014. Google strong policy for the Play Store has substantially reduced the abusive advertisement practices on the Android mobile devices. Phishing Attacks: Include logging on the fake site which behaves to be an authentic site and steal user’s sensitive information like passwords, username and account details also. Mobile users are more exposed to login on fake sites as compared to desktop users because it is hard to detect a fake site on mobile. Due to limited screen size, the URL is not long enough and well-crafted to identify the forged website. In 2012, 4000 phishing URLs has been designed for mobile Web. This number highlights that mobile devices (smartphones, tablets and the likes) are valid platforms to launch phishing attacks. In 2012, 75% of mobile phishing URLs were rogue versions of well-known banking or financial sites. M-commerce which includes m-payment is at more risk by phishing. Denial of Service Attack: Is also affecting the mobile devices. M-commerce is facing the same security hurdles as E-commerce. M-commerce has its own criteria to deal with such problems. Denial of service attacks on m-commerce makes its tedious to make payment when connected to online payment access. Rather than connecting to multi party for payment, single party connection is advisable. In 2014, The Motive Security Labs report noted that there is an increase in Distributed Denial of Service (DDOS) attacks using network infrastructure components such as home routers, DSL modems, cable modems, mobile WIFI hotspots, DNS servers and NTP servers. Flooding or DOS attacks are made possible by sending repeated messages to a target mobile phone, making the victim’s mobile phone inaccessible. Dos also include duplicating IP or MAC addresses intentional and causing interruption of data traffic on network. Studies also show that weaknesses in the SMS protocol could be exploited to launch a DOS attack on a cellular phone network. It was found that sending 165 text messages in a second were enough to disrupt all the cell phone. 283

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File Sharing and Other TCP/IP Service Attacks: Are prone on mobile devices as mobile device is getting connected to internet for its process. Wireless clients running TCP/IP services such as a Web server or file sharing are open to the same activities and misconfigurations as any user on a wired network. The file shared between two clients may contain virus causing complications for both the points. Two wireless clients can talk directly to each other, bypassing the access point. Users therefore need to defend clients not just against an exterior risk but also against each other, when they are connected in an infrastructure mode. Thus, user must be aware of the communicating nodes. The intermediate nodes can potentially try to attack the communications between the other two communicating nodes. These attacks may alter the contents or the order of messages and replaying messages sent prior. Even if the intermediate node does not dynamically alter the messages passing through, it will potentially affect the frequency and length of the messages being exchanged. This can intrude the privacy of the nodes in communication.

M-Commerce Authentication Authenticating mobile device and user is a challenging task. Device and user authentication are corelated. User must be authenticated before given access to devices. (K.Shanmugam & Dr. B.Vanathi, 2014). A lot of solutions have been proposed to provide security. Most of the solutions provided yet are insecure and inappropriate.

1. Device Authentication As the number of smart phones and tablets are growing, it becomes important to authenticate the device. The risks associated with device are either stolen or infected. Once the device is stolen, the attacker can access all the data on the disk. The disk encryption is either not present or not enabled by user. Many mobile devices (android mobiles) are equipped with pattern based passwords. Mobile device is constantly moving. Hence, it requires adaptive policies rather than static. There are various techniques which are used for device authentication which includes password based protection, OTPs (One time Password), public key cryptography, hardware tokens etc. These techniques are discussed below: •

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All the mobile devices are provided with a username and passwords. A combination of alphanumeric characters is used as user name and passwords to secure the hardware. These passwords are easy to guess and easy to forget. They are more prone to Brute force attacks. It is difficult to enter a tedious password which is a blend of numerals and special characters on a small touch screens. This task requires the switching of keyboards. User may enter wrong passwords unintentionally which may cause blocking the device and then requires resetting the password and hence user prefer small and easy passwords. Another technique to authenticate mobile devices is OTP. OTPs are static text passwords which try to tackle most online fraud and identity theft. OTPs are four to six digits which are easy to memorise and apply for authentication. They are intended for single usage and are time bounded passwords. It prevents hackers to use the same password again. OTPs token are generated by hardware and are copied by user manually to their device. They ensure more security as compared to

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ordinary passwords. SMS OTPs and Device generated OTPs are two ways of authenticating the device. SMS OTPs are received as SMS on the device and are being entered into the application by user manually. SMS OTPs are used to perform sensitive transactions. With this a temporary session is established in which user perform its multiple high risk transactions. Device generated OTPs are produced by software running on a mobile device. A software token application on the device is responsible for generating OTPs that the user can use to authenticate an application. Generally, the device time needs to be synchronized with the server time for this approach to work. Some software token vendors include RSA, Quest Software and Active Identity. One particular example is Google Authenticator, which is a mobile application that generates 6-digit verification codes that can be used as a second authentication factor for logging into a Google account. Rather, they should be used as an additional factor in an authentication scheme. They can be used for initial authentication in the application or for step-up authentication. Device-generated OTPs partially protect against borrowed devices. If a user lends its device to somebody else, the user borrowing the device can potentially access the application protected with a device-generated OTP while it is in possession of the device. However, once the user returns the device, he/she cannot access the user’s application. Device can also be authenticated using public key cryptography. A user may have multiple mobile devices, which can be registered with the application. Upon registration, a record for the mobile device is created in a database or directory where the application maintains user accounts, and it is associated with the user’s account. The device record stores a cryptographic hash of a public key. Upon consequent authentication, the mobile device submits the public key and validates the knowledge of the associated private key. The application calculates the hash of the public key, which coincides with the hash stored in the device record, and uses the associated user account to identify the user. No certificates are needed, which greatly facilitates the task of the application developer. Device authentication can also be done by Hardware Tokens. It is not easy to clone these tokens. Hardware tokens that generate one-time passwords such as RSA SecureID, VASCO, SafeNetSafeWord, Authnex A-Key, SecureMetricSecureOTP and ActivIdentiyOTP Token etc. Cryptographic operations are performed by hardware tokens and connect directly to the device authenticating the user, to transmit the result of a cryptographic operation to the server. Smartcards, USB tokens and token share the examples that attach to the headphone jack on mobile phones. Hardware token-generated OTPs are generally not used alone for authentication. Rather, they are generally used as an additional factor in an authentication scheme. They can be used for initial authentication in the application or for step-up authentication.

Sometimes single authentication mode is not sufficient. Multifactor authentication systems are more prevalent to deliver better security. Multiple authentications means that numerous authentication methods are cascaded one after the other, to enforce strong authentication. For example, a user may be prompted to authenticate using her username and password, and then impelled again to authenticate using one-time password and PIN and then, before the user has the access to the disk, another pattern based password also need to be cracked.

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2. User Authentication To identify the legitimate user is the requirement of m-commerce. (Anup K. Ghosh & Tara M. Swaminatha, 2001). Image-based authentication approaches are also faster for mobile users to execute, allowing mobile shoppers to quickly complete their purchases with minimal friction or stumbling blocks that could cause them to abandon the transaction. For high-value transactions, biometrics can be used to authenticate a person or ensure that it is the legitimate owner of the smartphone or tablet conducting the transaction and not another person who may have stolen the device. The various user authentication techniques are Image based or biometric system. These techniques are discussed below: •

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Image based user authentication scheme reduces the mind exertion of the user. Now User needs not to remember huge and complicated passwords. User just needs to remember 3 or 4 categories from where images are used for authentication. Since the image order is randomized for each authentication attempt the fingerprint traces on the device screen do not divulge the password. However there are certain limitations to this authentication. Choosing 3 categories in a 3x3 grid only permits 84 possible passwords, and choosing 4 categories in a 4x4 grid only permits 1820 possible passwords. This may allow brute force attacks and it may be inadequate for precarious connections. Biometric authentication uses user physical characteristics such as Fingerprint recognition, Retina scan, Speech recognition etc. to identify and authenticate them. These features of user ensure a very high level of security as it is not likely to be replicated. Biometric authentication requires complex and heavy algorithm for processing. There are certain issues with biometric in connection with mobile devices. All the mobile devices are not equipped with biometric hardware as it tough to install them on these light weight devices. No standard API are designed in mobile device architecture which can interpret the results from a biometric device. Since the touch screen to mobile phone is very smooth and glossy, the fingers traits of the user can be copied easily. An attacker can use this fake fingerprint to authenticate the device.

3. Anti-Malware and Anti-Spyware Software In market, Anti-malware and Anti spyware software are available to provide full protection. This software once installed attempts to remove the malware and spyware from memory, file systems and registry. The vast majority of consumers do not install security software on their smartphones or tablets. It is easy for fraudsters to plant keyloggers and other malware simply by tricking people into clicking on an untrustworthy link. Anti-Malware software automatically detects and destroys the many different types of malware. The Antivirus software which is used on PC receives security updates but this is not possible in case of mobile devices. Due to certain limitation, Mobile antivirus is not much established. The reason could be the size of mobile hardware, limited battery life and lack of operating system support. Certain software based security platforms are being developed to provide secure peer to peer transactions on mobile. Google trust that there is no need to install antivirus on Android OS. Cipher is an example for the same which uses Four-Factor Authentication (4FA) and Non-Repudiation technologies to secure a variety of applications from mobile. (Ali Mirarab & AbdolReza Rasouli kenari, 2014). Many mobile apps uses Ciphers e.g. Mobile Betting, Mobile Gift Vouchers& Coupons, Mobile Banking, Mobile Travel etc. Samsung KNOX is another solution for mobile security for Android devices. 286

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They cover the hardware, the architecture and the apps with a multi-layered security standard. KNOX has boosted security at every level to defend network from hacking, malware, viruses and unauthorized access. McAfee SECURE helps to prevent mobile device against mobile devices. It ensures users that their sensitive personal information is handled properly and will not be corrupted and leaked by virus.

M-Commerce Security Solutions Suresh Chari et al. (2001) have proposed many security algorithms for m-commerce. These algorithms ensure data confidentiality, data integrity, non-repudiation, high efficiency, authentication and authorization. The various techniques are WPKI (Wireless Public Key Infrastructure) based solution, Distributed key based solutions, WAP based double layer algorithm, Amalgam algorithm and Random LSB steganography technique. These solutions are discussed below in detail:

1. WPKI Based Security Solution WPKI is an improved extension of traditional PKI for the wireless environment. (P. Tiejun & Zh. Leina, 2012). WPKI incorporates the essential cryptography and a set of security management standards that are widely accepted as security solutions for M-Commerce. It ensures confidentiality by cryptography and integrity, non-repudiation and authentication are accomplished by digital signatures. WPKI is a two factor authentication scheme used primarily for the mobile phone and a laptop. The main components are PKC and the key certification management. The private keys are stored in WIM (WAP Identity Module or Wireless Identification Module). WIM is based on the WAP 1.2 specification enabling secure transactions and non-repudiation based on digital signature to permit the establishment of a WPKI. The network certificates are being employed to perform all other WPKI-related tasks such as validation, archiving or certificate delivery. The companies like Entrust, RSA security and VeriSign, enabled the use of PKI software in a wireless environment. Deploying PKI on wireless device is a biggest challenge. The reasons are small size of device, limited bandwidth, low battery power and small screen size. Certicom developed ECC (Elliptical Curve Cryptography). (S. Ali, W. Farag & Mohammad A. Rob, 2004). This technique uses 56 bits key which is very small as compared to others algorithm. It made handling of certificates easier for lower bandwidth and low-power devices. This short key size is very suitable for handheld devices to provide high level of security. This method can process a digital signature in very short span of time and takes approximately 15 seconds to process a digital signature on a Palm device. WPKI ECC is considered to be the most optimised and best suited method to provide security in a wireless environment.

2. Distribute Key Based Security Solution P. Tiejun et al. (2008) proposed an approach in which an isolated external electronic security key (EKEY) is used to enhance the mobile security. The presented m-commerce security solution is based on distribute key without changing the hardware configuration of the mobile device. The methodology consists of UE (User Equipment), an electronic security key (EKEY) which is connected to the mobile device by adaptable interface for increasing the UE security ability and storing private information, CA with digital certification and web server which provides the M-commerce services. Wireless mobile net and internet are used as communication medium between web server and CA. UE communicates with EKEY 287

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via COMM, USB or Bluetooth. Application layer security in M-commerce is implemented by mobile security services like User identification and administration (IMSI/EID), AKA, Data Integrity, Data Confidentiality, authentication information translation between EKEY and web server etc. Compatible API with 3GPP security protocol are based on OOD (Object Oriented Design) technology with which user can configure the security services according to its different requirement needs. The core encryption modules are KASUMI and AES on which the security algorithm are realised. In this encryption scheme, EKEY plays a vital role. The EKEY hardware design is used for hardware encryption and anti-attack problems. The EKEY should support Public Key Infrastructures (PKI) mechanism with Single DES (Data Encryption Standard), Triple DES, SHA-1. This method is easy to implement, has high efficiency, utilises small storing space and provides authentication, authorization and anti-repudiation.

3. WAP Based Double Layer Encryption Scheme The security cavity between the transmissions of mobile E-commerce through WAP gateway has been solved by double layer encryption scheme based on WAP. (F. Tian, H. Xiao-bing & Y. Wei, 2009). This approach combines the WAP security architecture and mobile E-commerce security architecture. The data is first encrypted with public key of application server on the mobile terminal and then the encrypted data is encrypted for a second time with WTLS in the wireless network and TLS/SSL in the wired network, which realises the double layer encryption scheme. The identity of both terminals is verified by elliptic curve cryptography and digital signature. This double layer encryption approach ensures the safe data transmission on a wireless and wired medium. This approach is highly efficient, reduces the authentication cost between the mobile terminal and WAP gateway, utilises the high channel bandwidth and uses small space for storing key and other security parameters.

4. Amalgam Algorithm Single encryption algorithm is not sufficient as it is very vulnerable to security attack. Amalgam algorithm is a hybrid approach which consists of combination of 3-DES) and RC4 and another combination is Advanced Encryption Standard (AES) and RC4. This algorithm increases the security of m-commerce. This algorithm divides the PIN into two parts (P1 and P2). The P1 is encrypted using 3-DES algorithm and this cipher text act as an input to another algorithm RC-4 which produces the amalgam hybrid PIN. This PIN will be sent to remote server for verification. Another half of the PIN encrypted using AES and RC4 and sent to authentication server for verification and then, finally the PIN has been sent to the third party for verification. Amalgam encryption is more secure as compared to other single block cipher or stream cipher encryption process. This standard ensures high data confidentiality as PIN is sent in parts, encrypted with different algorithm. Even if intruder is able to decode one PIN, it becomes unmanageable to crack the other half. The cracking of the complete PIN is very tedious and costly process. (K.Shanmugam, Dr.B.Vanathi & K.Ganesan, 2014).

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Figure 2. Amalgam algorithm

5. Random LSB Steganography This technique is a combination of cryptography and steganography and provides strong security algorithm. In this method, the data is first encrypted and then this processed information is hidden in an image before sending on the transmission channel. This technique is very helpful in m-banking system. Message is placed in non-sequential LSB insertion pattern and it is difficult to detect LSBs in which message is implanted. The information is password protected. It is difficult to detect the information hidden in the image. The data can’t be viewed by intruder as information is password protected before transmitting on Internet. This algorithm is very tangible and can be easily changed depending on the banking system requirements. This method can be used on all types of java enabled mobile devices. (Pratiksha Y. Pawar & S. H. Gawande, 2012).

6. Security Solutions to Organisations Many organisations which are using m-commerce have diverse issues other than the specific user and hence require extensive security mechanism. The needs of an organisation are different from an individual user as they need to protect their private and confidential business data to be stolen from mobile device. It will affect the integrity and authenticity of the organisation business. The organisations have to adopt a centralised security management system. This system ensures that all the mobile devices used by the company are adhering to its security policies. The security system includes configuration control and establishing management practices for specific user or device. Software tools can be used to scan devices for validating the mobile device integrity. A VPN (Virtual private network) can be deployed to provide a safe communication channel for delicate data transferred from public networks by remote access. This provides a secure wireless local area network. PKI (Public key infrastructure) can be used to issue a digital certificate to digitally sign and encrypt e-mails. An enterprise firewall can be configured

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to separate all unapproved traffic to and from wireless devices. Mobile devices can be monitored and controlled for messaging, data leakage, and inappropriate use to prevent malicious application from being installed. Device log files can be reviewed to detect suspicious activity. Recommended security practices must be deployed by organisation to prevent its business and its customer. (Security solutions available and proposed, 2014).

FUTURE TRENDS IN M-COMMERCE SECURITY The existing systems are needed to be developed and upgraded to ensure security. The mobile usage reduces effort and time. It generates revenues for various purposes. It needs to be protected against attacks. The vendors and developers should come together to propose secure solution. This will help in increasing the count of the people using mobile for money transactions. NFC (Near Field communication) technology can be used by credit card companies to ensure more secure mobile based payments.

CONCLUSION As we are evolving from E-era (E-commerce) to M-era (M-commerce), it is essential to provide security to the device, data and the transactions. As the numbers of mobile phones are growing, the usage of m-commerce is also expanding and attracting hackers to breach the security. Mobile market is also very dynamic with different device operating systems like Symbian, Android, IOS, window etc. The security and privacy policy must be defined considering all the different types of OS. The security attack like spyware, malware and trojan are constantly increasing. More secure environment and assurance will be given to the user so that the benefits of m-commerce usage will be promoted. Security and privacy must be updated as per customer and device perspective. It should not be more costly than the existing system. It is the accountability of the service provider to certify user security, data security, network security, authentication and authorisation of the device and others various aspects. Mobile operating system develops many security features to prevent the hardware but apps level attacks are required to be controlled.

REFERENCES 2013 Lookout Mobile Threat Report: Mobile Threats, Made to Measure. (2013). Retrieved from https:// www.lookout.com/resources/reports/mobile-threat-report-2013 Alcatel-Lucent report on malware in 2014 sees rise in device and network attacks that place personal and workplace privacy at risk. (2015). Retrieved from Alcatel Official Website. Ali, S., Farag, W., & Rob, M. A. (2004). Security Measures in Mobile Commerce. Problems and Solutions. Fourth International Conference on Electronic Business, Beijing. Chari, S., Kermani, P., Smith, S., & Tassiulas, L. (2001). Security Issues in MCommerce: A Usage Based Taxonomy. E-Commerce Agents. In LNAI (vol. 2033, pp. 264–288). Berlin: Springer-Verlag.

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Corell & Lawison. (2012). Strong and Convenient Multifactor Authentication on mobile devices. pomcorn.com white paper. Corin, R., Di Caprio, G., Etalle, S., Gnesi, S., Lenzini, G., & Moiso, C. (2005). A Formal Security Analysis of an OSA/Parlay Authentication Interface. International Federation for Information Processing, 2005, 131–146. Ghosh, A. K., & Swaminatha, T. M. (2001). Software security and Privacy risks in mobile E-commerce. Communications of the ACM, 44(2), 51–57. doi:10.1145/359205.359227 Giri & Singh. (2014). Issues in Mobile e-commerce: A survey. International Journal of Computer Science and Information Technologies, 5. Juul & Jørgensen. (2002). Security Issues in Mobile Commerce using WAP. 15th Bled Electronic Commerce Conference e-Reality: Constructing the e-Economy, Bled, Slovenia. Kasera, S., & Narang, N. (2005). 3G mobile networks: architecture, protocols and procedures: based on 3GPP specifications for UMTS WCDMA network. New York: McGraw-Hill. Leo, Y., Kai, M., & Liu, A. (2011). A comparative study of WiMAX and LTE as the next generation mobile enterprise network. Advanced Communication Technology, 13th International Conference. Mirarab & Kenari. (2014). Study of secure m-commerce, challenges and solutions. Advances in Computer Science an International Journal, 3(2). Mirarab & Kenari. (2014). Study of secure m-commerce, challenges and solutions. Advances in Computer Science: an International Journal, 3(2). Pawar & Gawande. (2012). M-Commerce Security Using Random LSB Steganography and Cryptography. International Journal of Machine Learning and Computing, 2(4). Security solutions available and proposed. (2014). Retrieved from http://www.zdnet.com/search?q=se curity+solutions+available+and+proposed Shanmugam & Vanathi. (2014). Enhancing secure Transaction and identity authentication in M-commerce. International Journal of Advances in Science Engineering and Technology, 1(3). Shanmugam, Vanathi, & Ganesan. (2014). Enhancing PIN distribution Techniques by using Amalgam Encryption in M-commerce. International Journal of Scientific & Engineering Research, 5(5). Stephens, A. (n.d.). IEEE Working Group for WLAN Standards. Retrieved from http://grouper.ieee.org/ groups/802/11/index.html Tian, F., Xiao-bing, H., & Wei, Y. (2009). Study of WAP Mobile E-Commerce Security on WPKI. Electronic Commerce and Security. Second International Symposium, IEEE Proceedings. Tiejun, P., & Leina, Z. (2012). New Mobile Commerce Security Solution Based on WPKI. International Conference on Communication Systems and Network Technologies, Rajkot. doi:10.1109/CSNT.2012.110

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Tiejun, P., Leina, Zh., Chengbin, F., Wenji, H., & Leilei, F. (2008). Mcommerce Security Solution Based on the 3rd Generation Mobile Communication. International Symposium on Computer Science and Computational Technology, Shanghai. doi:10.1109/ISCSCT.2008.363 Trewin, S., Swart, C., Koved, L., Martino, J., Singh, K., & Ben David, S. (2012). Biometric Authentication on a Mobile Device: A Study of User Effort, Error and Task Disruption. Orlando, FL: ACM ACSAC. doi:10.1145/2420950.2420976 Unstructured Supplementary Service Data (USSD) - 3GPP2. (2012). Retrieved from http://www.3gpp2. org/public_html/specs/X.S0065-0_v1.0_20120505 Vasileiadis, A. (2014). Security Concerns and Trust. In The adoption of M-commerce in socialines technologijos social technologies. Yazdanifard & Elkhabir. (2011). Mobile Commerce and Related Mobile Security Issues. International Conference on Software and Computer Applications. IACSIT Press.

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Chapter 15

Present and Future of Mobile Commerce:

Introduction, Comparative Analysis of M Commerce and E Commerce, Advantages, Present and Future Barkha Narang Jagannath International Management School, India Jyoti Arora Banasthali Vidyapeeth University, India

ABSTRACT Mobile Commerce is a term to describe any commercial activity on a mobile device, such as a mobile phone (iPhone, Android, Blackberry) or a tablet (iPad, Galaxy Tab, Surface). This includes all steps of the customer journey; reach, attract, choose, convert and retain. Hence mobile commerce is probably best described as shopping that takes advantage of unique properties of mobile devices. It is also called as m-commerce. Pervasive computing aims at availability and invisibility. On the one hand, pervasive computing can be defined as availability of software applications and information anywhere and anytime. On the other hand, pervasive computing also means that computers are hidden in numerous so-called information appliances that we use in our day-to-day lives Characteristics of pervasive computing applications have been identified as interaction transparency, context awareness, and automated capture of experiences.

DOI: 10.4018/978-1-5225-0236-4.ch015

Copyright © 2016, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

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E-Commerce • Big screen, lots of space • Mouse or touchpad control • Big keyboard to type on • Fast internet • Time to browse • Switch windows easily

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M-Commerce • Small screen • Touch, swipe, tap • Untypable size keyboard • Depends on Location where the user is • Hurry, public transport, transit • One window, one chance

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Driver • Daydreaming • Quick wins • Help me now • Constant monitoring • Instant gratification

Description > > > > >

Exploring and searching without real purpose Short tasks with a desire to get things out of the way Related to being on the go (directions, events near) Following bids, news, stock and games Short transactions without hassle or lengthy forms

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Advantages of Mobile Shopping Comfort with the Technology According to CEB Marketing & Communications (2012) Consumers are becoming more comfortable with the idea of using their mobile devices to research and purchase items. In 2011, it was reported that 50% of mobile users had used their mobile phone to shop at some point. A recent finding shows 4 out of 5 smart phone users report using their device to shop. Furthermore, DC Financial Insights found that 34% of smart phone users have made a purchase using their device compared to 19% in 2011. Companies such as PayPal have been essential in this increased sense of security. Consumers are more comfortable with the idea of making payments with smart phones. This comfort can only continue to increase as retailers tweak and optimize the mobile shopping experience.

Casual and Spontaneous Shopping Mobile phones allow shoppers to approach shopping more casually. Traditionally a consumer would need to do their research at home before entering a store. Using a smart phone, consumers can search for the best deal once they get to a store. Deal comparison makes it easier for a consumer to decide rather or not they want to buy a given item at a brick-and-mortar store or online via mobile. Furthermore, mobile allows customers to be spontaneous in their shopping endeavors. When a purchase crosses consumers’ minds they can simply buy directly from their phone no matter where they are at the moment. In a way, mobile instantaneously solves a desire or need from just about anywhere at any time.

Incentives and Interactive Mobile Experience Forward-thinking companies are designing apps that engage and reward users. Take the Shopkick app for example. Customers are rewarded for shopping and exploring products at different partner stores. The app turns the experience into a game of sorts allotting “kicks” to customers when they walk into certain stores, scan items, or buy items. These “kicks” can then be used to redeem prizes such as discounts and free items. Engaging apps help retailers realize higher conversion rates while making the user feel rewarded for choosing to spend money.

Company Adoption of Mobile A few years ago few companies had invested in a sound mobile strategy. Two years later most companies have some kind of mobile product offering be it a native app or a mobile optimized website. Consumers expect the biggest stores to have one or the other; in fact 72% of consumers report they expect a company to have a mobile-friendly site (adweek). Because of this expectation companies are gravitating to the mobile platform in droves. There are real benefits for the companies that engage in mobile such as increased revenue and increased market reach. So, incentive for the companies to address the mobile platform results in more opportunities for consumers to shop using a Smartphone. This is a perfect scenario of the age old question – Does demand create supply or does supply create demand? Clearly in this circumstance it works both ways. Consumers are getting added value out of mobile shopping and so are retailers. 296

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Present Scenario of M-Commerce According to Sharma, K. (2014), E-Commerce is the present and m-Commerce is the future. Currently estimated at $13 billion, the Indian e-Commerce industry’s primary focus is on the millions of consumers who prefer to shop online. In the last five years, the e-Commerce industry has witnessed transformations that were unpredictable and unknown. However, being the dynamic industry that it is, the e-Commerce sector has been extremely flexible and has also kept up to the ever increasing and largely changing market trends. As smart phones and tablets become routine for the average consumer, retailers find this trend as a great marketing platform to reach out to the masses. In his interview a few months ago, Mr. Sachin Bansal, the co-founder & CEO of Flip kart quoted about the organization’s intention and ambition to increase its market focus by preparing the e-commerce platform, to be mobile oriented. Snap deal, which has been promoting its mobile shopping application all over the country, recently stated that it receives almost half of its orders from mobile phones. This aspect at Snap deal, has logged a growth of approximately 20 times in multiples as compared to the previous years. The marketplace has taken m-Commerce to the next level by letting sellers manage inventory and orders with their recently launched android app. Several other companies such as Paytm, Shop Clues and Lime Road have also claimed that majority of their transactions come from mobile phones. Shop Clues, a Gurgaon based marketplace recently unveiled it’s Android application in the market. For Paytm, 60% of their transactions (mobile, DTH and data recharges) are logged in from mobile phones. So, what has transpired such a dynamic change? Internet bandwidths are predominantly 3G focused and with their tariffs on the lower side. Therefore consumers are highly motivated to shop online on a greater scale. The GPS functionality in mobile phones helps consumers to locate target based offers and product services. With step by step notifications via SMS and e-mails, the user can thus keep track of their transactions and orders as, there and then, until they actually receive their product. Everyone loves anything and everything that’s free. This in fact becomes a target based marketing strategy to marketplaces that push consumers to mobile phone shopping by offering splendid discounts and additional freebies. Online mobile recharge companies such as Paytm and free charge have been offering a variety of free coupons and discounts on any amount of recharge that the user does. While freebies remain one such aspect to motivate m-Commerce in India, users are highly motivated to shop ‘m-shop’ due to the 24×7 shopping availability, anytime, anywhere on their mobile phones. Jeff Schueler, President of Usability Sciences Corp., an e-Commerce and m-Commerce research and consulting firm says that in five years, e-Commerce on desktops and laptops will still exist, and m-Commerce on smart phones and tablets will still exist, but to consumers, online shopping will mean researching and buying wherever they may be on whatever device is best suited to the moment or whatever device is simply handy. Everyone loves their mobile phone as it is one of the most important devices in our lives. This becomes a highly inspiring factor for marketplaces to invest and increase their revenue via M-commerce. Specifically in several tier II and tier III companies, a large amount of consumer base uses a mobile phone as compared to a PC which enables marketplaces to penetrate far greater than the desktop based shopping. With the M-commerce industry becoming a second highest platform for online shopping, what transpires next is yet to be seen.

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Launching of Mobile Commerce According to Magapu, S., Quandano.com, here’s a fact to give some perspective on how big mobile commerce is today. The number of mobile devices has now surpassed the global human population, according to Steve French, global vice president at Amdocs’ Open Market, with nearly 90% of consumers owning a mobile phone and 30% a tablet. By late 2006, mobile penetration in the Americas region was over 62%. It is worth noting, however, that penetration rates range from single figures to over 300% in some cases.

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Trends in the US: Nearly 1/5th of e-commerce in 2014 happened via mobile devices. More than a third of visits to online stores now come from mobile devices. Apple dominates the m-commerce world, both in terms of number of orders from smart phones as well as tablets. Samsung and Amazon are showing upward trends. One very interesting trend is that email marketing dominated leads to m-commerce and not social media or ads. Fixed vs Mobile Penetration Rates Source: ITU Compared to other regions globally, the mobile penetration rate in the Americas is quite high. Mobile Subscribers Per 100 Inhabitants Source: ITU The annual average growth rate also demonstrates the availability and rapid growth of mobile services across the region. Annual Average Growth Rate in Mobile Subscribers Source: ITU According to a study by Budde Comm, a telecoms research firm based in Australia, mobile phone penetration in the Caribbean and Latin America grew to an approximated 80% by 2009, some ways above the global average, which was about 58%, with 458 million people in the region owning a mobile phone (Baker, 2010). This means that the Caribbean and Latin America now combine for an estimated 12% of the world’s 3.97 billion mobile subscribers. It is also reported that with the exception of some first-world Caribbean nations, the highest mobile penetration rates in early 2009 were seen in Jamaica (115%), Argentina (110%), Uruguay (109%), and Venezuela (101%). On the other end of the spectrum, penetration rates were much lower in Bolivia (48%), Costa Rica (48%), and Nicaragua (52%). Cuba, the country with the region’s lowest mobile penetration, stagnated at 2.9%. Penetration in Haiti, the second lowest country, shot up from a 4.8% in late-2005 to 41% at year end of 2008; attributed to the rollout of low-cost GSM services by Digicel, the pan-Caribbean mobile giant, which entered the Haitian market in mid-2006. Digital Opportunities Present Themselves What does this unbridled growth in mobile services represent? To be succinct, this mobile revolution presents a tremendous opportunity for the development of a mobile banking ecosystem across the region, namely financial services customized for the Caribbean experience, Caribbean people and Caribbean growth and development. In her 2008 paper titled, “Developing Mobile Money Ecosystems”, Beth Jenkins maintains that this need and opportunity is shared by companies and customers alike. In specific industries, such as telecoms and software development, it offers the chance to develop whole new business segments. For customers, the benefits of mobile money include accessibility, affordability and security. The mobile channel can essentially open access to financial services and other markets to several, mostly low-income, customers who are at present excluded altogether.

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In 2010, a chartered Canadian Bank, headquartered in Toronto and with international operations in the United States, Asia, the United Kingdom and the Caribbean, moved to grasp the digital opportunity that had presented itself. The organization partnered with Sybase 365, a subsidiary of Sybase, Inc., the global leader in mobile messaging and mobile commerce services, to become the first regional bank to provide customers with m-banking services enabling them the flexibility and convenience of managing their finances over their mobile phones. The service was SMS-based, and as such was available to any individual; regardless of what mobile platform they used (e.g. BlackBerry OS, Android, AppleOS, Symbian, etc.). The first iteration of the service allowed customers to check account balances, get balance alerts, transfer money, and monitor recent transactions. Then, in early 2011, additional features were added whereby the service could be utilized to pay bills and transfer funds between third-party beneficiaries. During the first year, approximately 30,000 customers signed on to take advantage of the convenience of the aforementioned m-Banking offering. Creating a Mobile Payments Ecosystem (m-Wallet). With m-Banking established, efforts are currently in play to create a mobile payments ecosystem for the Caribbean. It must be admitted that these are challenging times in terms of the development of a region-wide mobile payments ecosystem. Many of the participants in the process are still trying to grasp exactly what constitutes a business ecosystem. In common literature, a business ecosystem is seen as an economic community supported by a foundation of interacting organizations and individuals – the organisms of the business world. This economic community produces goods and services of value to customers, who are themselves members of the ecosystem. The member organisms also include suppliers, lead producers, competitors, and other stakeholders over time, co-evolve their capabilities and roles.” In most cases, mobile network operators (MNOs) usually take the leadership role in developing mobile economies. By virtue of their infrastructure base which serves as the distribution channel for mobile transactions, the practical view is that the MNO ought to be the thought leader in this atmosphere. The impetus and innovation required to develop m-Wallet capabilities is being demonstrated by the banking sector, which has initiated partnerships with various MNOs. Subjectively, the leadership argument in developing mobile payments is just as strong for banks as with MNOs. Mobile banking is 50% cheaper than servicing customers via traditional channels, and the untapped market potential is phenomenal. Unlike MNOs, financial services institutions are specifically authorized by financial industry regulators to serve certain purposes, including taking deposits and transferring funds across borders. Governments across the Caribbean also have a major role to play in the development of the mobile economy, while maintaining the necessary oversight. Regulators need to provide the operating climate that will enable the mobile money ecosystem to thrive. They can foster the environment for innovation and, as key lessons are learned, assemble the policy mechanisms required to support further growth as well as build trust in the system. Given their dearth of experience in this area, the strategy that has been adopted by regional governments is comprised of capacity building programs, public-private partnerships and international cooperation agreements. These are all, in my opinion, key contributing factors to successfully building the enabling environment for mobile payments.

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With e-commerce and mobiles on the upward trend, the growth of mobile commerce seems only natural. Especially in Asia, where people cannot quite afford computers or laptops but can afford phones, mobile commerce provides new opportunities. Big players like Amazon, Apple and Google have made investments in this space. It has evolved a long way from downloading songs to virtually almost all aspects of e-commerce. Today, apart from communication, smart phone is used to spend and earn money via a host of applications and services. Simple tasks such as hailing a taxi, shopping, food ordering, travel bookings, gaming, movie ticket bookings to even finding work, selecting a home, dealing with business partners, banking, tracking shipments, finding suppliers etc. are completed using smart phone.It is an amalgamation of almost 30 different business sectors. The single most important factor would be the rise of smart phones starting with the launch of the first iPhone by Apple in 2008. As in the expression for mobile commerce, notice how the term “best customer” is used highlighting the fact that mobile customers are repetitively engaging and attract loyalty for simplified services in a fast moving world, once an app delivers a good service, customer retention is a big plus point. This proven by the behaviour of mobile commerce companies in India, where currently the fashion seems to be offering huge discounts and advertising just to build a huge customer base and drive out the competition. According to a research conducted by Digi-Capital, currently the mobile internet revenue is around $230 Billion and is expected to reach around $700 Billion by 2017 out of which over $500 Billion would be m-Commerce alone and others like advertising, app as a service, in-app purchases etc.. Among the continents, Asia has the fastest growth rate and would have almost half the market of mobile commerce by 2017. In 2015, above 20% of all ecommerce sales will be done by mobile in the USA, and the no. is even higher in Asia because most new users start using the internet only using their phones and not on PC. While it’s difficult to put a timeline on how mobile commerce began to take shape in which country, Mobile business first started expanding in USA, Amazon launched its first app in 2011 and growing its mobile share since then while 2014 was the year of boom for the Asian Mobile Commerce Markets. Biggest was the phenomenon of Flip kart in India and Xiaomi flash sales. On 6 October 2014, Flip kart sold products worth USD 100 Million in 10 hours in a special one-day event - “The Big Billion Day”, which included over 500,000 smart phone sales and 500,000 apparel sales. While Xiaomi, china based smart phone manufacturer started a trend of online only flash sale logistic models. They release their phones online only and usually go out of stock within seconds of being launched. What they have done is completely removed the clutter of sales, advertising, brick and mortar stores. Growth of Mobile Commerce is imminent. Many of the services offered by M-Commerce may as well be availed using the “immobile” (stationary) Internet, e.g. purchasing entrance ticket to a football match. However, M-Commerce opens new business opportunities by enabling innovative, location-based services (LBS) that the “immobile” Internet cannot offer. For instance the location of the nearest Automatic Teller Machine (ATM) in real time can only be provided by determining the current geographic position of the user. Or for example, services such as snap-to-buy.

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Technologies such as near field communication which have been started being integrated into credit cards have the potential to ultimately replace all credit cards with phones, allowing for even greater security measures. Factors such as responsiveness of the web design and cloud computing are designed for seamless interconnection between devices. As one carries mobile devices almost everywhere, every time, the usage pattern will change on increased ease of use of mobile devices. The ever growing convergence in responsive nature of websites now makes it easier to operate all websites on a smaller screen. Baseline Configuration for a Mobile Money Ecosystem Source: World Bank As is quite apparent, mobile payment ecosystems require various inputs and outputs from a diverse collection of players, such as mobile network operators, banks, retail companies, employers, utilities, regulators, international donor agencies, and even civil society. Based on the illustration above, the defined roles, assets, functional capabilities, business drivers, and constraints or restrictions of all these parties create a high level of interdependence with a layered configuration that demands optimal interaction. The resulting “Multilayer-Multiplayer Mechanism” should have no centralized authority, and participating public sector, private enterprises and non-governmental organizations ought not to be subordinate to one another. The only ways in which the mobile payments ecosystem will truly flourish is through committed, multi-stakeholder partnerships. It ultimately manifests itself as a delicate endgame which may obligate the various factions to synergize their conflicting goals of socioeconomic development and revenue generation. Looking Ahead to Ubiquitous Payments (u-Payments) a loosely-knit group of researchers and members of various technical communities in the Americas are presently defining the future state of mobile commerce across the region, and the consensus appears to be that ubiquitous payments (u-payments) are the most promising option. While there is no consensus definition of u-payments at this time, a prior description of ubiquitous computing can be used as a basis for further elaboration. Ubiquitous computing is the most unobtrusive manner in which individuals or objects can interface with computing systems (Weiser et al., 1999). Hence, u-payments can be defined as ubiquitous, invisible and unobtrusive payment, which is integrated into the environment and references the context of the payer. The payer in this case could be an individual or an object. This means, that the payment process should not interrupt the payer in his current action or should not disrupt ongoing processes, unless a process change initiates the payment. Conversely, mpayments can be categorized as any banking transaction, where at least one participant uses a mobile device. This device can be a mobile phone or a personal digital assistant (PDA). Recent developments in mobile device platforms, wireless networking (802.11x, Bluetooth, WiMAX, LTE, etc.), interactive digital media and automated data capture (more specifically RFID – Radio Frequency Identification) have laid the platform for the implementation of ubiquitous payment systems; integrated commercial environments capable of enhancing the total human experience in such a way that the consumer feels engaged, understood, supported, and eventually, fulfilled. Some example applications of u-payments are smart homes (remote shopping, out-of-stock alerts), pervasive retail (automated self-checkout, inventory management) location and context awareness (location-based services, directed marketing), health and home care, value transfer and automotive tele-matics. The benefits to underserved and previously excluded demographics are numerous. For any u-payment application to be successful, the service provider will need to deliver a secure, transparent and simple end-to-end payment process. The amount of human interaction will be decided by embedded security features such as an active payment authorization by the customer (Gross et al., 2003). 301

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Work is also being done on object-to-object payment scenarios. The underlying assumption being that products or objects will trigger payments when product associated services are used. The user will be able to concentrate on the usage of the objects instead of concentrating on the payment process. The objects are context sensitive and their buying decisions and actions are based on implemented rules, which take the contextual situation into account. While the early assessments appear promising, there is still much work to be done before payment enabled ubiquitous computing services are to become a reality. Further research should focus on determining applicable business models (pay-per-use, pay-per-damage or payper-risk), evaluation of engineering standards and requirements, personal identity considerations, security and privacy, and user acceptance. Security and privacy issues will be of critical importance given that continuous information will be required on the customer’s location, purchasing patterns, demographic information and household data. Such high levels of data capture may run counter to data protection laws in developed countries, but given the absence of such legislation in the Caribbean, this presents an opportunity to build the enabling regulatory framework while testing is performed and user acceptance scenarios are explored. At the same time, the involvement of users in the design and development of the ubiquitous payment platform will assist in identifying acceptance barriers and provide the feedback loop needed to design a system that aligns to user needs and expectations.

Challenges and Futuristic Approach of Mobile Commerce This is all great, but should the expectation from mobile commerce to keep increasing for a good while? Or will it level out sooner rather than later? While no one can pretend to be certain of the future, there are numerous speculative numbers floating around out there (which will undoubtedly change with time). Let’s examine a few of the predictions… Deloitte has predicted that by 2016 mobile purchases will account for 19% of total store revenues equating to a total of $689 billion. There are also predictions that within 5 years over half of smart phone users will use mobile wallets as their preferred payment. All in all mobile shopping is picking up rather rapidly. But there are still aspects of the market that have not been fully tapped into such as using smart phones as digital wallets, image recognition, the use of QR codes and augmented reality to enhance the shopping experience. The adoption of these features will catapult mobile into new record breaking numbers before long shopping with a mobile device will be synonymous to simply “shopping”. As the number of mobile devices and mobile purchases continue to grow, more and more online and offline retailers are incorporating mobile commerce into their business strategy. However, mobile commerce is not just another sales channel, but rather a convenient way to integrate the existing online and offline channels, providing your customers with an omnipresent brand and product experience. So where does m-commerce stand and what can be expected in the (near) future? There are two big barriers to widespread adoption of mobile payments and commerce: •

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The Lack of a Developed, Recognized Standard: There is an industry-wide standard for credit cards, and processors work such that almost any credit card can be swiped at almost any retail point of sale, and the transaction will go through. The same is absolutely not true for mobile payments, at least not yet: retailers wishing to accept mobile payments have to guess what kind of phones their customers use, and potentially install multiple pieces of hardware to handle the transactions.

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The Significant Cost of Updating Retail Infrastructure: Hand in hand with the lack of certainty around a particular processing standard is the big cost retailer’s face in upgrading their infrastructure to handle mobile payments. Big retailers often use purpose-built or highly-customized point of sale software, designed to integrate smoothly with inventory and payment processing systems – positive qualities that make implementation of a new payment method prohibitively difficult and expensive. It also includes the cost of training new staff to use the equipment which is not an easy task.

The Future of M-Commerce As described in the introduction, mobile commerce is rising quickly. According to CEB Marketing & Communications (2012) with an 80% growth in 2011 and 105% in 2012 the m-commerce market has already generated between $119 billion to $1 trillion revenue worldwide in 2014. So how will m-commerce evolve? And what game-changers can we expect?

Very Near Future The easiest question with respect to future of M-Commerce is; what can we see in the near future? With the current growth rates of both the number of mobile devices as the number of adapting users, the revenue share will be rising with about 120% in the 2013. Consumers will get more used to mobile purchasing of products and services. • • • •

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A lot of retailers update their current web shops to be mobile proof and several retailers (14%) are already building fully responsive mobile shops. However, there is not an active change in the way the consumer is approached (a mobile consumer is still addressed as an online customer). There is a rise of online retailers connecting with offline and out-of-home space owners to present their online products in the offline world. Some great examples can be found here and here. This is an easy way to provide mobile users with a location-related commercial opportunity. Of course the social impact of mobile will increase. With the introduction of Apple Passbook, Google Wallet, Group on and Facebook commerce, it will become easier to incorporate commerce into day-to-day social-mobile activities. Commerce will become more social. Mobile payments, still a threshold for many consumers, will continue to evolve, but don’t expect a BANG. Banks, credit card companies and payment gateways will evolve into providing mobile ways to checkout. It is expected that PayPal and after pay-providers to become default payment methods. App vs. Web discussion will heat up a bit. An app is a quick way to present the products, perform an in-app purchase and be visible as an icon on the mobile screen. Web apps are cross-platform, suit all mobile devices and require a lot less investments, updates and management. Point on the horizon.

So what will happen in the long run? Now this question is a bit harder to answer, although a pretty good idea of what will happen exists. Research and practical experiences show that mobile commerce is now in the early stages, with most companies simply following a trend or experimenting.

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The user is in control. This mind-set will dominate the way that mobile commerce is evolving. As consumers are looking for quick, short and to-the-point service, it is expected that companies accommodating user-centered experiences will prevail (e.g. location-based mobile offers) As mobile commerce is just coming around the corner, it is expected to have some game-changers that can’t yet imagine. Consider the rise of augmented reality, Google Glasses, P interest, LEAP motion, QR Code stores and the ever descending threshold to create web content.

The Architecture of Pervasive Computing Software The Current and Future State of m-Commerce is m-Banking, m-Wallet. Increased access to banking products – such as savings, deposits and insurance – is key to reducing poverty on a global scale. Financial services provide ways and means for lower income persons to invest in productive assets expand their businesses and protect their livelihoods. Moreover, research has shown that an increased level of entrepreneurship is a significant factor in bolstering the middle class in developing countries. For example, the availability of finances has an essential linkage to a reduction in Gini coefficient (inequality in the distribution of wealth). Still, lack of access to finance and banking services remains one of the biggest obstacles for SMEs and entrepreneurs in developing countries in terms of business growth or new ventures. Penetration of financial services in developing economies is notoriously low, but mobile diffusion rates are high with a steady growth trajectory. Mobile commerce delivers a foundation from which to offer more opportunity and stability to lower and middle-class citizens in developing nations, and to assist in meeting development objectives in an equitable manner. The Strong Mobile Market, liberalization of the telecommunications sector has occurred in the majority of nations in the world, with operators in these countries now offering a full suite of telecoms services. Regardless of the comparatively small markets by international standards, telecommunications has become one of the major growth industries for the region. While in a handful of countries Cable & Wireless (now rebranded LIME) still holds a monopoly in the fixed-line sector, many countries now have other operators offering fixed-line services at competitive prices. Nevertheless, mobile has been the preferred technology for the region. The region’s mobile subscriber base has been witnessing significant growth in recent years, driven, in particular, by aggressive competition from Digicel, the Irish mobile communications giant.

Applications of M-Commerce Five Ways Mobile Technology Will Revolutionize ATMs The ATM and banking industry is facing an opportunity to adapt to new technology, including mobile commerce. ATMs can cost-effectively provide the link between the digital world and the physical world, where consumers still need to access currency. This white paper, sponsored by ATM & Mobile Innovation Summit, explains the following five ways that mobile technology will change ATMs: • • • • • 304

Presaging transactions. Contactless transactions. Serving the unbanked. Expanded ATM services. Expanded ATM/mobile capabilities.

 Present and Future of Mobile Commerce

•

There’s more to mobile payments than payments: engaging the customers in the age of the new mobile wallet.

The shift to mobile payments is underway, especially now that Apple is encouraging customers to pull out their smart phones instead of their old leather wallets every time they pay. But the possibilities for brands to capitalize on the mobile wallet revolution extend far beyond payments. • • • • •

Bitcoin/Virtual Currency: Virtual currency, such as Bitcoin, is the next disruptor in payments. Adoption is on the rise and consumers want places to spend their bitcoin. An Introduction to Dynamic Authentication: While magnetic stripe cards are perceived as more vulnerable than EMV-enabled cards, using the magnetic stripes unique biometrics can ensure security. WWS: World Class Mobile Banking and Payments: WWS Mobile is a well proven, highly secure, mobile banking and payments solution that delivers the widest range of banking services in the most cost effective way. Contactless Payments/NFC Payments: How merchants and mobile payment service providers can protect their users against mobile payments fraud. Direct Carrier Billing: As the app economy continues its explosive growth, the world’s mobile network operators (MNOs) are fighting tenaciously to secure their share of the revenue that’s flowing across their networks. As this battle rages, carrier billing is emerging as the most powerful weapon in the MNO armory.

This Case Study on implanting Cetil direct mobile billing in Italy details the benefits brought to a gaming business using Infobips mobile payments solution. The featured company implemented direct carrier billing to monetize their Top Eleven sports game, one of the most popular Facebook games ever, boasting. •

Mobile Handsets/Mobile Devices: What merchants need to know about mobile point-of-sale technology.

PERVASIVE COMPUTING APPLICATIONS Characteristics of pervasive computing applications have been identified as interaction transparency, context awareness, and automated capture of experiences. (Stojmenovic, 2002) Pervasive computing aims at no intrusiveness. It contrasts with the actual no transparency of current interactions with computers. Neither input–output devices nor user manipulations are natural. Input–output devices such as mouse’s, keyboards, and monitors are pure artifacts of computing. So are manipulations such as launching a browser, selecting elements in a Web page, setting up an audio or video encoding mechanism, and entering authentication information (e.g., a log-in and a password). Biometrics security is a field aimed at making authentication of users natural. It removes the log-in and password intermediate between the user and the computer. To identifying individual, it exploits the difference between human bodies. Authentication is based on physical measurements. To be usable, however, the measurements must be noninvasive and fast. DNA analysis does not meet that criteria, but fingerprint identification does. Other 305

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alternatives include facial characteristics, voice printing, and retinal and typing rhythm recognition. Input biometric information hardware and software are being marketed. It is interesting to note that practical evaluations have reported that biometric input is often not recognized and needs to be accompanied by a conventional authentication procedure(log-in and password) in case the biometric authentication fails. Another example of interaction transparency is the electronic white-board project called Classroom 2000. (Weiser, 1993) An electronic white-board has been designed that looks and feels like a whiteboard rather than a computer. With ideal transparency of interaction, the writer would just pick up a marker and start writing with no plug-in, no log-in, and no configuration. To achieve transparency of interaction, advanced hardware and software tools are needed such as handwriting recognition, gesture recognition, speech recognition, free-form pen interaction, and tangible user interfaces (i.e., electronic information is manipulated using common physical objects) Context awareness translates to adaptation of the behavior of an application as a function of its current environment. This environment can be characterized as a physical location, an orientation, or a user profile. A context-aware application can sense the environment and interpret the events that occur within it. In a mobile and wireless computing environment, changes of location and orientation are frequent. With pervasive computing, physical device can be a personal belonging, identified and long-term personalized to its user (such as a cell phone or a PDA) or shared among several users and personalized solely for the duration of a session (such as an electronic white-board).The project Cyber guide (Weiser, 1993) is a pervasive computing application that exploits awareness of the current physical location. It mimics on a PDA the services provided by a human tour guide when visiting a new location. Context-aware components can sense who you are, where you are, and what you are doing and use that information to adapt their services to your needs. Mobility and services on demand are greatly impacted by the location of the devices and the requested services. Examples range from relatively rudimentary device following services such as phone call forwarding to the location of the device, to more complex issues of detecting locations of available services and selecting the optimal location for obtaining the services, such as printing services. The complexity of the problem increases when both the service users and the service devices are mobile. These problems require dynamic and on-the-fly system configuration. The dynamics of such systems are complex because not only system reconfiguration and low level configuration, e.g., multiple communication and security protocols, are required, but also service detection and monitoring in order to provide the best available services. Capture and storage of past experiences can be used to solve new problems in the future. Experiences are made of events and computers have the ability to record them automatically. Human users only have to recall that information from the computer when it is needed. For example, a context-aware electronic wallet could capture and store locations, times, and descriptions of payments made by a traveler. Back home, the traveler could use the recorded events to generate an expense report. The software of pervasive computing applications is subject to the support of everyday use and continuous execution. Robustness, reliability, and availability are therefore required.

CONCLUSION Consumers just don’t seem to be interested and they can’t be blamed because there’s no inherent advantage to whipping out one’s phone to pay for a retail transaction vs. whipping out one’s credit card. In the

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development of other forms of e-commerce, there was a real sticking point – the need to get up and go to a store to get books and other items, for instance – and there doesn’t appear to be one here. Pervasive computing aims at availability and invisibility. On the other hand, pervasive computing also means that computers are hidden in numerous so-called information appliances that we use in our day-to-day lives. Personal digital assistants (PDAs) and cell phones are the first widely available and used pervasive computing devices. Context awareness means that the application knows, for instance, its current geographical location. An experience capture and reuse capable application can remember when, where, and why something was done and can use that information as input to solve new tasks. There’s real growth and a series of incremental innovations possible in making the buying experience easier for mobile users in mobile-enabled e-commerce. This is a research area that is worth pursuing. Research on mobile commerce has attracted the interest of e-commerce scholars ever since mobile and portable devices became a widespread and effective means of commercial transactions and business practices. The growth of M-commerce in developing and developed countries varies depending on many factors but the future of businesses and success in competitive world depends on the emergence of mCommerce in them. The future of m-commerce research as we move toward the more social-minded, hyper connected world of tomorrow’s social commerce is s-commerce.

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ADDITIONAL READING Norman, S. (2002). M-Commerce: Technologies. Services, and Business Models Paperback – Import.

KEY TERMS AND DEFINITIONS E-Commerce: E Commerce stands for electronic commerce and is defined as commercial transactions done electronically over the internet. M-Commerce: M-commerce, called mobile commerce, is the commercial transaction done through wireless handheld devices such as mobile phones, laptops, cellular telephone and personal digital assistants (PDAs). It includes buying and selling of goods and services, online banking, bill payment, information delivery and so on. M-Wallet: Mobile wallet is like a prepaid instrument for certain payments. Pervasive Computing: Pervasive computing is also called ubiquitous computing, ambient computing and existing everywhere. Pervasive Computing applies to the growing trend of embedding microprocessors in everyday objects like microwaves, air-conditioners, washing machines, etc so they can communicate information. PDA: A personal digital assistant (PDA) is like a palmtop computer, or personal data assistant. It is a mobile device that functions as a personal information manager. PDAs are now being replaced by smart phones.

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About the Contributors

Priyanka GuptareceivedtheB.Sc.(H)degreeinComputerSciencefromShaheedRajguruCollege ofAppliedSciencesforWomen,UniversityofDelhi,NewDelhi,India,in2009,andtheM.Sc.degrees inComputerSciencefromUniversityofDelhi,NewDelhi,India,in2012.SheworkedasaAssistant ProfessorinComputerSciencedepartment,ShaheedSukhdevCollegeofBusinessStudies,University ofDelhi,fromJuly,2013toMay,2014.FromJanuary2015toApril,2015,sheworkedasAssistant ProfessorinMathematicsDepartment,GargiCollege,UniversityofDelhi.Currently,sheisworkingas AssistantProfessor(Guest)inComputerSciencedepartment,ShaheedSukhdevCollegeofBusiness Studies,UniversityofDelhi. Rajan GuptaiscurrentlyenrolledasResearchScholarwithUniversityofDelhi.Hisareaofinterest includesE-Governance,M-Governance,PublicInformationSystems,MultimediaDataprocessingand DataAnalysis.Hehasover25publicationsatnationalandinternationalforums. Neeru Kapoor,Ph.D.isanAssociateProfessorintheDepartmentofCommerce,DelhiCollegeof ArtsandCommerce,UniversityofDelhi.SheobtainedmyMCom.,MPhil.,andPh.D.degreesfrom DelhiSchoolofEconomics,UniversityofDelhi.Theareasofherteachingandresearchinterestsinclude: Marketing,Advertising,OrganisationalBehaviourandStrategicManagement.Sheisaresearchguide atIGNOUfortheMBAprogramme.SheworkedasavisitingfacultyforM.Com.intheDepartmentof Commerce,DelhiSchoolofEconomics,UniversityofDelhiandtheguestfacultyatotherprestigious ManagementInstitutesinDelhi.SheisalsoaPart-TimeLessonWriterwithTheInstituteoflifelong learning,UniversityofDelhi.ShehasalsocontributedtotheEPathshalaprojectoftheUniversityGrants Commission.Shehaspresentedpapersinthenationalandinternationalconferenceswiththelatestone beingtheGlobalConferenceheldattheOxfordUniversity,London.Shehasalsopresentedpaperatthe InternationalconferenceheldattheHarvardUniversity,Boston,USAandtheEuropeanConferenceheld atGermany.Anumberofarticleswrittenbyherhavebeenpublishedinvariousreputednationaland internationaljournals.ShehasauthoredfivebookstitledTelevisionAdvertisingandConsumerResponse, EconomicsWherePeopleMatter,AdvertisingandPersonalSelling,HumanResourceManagement,and PrinciplesofMarketing,whichhavebeenwellreceivedbytheacademics. Kijpokin KasemsapreceivedhisBEngdegreeinMechanicalEngineeringfromKingMongkut’s UniversityofTechnologyThonburi,hisMBAdegreefromRamkhamhaengUniversity,andhisDBAdegreeinHumanResourceManagementfromSuanSunandhaRajabhatUniversity.HeisaSpecialLecturer atFacultyofManagementSciences,SuanSunandhaRajabhatUniversitybasedinBangkok,Thailand. HeisaMemberofInternationalAssociationofEngineers(IAENG),InternationalAssociationofEngineersandScientists(IAEST),InternationalEconomicsDevelopmentandResearchCenter(IEDRC), InternationalAssociationofComputerScienceandInformationTechnology(IACSIT),International FoundationforResearchandDevelopment(IFRD),andInternationalInnovativeScientificandResearch Organization(IISRO).HealsoservesontheInternationalAdvisoryCommittee(IAC)forInternational AssociationofAcademiciansandResearchers(INAAR).Hehasnumerousoriginalresearcharticlesin topinternationaljournals,conferenceproceedings,andbookchaptersonbusinessmanagement,human resourcemanagement,andknowledgemanagementpublishedinternationally.

344

About the Contributors

Baljeet KauriscurrentlyAssistantProfessorinDelhiUniversity,India.SheisMScinComputer SciencefromDepartmentofComputerScience,DelhiUniversityandMPhilfromVinayakMission University,India.ShehasbeenteachingwithDelhiUniversityandhas6+yearsofteachingexperience.Tohercredit,therearemanyresearchpapers.Shehaswrittenpapersonthetrustfactorswhich existinIndianEcommercemarketandhasalsogivenitscategoricalclassification.Shehasproposeda frameworktocomputetrustindexforthewebsitesinherdoctoralstudies. Ramandeep KaurispursuingPh.DfromBanasthaliVidyapith,Rajasthan,India.Sheiscurrently workingasanAssistantProfessorinInstituteofInformationTechnologyandManagement,affiliatedto GuruGobindSinghIndraprasthaUniversity,Delhi.HerareasofinterestareSoftwareReliability,SoftwareEngineering,CloudComputingandE-commerce.Shehaspublishedresearchpapersinjournals ofreputeandachapteronsoftwarereliabilityinLNCS. Harmeet Malhotra works as an Assistant Professor at Institute of Information Technology and Managementsince2007.TheresearchinterestareasareE-Commerce,M-Commerce,E-governance, SoftwareEngineeringandQualityManagement. Myriam Martínez-FiestasisaPhD.inBusinessSciences(Marketing)attheUniversityofGranada. SheisanassistantresearchprofessorofMarketingArea,ESAN,GraduateSchoolofBusiness(Peru). HermainresearchinterestsareinthefieldsofPerceivedRisk,Mobilepayments,Psychophysiology, Emotions,Neuromarketing,SocialMarketingandConsumerBehavior.Shehaspublishedhisresearch workinseveraljournalssuchas,“JournalofAdvertisingResearch”,“ServiceIndustriesJournal”,“Fire Technology”,“ASCE’sJournalofConstructionEngineeringandManagement”,“InterdisciplinaryJournalofContemporaryResearchinBusiness”or“TheInternationalJournalofManagementScienceand InformationTechnology”,amongothers.Additionally,shehasdevelopedresearchprojectswithdiverse companiesandpublicadministrations. Basanti Pal Nandi received her M.Tech. and B.E. degree from Jadavpur University. She joined GuruTeghBahadurInstituteofTechnologyasanAssistantProfessorinComputerScienceDepartment andhasbeenteachingsincefiveyears.HerinterestareasareMobileComputing,Imageprocessingand NaturalLanguageProcessing. Barkha NarangiscurrentlyworkingasanAssistantProfessorinJagannathInternationalManagementSchool,NewDelhi.Shehasworkexperienceinacademicsoftenyearsandhasbeenteaching engineeringstudentsandmanagementstudentsofJaipurandDelhi. Poonam Ahuja Narang received her M.Tech. and M.C.A. degree from Kurukshetra University. ShejoinedGuruTeghBahadurInstituteofTechnologyasanAssistantProfessorinComputerScience Departmentintheyear2008.Shehasateachingexperienceofnineyears.HerinterestareasareMobile Computing,SoftwareEngineeringandCyberSecurity.

345

About the Contributors

Katia Oviedo-Caceres,MasterofBusinessAdministrationwithamajorinfinance(ESAN),CertifiedPublicAccountant(UniversityofSanAgustinofArequipa).ExperienceManagement,People Management,FinanceandTreasury,SustainableDevelopment,ResearchandDevelopment,Auditand Consulting.Shehasworkedincompaniesinsectorssuchaseducation,mining,banking,microfinance, transportandstateentitiessuchasSBS,SUNATandtheContraloríaGeneraloftheRepublic.Currently, SheworksasChiefofadministrationinResearchAreainESANUniversity. Ignacio Rodriguez-GarzonisaPhDinBuildingEngineeringattheUniversityofSeville(Spain). Now,heisanactiveresearcherattheCientificadelSurUniversity(Peru)intheSchoolofArchitecture. Hismainresearchinterestsareinthefieldsofrisk,managementanddecision-makingindifferentareas. Vaggelis SaprikisisanadjunctSeniorLecturerattheDepartmentofBusinessAdministration,inthe TechnologicalandEducationalInstituteofWesternMacedonia,Grevena&Kozani,Greece.HegraduatedfromtheUniversityofMacedonia,DepartmentofAppliedInformatics,Thessaloniki,Greecein 2004.HealsoreceivedhisMaster’sDegreeinInformationSystemsandhisPhDine-Businessfromthe sameUniversityin2007and2011correspondingly.Hisresearchinterestsincludee-businessmodels, e-commerce, e-marketplaces, m-commerce and information systems. He has participated in various internationalconferencesandhaspublishedpapersininternationaljournals. Mukta SharmaholdsM.Phil(ComputerScience),M.Tech(IT),M.Sc(CS),PGDCA.Currently sheispursuingPh.DinITfromTeerthankerMahaveerUniversity,Moradabad.Shehasmorethan fourteenyearsexperienceofteachinginvariousundergraduate&postgraduatecoursesofIndianUniversitieslikeDTU,GGSIPUniversity,MCRP,Kurukshetra,IASE,PTU&UPTUetc.Tohercreditshe hasvariousresearchpaperspublishedinnationalandinternationalJournals/conferenceslikeIEEE, IJATES(YMCA),AmityUniversity,JNU,TMUetc.shehasco-authoredabookon“WebTechnologies:Planning,DesigningandDevelopmentofWebsites”.Shehascontributedvariousbookreviews. Theodora ZarmpougraduatedfromtheTechnicalUniversityofCrete,DepartmentofElectronic &ComputerEngineerandsheobtainedherMastersDegreeinManagementofInformationSystems, DSVDepartment,RoyalInstituteofTechnology,Stockholm.AftercompletingherPhDaboutmobile marketingandmobilebusinessmodelsinthegovernmentsector,sheisexcitedtoinvestigatehowdata analysisanddataminingtechnologycantransformthecurrentmarketingindustrytrends.

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347

Index

2D Barcode 85, 172, 175

A Adoption 4-6, 8-10, 24-34, 36-38, 40-41, 48-50, 75, 101, 145, 152, 155, 158, 186-187, 219, 228, 231, 234-235, 237-239, 241-244, 271, 296, 302 adoption intention 24-30, 32-34, 36-38, 40-41 Airtime Refill 115 Always on 219-220, 274 Android Phone 274 Apple Pay 160, 243 APPS 49, 51-53, 55, 57, 60, 62-65, 117-123, 129, 137, 142-145, 153, 158, 188, 194, 218, 222, 243, 251, 258, 266-268, 271, 274, 276, 286-287, 290, 296 Attack 76-77, 81-83, 86, 146, 157, 198, 203, 205, 208, 276, 278, 282, 288, 290 Authentication 9, 69, 72, 76-78, 80-83, 85, 87-89, 144, 157, 172, 178-179, 194-196, 205, 207, 211-212, 216, 236, 239, 243, 275, 278-279, 281, 284-288, 290, 305-306 Authorization 9, 74, 85, 157, 178, 187, 199, 211, 287-288 Awareness 57, 100, 121, 155, 177, 197, 219, 228, 234, 242, 293, 305-307

B Bandwidth 71, 142, 159, 196, 204, 234, 236-237, 239, 274, 278, 287-288 Barriers 1, 8, 94, 96-97, 101, 111, 234, 237-240, 242, 244, 253, 302 Business Model 11, 111, 195, 205-206, 216, 269

C Case Study 117, 119, 122, 137, 305 Channels 33, 51, 83, 218, 302

Cipher Key 208 Communication 2, 6, 8-9, 24-25, 49-50, 72, 76-77, 83, 85, 87, 96, 115, 142-143, 145-146, 155, 159, 175, 177-178, 185-186, 188, 193-199, 202-203, 208, 211, 216, 218, 236-238, 242-243, 252-254, 274, 276, 287, 289-290, 294, 306 Confidentiality 31, 76, 153, 155, 194-195, 205, 211212, 216, 243, 278-279, 287-288 Consumer Perception 217-219, 228, 230 Cost 5-6, 8, 10, 26, 41, 50, 75, 89, 177, 188, 212, 230, 234, 238-239, 243-244, 250-251, 268-269, 271, 288 Customer Protection 183, 192 Customer-Driven Approach 48 Customization 220, 241, 269

D Direct Carrier Billing 173, 175, 305 Drivers 24-25, 27, 32-34, 36-38, 40, 220, 231, 251, 254, 295

E E Commerce 293-294, 308 ECM 26, 47 E-Commerce 2, 4, 6, 8, 25, 30-31, 48-51, 53, 57-58, 62-65, 67, 78, 86, 117-118, 120-121, 137, 140143, 145-146, 154-155, 158, 172, 175-176, 180, 182-183, 185-186, 194, 201, 205-206, 220-222, 240, 244, 259, 261, 266-267, 271, 274-275, 277, 288, 290, 294, 297, 307-308 EDM 26, 47 Electronic Commerce 2, 23, 26, 31, 50, 181, 192, 252-254, 308 Equipment 23, 41, 85, 95, 158, 173, 175, 211, 243, 252, 287

Index

F

Handheld Devices 71, 141-143, 145, 186, 201, 234235, 275, 277, 287, 308

Mobile Operator 176, 179-180 Mobile Payment 1-2, 6, 9, 23, 73, 78, 80, 83, 85, 87-90, 94-97, 101, 103-106, 109, 111-112, 141, 158-160, 163, 166, 172-173, 175-176, 188, 192, 195, 201203, 206, 234-235, 243-244, 281 Mobile Payments 29, 31, 86, 95, 101, 105, 115, 158159, 173, 181, 201, 206, 235, 243-244, 302, 305 Mobile Transaction Flow 202 Mobile Wallet 52, 96, 103, 105, 172, 175, 187, 243, 305, 308 Mobility 1, 8-9, 25, 41, 50, 69, 71, 143, 158, 194, 196, 199-200, 209-212, 241, 243, 252-254, 269, 306 Money Laundering 94, 96, 105, 115 M-Payment 1-3, 6-7, 9-11, 30, 50, 78-79, 86, 89-90, 195, 203, 205-206, 220, 225, 234, 242, 275, 281-282 M-payments 9, 11, 220, 226, 235, 243-244 m-services 24-28, 30, 33-34, 36-38, 41, 220 m-shopping 25-26

I

N

Indian E-Commerce 297 Information Technology 23, 31, 48, 112, 159, 252 Innovation 2, 26, 31-32, 48, 62, 75, 179, 197-198, 259, 304 innovativeness 5, 24-25, 27, 31-32, 34, 36-38, 50, 241 Integrity 6, 31, 82, 143, 153, 194-195, 211-212, 216, 239, 243, 287-289 International Money Transfers 97, 115 Intrusion Detection 75-76, 86 IPhone 84, 253, 258, 267, 274, 293-294

Network Fraud 75, 89-90 Network infrastructure 77, 236 NFC 9, 158-159, 172, 175, 194-195, 206, 208, 216, 243, 290 Non-Repudiation 195, 207, 216, 239, 286-287

Financial Inclusion 94-101, 103-105, 111-112, 115 Framework 10, 24-25, 27-29, 32-34, 38-41, 96, 110111, 119, 121, 137, 150, 172, 176-178, 180-182, 186-188, 192, 194-197, 212, 226-227, 230, 302

G Gender 5, 30, 38, 98-99, 234, 241-242 Google Wallet 160, 243 GSM 72, 187-188, 195, 198, 206-207, 237, 274, 278-280

H

L Latin America 94-106, 109, 112, 187 Localization 8, 69, 253

M M- Commerce 253 Mobile Adhoc Network 143, 157 Mobile Applications 8, 33, 48, 50, 52, 69, 117-119, 122, 127, 137, 142-143, 145-146, 188, 198-199, 218-219, 266, 271, 276, 281 Mobile banking 5, 8, 30, 95, 103, 141, 143-144, 153, 187, 198, 222, 240, 243, 282, 286 Mobile Commerce or M-Commerce 117, 158, 274 Mobile Computing 1-3, 23, 52, 208, 221, 253 Mobile Database Security 195, 208

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O One-To-One Marketing 64 Online Shopping 26, 50, 52, 60-62, 117-120, 158, 180, 194, 236, 297 Order Fulfilment 121-123, 140

P P2P Money Transfers 115 Parlay 280 Payment Gateway 83, 172, 175, 204, 268 Payment gateways 158, 172-173 Payment Modes 158-159, 176, 193-195, 199, 201, 212 PayPal 9, 158, 160, 243, 294, 296 PDA 49, 142, 178, 193, 201, 252, 278, 306, 308 Perceived ease of use (PEOU) and Perceived Usefulness (PU) 241 Pervasive Computing 293, 304-308 Pharming 73, 77-78 Phishing 60, 73-74, 77-78, 142, 194, 282 Portability 5, 69, 235, 241, 269

Index

Prevention 65, 80, 90, 105, 141, 149-150, 155-157, 184 Privacy 6, 9, 31, 74, 78, 80, 121, 127, 140, 145, 149, 155, 173, 177-180, 184, 188, 194-195, 197, 199, 206, 217, 224, 226, 234, 238-240, 250, 266, 274276, 281-282, 290, 302

Q QR Code 175, 304

R Regulatory Framework 110-111, 172, 176-178, 180181, 186-188, 192, 302 relationship drivers 24-25, 27, 32-34, 36-38, 40 Reputation 75, 120, 240 RFID 172-173, 175, 177, 243 Rich Client 197, 216

S Security Algorithms 195-196, 207, 287 Services offered 60, 95, 97, 112, 251 Showrooming 218 Smart Phones 49-50, 61, 71, 117-118, 142, 173, 179, 187-188, 194, 202, 217-218, 284, 294, 296-297, 302, 305, 308 SMS 2, 25, 32-33, 41, 49-50, 72, 74, 97, 158, 194-195, 198, 206-207, 218-219, 239, 242-243, 253, 267268, 278, 280, 282, 297 Smurfing 115 Social exclusion 94, 96, 98-99, 103 Social Inclusion 95-101, 111-112, 115-116 Spear Phishing 77-78 Strategy 101, 112, 141, 149, 155-157, 187, 197, 242, 267, 296-297, 302 SWOT 48-50, 55, 57-58, 60, 64, 67

T

Technologies 1-6, 8-9, 24-25, 29-30, 40-41, 75, 78, 83, 95-97, 115, 143-144, 146, 153, 155, 158-160, 177, 180, 194-196, 201, 203, 217-221, 237, 239, 242244, 254, 267, 274, 276, 278-279, 281, 286, 295 Technology Acceptance Model 1, 4, 23, 25-26, 47 Telecommunication Regulator 176, 180 Thin Client 197, 216 Threat 90, 142-143, 146, 155-157, 217, 224, 238, 276 TPB 6, 26, 47 Transaction 6, 8-10, 23, 31, 33-34, 41, 57, 68-70, 7275, 78, 83-90, 96, 103, 105-106, 115, 142-143, 145-146, 149, 152, 155, 157-159, 172, 175-178, 180, 183-184, 186-189, 192-196, 198-203, 205208, 210-212, 218-219, 239, 242-244, 250, 252, 261, 271, 275-276, 281, 286, 306, 308 Transaction Models 193-195, 199, 201, 210, 212 Trust 1-2, 6, 10, 24, 27, 30-31, 34, 36-38, 41, 73, 75, 84, 90, 95, 117, 119-122, 127, 137, 173, 177, 179, 184, 197, 205, 217, 234, 240-241, 243, 250, 275-276, 286 Trusted Stack Model 194, 198-199

U UMTS 207 Usefulness 5-6, 10, 24-27, 29-32, 34, 36-38, 41, 187, 234, 236, 241 USSD 2, 206, 274, 280 UTAUT 4, 26, 47

W WAP 2, 50, 72, 78, 83, 144, 177, 194-196, 198, 204, 206-207, 216, 239, 243, 274, 282, 287-288 Wireless Communication 9, 24, 49, 76-77, 142-143, 145-146, 193, 252, 254 Wireless Technology 32, 50, 55, 72, 158, 175, 177, 185, 193-194, 216 WTLS 207, 239, 288

TAM 1-2, 4-6, 10, 25-26, 28, 47, 241

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