Commerce anywhere, anytime

Billions of people are using mobile phone and handheld wireless devices worldwide. Global shipments of mobile phones (and other wireless devices) have surpassed shipments of laptops and desktop computers earlier this year. Result: over 67 per cent of the world’s population owns a mobile phone, making it the largest consumed electronic device in human history. People have come to embrace the mobile devices as an extension to their everyday lives. This growth has given pace to mobile commerce (m-commerce) environment.
In the fast age when time is short and the value attached to convenience is high, the logic behind growth of m-commerce is the need for finding easy ways for financial transactions to get cash, pay bills or shop for goods and services anywhere, anytime just by touching buttons.
Rapid convergence of the internet and cellular technologies streams is acceleration m-commerce. Industry estimates are that by 2015, users around the world are expected to spend about $119 billion on purchase of goods and services via mobile phones. In Pakistan, moving from an environment, which acts as a communication tool, and forcing that same device to become a transactional tool has been very slow so far.
In order to make mobile commerce a viable option in our economy, financial services are already offering limited mobile banking so that the customers can use their handheld devices to access their accounts to pay their bills and buy things. But sadly, most Pakistanis do not have bank accounts (in 2009, only 14 per cent of the adult population had an access to formal banking services) let alone access to internationally accepted credit and debit cards. The lack of credit and debit cards or, in general, electronic payment systems has been partially responsible for the slow start of m-commerce here.
While the number of credit and debit cards holder Pakistanis is on the rise, widely available electronic payment mechanism through mobile phone is an alternative and more convenient. What is revolutionary is mobile banking for those who do not have formal bank accounts or whose banks do not issue debit or credit cards. With mobile banking, users can get a sort of virtual bank account or wallet, which they can use to receive and send money, pay bills and buy goods and services. Common mobile phone users are already familiar with branchless banking and alternate delivery channels.
In an agricultural country where there is a lot of rural-urban migration and where most Pakistani still have roots back in the ‘village’ and need to send money home regularly, having an economical, safe and efficient way to transfer cash via mobile phone is a big facility. As mobile payment systems become prevalent, the people receiving the cash on their mobile phones will use this same cash to pay for goods and services without having to change the cash back into physical cash. Gradually, there will be limited need to carry around physical cash and we shall see Pakistan moving more into m-commerce. An open, transparent and robust mobile banking regulatory framework would not only assist the population at large but would also be bridging the ability to measure undocumented economy of Pakistan.
Two sectors that are already making the most of financial transactions through mobile phones are the utility companies and fundraising. Bill payment was one of the first mobile banking services in Pakistan. Another beneficiary is fundraising, which was at its best during the floods of 2010.
Personal scouting reveals that many mobile phone users rely on their devices for searching, browsing and gathering information, and not necessarily for making purchases. Mobile consumerism is still very much a work in progress. Businesses need to incorporate the mobile channel into their marketing plans. Knowing the limitation of a small screen, websites should be made easy to use and optimised taking into account these physical constraints. Savvy marketers know how to use that mobile phone numbers advantageously. The idea is not to be intrusive but informative. Any tactics that invites engagement through the mobile channel is a viable strategy.
As a next step cellular operators and banks in Pakistan could team up to create a single m-commerce system to let customers pay for goods using their mobile phones, and to let businesses offer goods and services to customers as it is being successfully practiced elsewhere. Such arrangement can change how people do business in m-commerce environment by offering the possibility of an entire new level of financial flexibility. This will benefit the whole economy, allowing users to manage their money and make payments using their handsets, helping marketers to reach their customers on the move, and helping banks provide their clients with an easy and convenient way of using cash. Clearly, the explosion of applications and services is upon us. To compete in a marketplace dominated by wireless devices, businesses must devise effective m-commerce strategies. Building successful strategies begins by recognising the local users’ base that can drive m-commerce. Will m-commerce become the next great business avenue? We will know soon enough.

The writer is Deputy Controller of Examination at Lahore School of Economics. He blogs at http://logicisvariable.blogspot.com and can be reached at [email protected]