There is a lot of hype in the market about mobile services like m-payment. To be fair, most of the hype is justified. Recent TRAI figures have shown that the Mobile channel will be a significant, and in many cases the only, way to reach and serve millions of customers across India. While most people know that India has topped 250 million mobile users, few realise that a large number of those people are actively using mobile data services today.
There is a lot of hype in the market about mobile services like m-payment. To be fair, most of the hype is justified. Recent TRAI figures have shown that the Mobile channel will be a significant, and in many cases the only, way to reach and serve millions of customers across India. While most people know that India has topped 250 million mobile users, few realise that a large number of those people are actively using mobile data services today. TRAI reported that the number of Indians who access the Internet or use high-end data services over the mobile increased by 8 million from Q1 â€˜07 (38 million) to Q2 â€˜07 (46 million). This compares to only 9.3 million total PC internet connections across India in 2007. The mobile channel offers reach and convenience for completing electronic transactions that the PC simply cannot match â€“ today or in the near future.
However, the use of the mobile channel for electronic transactions is still disproportionately lower than it should be, given the penetration numbers above. Why has the mobile channel been so slow in taking off for electronic transactions?
Lessons from the PC Revolution
The inherent benefits (convenience, cost, choice) of electronic commerce apply in India just as much as they do in other markets. Yet, the mobile revolution in India is not mature. The mobile is the logical long-term channel for consuming e-commerce in India given the penetration, growth rate, minimal cost, instantaneous reach, and comfort level of users with the medium. To understand where it stands, we can look back to the PC revolution in mature e-commerce markets like the US for guidance.
When analysing the PC revolution, three phases drove user adoption:
PHASE 1 â€“ deployment of the technology infrastructure characterised by the build-out of the PC, Network, and Internet ecosystem.
PHASE 2 â€“ development of usable, cost-effective, secure, and value-add transactions like paying a bill, searching for a news story, sending an email. These â€œtransactionsâ€ gave the user â€œHigh Utility / minute spentâ€.
PHASE 3 â€“ evolution of cost-effective, secure, and high value mediums in which a user could complete multiple, diverse transactions quickly and easily. Sites like eBay, Amazon, Yahoo!, bank websites allowed users to engage in a few places for a long time and complete a wide range of high-value, â€œone-stop shopâ€ transactions such as shopping, m-banking, etc â€“ thus providing â€œHigh Utility / hour spentâ€.
In other words, paying one bill in 10 clicks over 10 minutes is valuable (especially when the option is mailing in a check or driving to your service providerâ€™s office). However, paying 10 bills from different companies in 10 clicks over 10 minutes is even better and will accelerate a personâ€™s willingness to invest another hour in the medium. The evolution of the mobile as an electronic commerce channel will be driven by the same three phases.
Letâ€™s look at where we are in the evolution of mobile services â€“ High Quality-of-Service data networks are in place or rapidly being put in place. Service providers have given us the technical ability to complete useful one-off transactions like topping up an account or paying a bill on a mobile. This is where current m-payment solutions comfortably fit in. However, are current m-payment solutions easy for the user to use? Are they cost-effective? Do they provide high utility / hour spent? Not reallyâ€¦
Letâ€™s look more closely at the existing m-payment experience. Here are some of the characteristics of m-payments today:
(1) High burden on the user â€“ A user who might want to do five transactions perfectly designed for the mobile medium â€“ (a) paying their mobile bill, (b) Paying their Credit Card Bill, (c) Viewing their Bank Balance, (d) Checking Flight Schedules, and (e) Booking a movie ticket â€“ would have to learn, register, interact with, or download five different m-payment solutions!
(2) SMS platform is costly in large volume and doesnâ€™t always provide best performance. Every transaction adds incremental, uncapped cost for the user. (Remember a purchase may require 3-5 SMS sent by the user).
(3) Not intuitive â€“ How often have you seen an advertisement telling a user to â€œSMS â€˜ABCDEâ€™ to 12345 in order to buy a ticketâ€? In the course of daily life, users may remember one or even two short codes & custom text but not much more.
In terms of utility per single transaction, current m-payment solutions are great. In terms of utility for multiple, transactions, they need to evolve.
Whatâ€™s the solution?
Companies like ngpay focus on providing a more engaging m-commerce (not simply m-payment!) experience on the mobile. Things like a highly interactive java client that works on entry-level handsets, process-based user interface, secure mobile wallet that supports multiple payment instruments, and a â€œone-stop-shopâ€ business model in which customers and businesses interact in a single place have helped such companies bypass all of â€œPhase 2â€ limitations of existing â€œm-transactionâ€ solutions in the market today.
The inertia behind m-payments and m-commerce have less to do with whether the user will eventually be interested or see value in mobile services but on whether the ecosystem players (banks, telcos, m-commerce companies) proactively deliver services and an environment that can move the Indian mobile evolution from Phase 2 to Phase 3. The way to do that is make it easy, cheap, engaging, and highly valuable for a user to spend a 5 or 50 minutes on the mobile with your service.