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Problems with Mobile Commerce

Paper Type: Free Essay Subject: Information Technology
Wordcount: 5459 words Published: 13th Jul 2017

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The recent years have seen an explosive growth in the mobile phone industry. Research has shown that the number of mobile phone subscribers at the end of the year 2004 has passed 1.6 billion. Mobile commerce more popularly known as m-commerce has made the business mobility a reality. The concept of anytime and anywhere internet facility with an inexpensive and comparatively smaller computing infrastructure is the driving force towards mobile commerce. With the advancements in the Wireless communication, mobile commerce has become a new paradigm for personal communication without any constraints in location. There are no age limitations in conducting mobile commerce. Starting from the teenagers to the retirees, everyone is depending on mobile devices. Mobile Commerce is defined as any direct or indirect transaction conducted through the handheld devices such as PDAs and mobile phones facilitated through mobile or wireless telecommunication networks. It is a subset of electronic commerce.

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E-Commerce and M-Commerce differ in the way the business is conducted. In E-commerce, online auction systems act as an intermediary between the buyer and a seller whereas mobile commerce is more personalized and is ideal for the location based services. The characteristics of mobile devices such as mobility, cost, portability, voice, more personalization and global positioning system (GPS) have made the establishment of new business models around mobile devices. Many applications such as mobile payment systems, entertainment, content distribution and business services have been developed. Consumers can use mobile phones as an ATM or debit card to purchase tickets or pay the bills online. Content distribution services such as real time information and notifications and location tracking systems are increasing every day. Consumers can get real time information such as stock quotes, traffic information, news and weather forecasts anywhere anytime on their mobile phones via the internet. In addition to the real time content services, mobile phones have become an entertainment medium. Entertainment services such as ringtone downloads, watching live TV broadcasts, online games and music downloads has become a youth trend today. A report from Screen Digest Ltd., a global market research company, shows that Korea and Japan accounted for 80% of the worldwide online game downloading revenues (approx. 380 million Euros). According to Juniper research, a company that specializes in mobile market and technologies, adult mobile services and mobile gambling services accounted for total revenue of US $1 billion and US $ 15 billion respectively.

Mobile Commerce has a great impact on business services and applications. Extending the Enterprise Resource Planning (ERP) systems to have mobile functionality will provide the sales personnel and marketing staff with real time management and corporate data. Mobile inventory management applications benefit the logistic related business in their supply chain management. Also, no time and location based constraints helps in making the offices going paperless in which case a sales person need not have to carry loads of paper for the client delivery.

Mobile Commerce is creating new opportunities for the mobile service providers as well as for mobile users. Experts have proposed that the next wave of computing would be mobile commerce and the first decade of 21st century would be considered as the decade of mobile computing and mobile commerce. The driving factors of mobile commerce include various interrelated forces. The social trends where every person is depending on his or her mobile for communication (mobile society), technological advancements and economics are some of the driving forces of mobile commerce. The success of the electronic commerce itself is another major driving factor for mobile commerce. Consumers have embraced the web based e commerce in their day to day life in such a way that they cannot think of doing their tasks without any electronic channel and this has made businesses to extend their services beyond electronic channel into mobile channel. In addition to the above factors, the lowered provider costs, increased internet speed and reliability, availability of content and information anytime through an instant access and reduced time to market have contributed for the growth of mobile services.

Although the above mentioned factors indicate that mobile commerce is creating various opportunities for businesses, users and service providers, a report from the Business Studies 2009 shows that only 7% of the 90% of the Americans who own a mobile phone have used their mobile phones to conduct mobile commerce transaction. Electronic Commerce can be divided into four different categories such as Business to Business (B2B), Business to Consumer (B2C), Consumer to Business (C2B) and Consumer to Consumer (C2C). Mobile commerce is mainly concerned with the B2B or B2C market. With the widespread adoption of mobile phones, mobile commerce has a prosperous future in business to consumer (B2C) category.

As Business to Consumer (B2C) is considered the future of mobile commerce, businesses and consumers are becoming more concerned about security issues since identity theft has become a growing problem. The wireless telecommunication industry has seen enormous advancements in technology and hence the development of standards. But a question arises on whether the early adoption of the standards may hinder future developments in mobile commerce.

Let us have a look at the major differences between mobile commerce and electronic commerce and what drives the consumer to adopt m-commerce over e-commerce. The attributes such as ubiquity that is anytime, anywhere availability, high interactivity, convenience, personalization, that is mobile phones are more personal with most probably a single owner when compared to home computers or internet cafes which is shared between a number of people, and finally localization are some of the benefits of mobile commerce which is driving the consumer market. In short, mobile commerce offers more enticing market opportunities than e- commerce.

While live internet on the mobile may sound intuitively appealing, it is very difficult to estimate the utility and the extent of its usage. Businesses, governments, service providers, mobile users and stakeholders still need to address many issues and obstacles before mobile commerce pervades in to our daily lives. The next section of the paper discusses the major issues in mobile commerce such as application issues, network challenges, consumer privacy and trust, security concerns, infrastructure problems and legal and regulatory issues.

Key Issues in Mobile Commerce

* Security in mobile commerce

* Location management issues

* Limitations of mobile devices

* Ethics and Privacy

* Wireless Infrastructure

* Usability

* Legal and Regulatory challenges

* Consumer Trust

* Interoperability and Compatibility


Security in mobile commerce

Wireless communications are more vulnerable than wired communication. Although most of the wireless data networks provide reasonable encryption, security has become a major concern with the introduction of high end mobile devices in the market and the anticipated increase in the number of devices. Many issues exists with the use of mobile devices to conduct transactions such as: Data could be lost and the mobile terminals itself could be misplaced or stolen due to its smaller size and contents stored in the device could be accessed by anyone who possesses the device due to lack of proper authentication techniques . Although mobile commerce enjoys mobility, it raises many serious security threats. In particular, as it plays a very important role in business and personal life, security issues have to be considered seriously.

There are many aspects to consider in security which includes physical security, risk assessment, secure wireless transmission, secured access and malware. The built in security features such as passwords and locking keypads are not used by majority of wireless users and the data stored on these handheld devices are often not encrypted which makes it easy for anyone to access the information stored without any authorized access. The article ‘Mobile Commerce: issues and obstacles’ mentions that Motorola, Ericsson and Nokia did provide industry standard digital signature for authentication but was discarded in 2006.

Data transmitted over the wireless medium is more vulnerable for attacks. Wireless transmission can be intercepted and if is not encrypted or encrypted with a flawed protocol, then the information can be made known. Unsecured data transmission may be exploited by hackers for eavesdropping or ï’man- in-the-middle’ attacks. Tradeoff between performance and security remains an issue of concern for low power mobile devices.

Communication between mobile devices is in the form of ad hoc networks where one node communicates with another without a fixed infrastructure. Network decision making in ad hoc networks is decentralized, as a result all the network protocols rely on the cooperation between the nodes. An attacker can utilize this to compromise a single node with false routing information or can instruct all the routing to go through the compromised node. In addition to compromising the nodes, hackers may route the mobile users to download malicious or miscellaneous information or may even launch denial of service attacks. An attacker need not always target a mobile user but instead if a mobile user roams in an attacker’s zone he or she is vulnerable to attacks. Roaming in an attacker’s zone may lead to the alteration or stealing of data and information without the end user’s knowledge. The difficulty in tracing the wireless devices as they roam in different wireless zones, no fixed geographic points and the ability to go online and offline easily gives the malicious users an excellent advantage to launch the attacks.

A question of who would be responsible for the financial or data loss remains a challenge in security. Is it the user or the wireless provider or the financial institution or the software provider held responsible for the loss? Someone has to be responsible for the loss and it is quite costly and becomes a risk for stakeholders. Hence there is a need for wireless risk management.

There are some false impressions that only laptops or computers are exposed for viruses and cell phones or handheld devices such as PDAs and smart phones are immune to viruses. These viruses when downloaded by cell phones drain battery life or can simply increase the load on the network.28 The compromised security function may affect not only the network but also can lead to the loss of revenue in business.

Location management issues

Mobile Commerce is an emerging field which involves many applications such as financial applications, user applications, entertainment, mobile inventory management applications, mobile business re-engineering, mobile games and location specific mobile advertisements. All these applications require the support of location tracking to track devices, products or the people. The following figure shows possible mobile commerce architecture.

The important components of mobile commerce include wireless infrastructure, user interfaces, devices, database, mobile middleware and servers. In general, mobile commerce is very dependent on the location information of the users, devices, products, services and servers. Because of the mobility involved in mobile commerce, the location management becomes a challenging task. With the varying requirements in precision, scalability and delay between different m-commerce applications, tracking becomes more challenging. Issues in location management include precision in tracking, updating the location, storage and access of the tracked information, updating of the existing location management schemes with few modifications, difficulty in modeling the ‘context-awareness’ related to the location management, the overhead of location management for various mobile commerce applications under different network size, mobility patterns and transaction size.

There are a number of location intensive mobile commerce applications which require location management support as their primary requirement in wireless network. The article ‘Addressing Location Issues in Mobile Commerce’ identifies some of the location intensive mobile commerce applications which include mobile advertising, mobile financial applications, mobile inventory management and proactive service management. One of the most important components of mobile commerce is financial applications which include mobile banking, mobile money transfer, brokerage services and mobile payments. If implemented properly, these applications may eventually become a business tool. Mobile advertising is another category of application where advertising is targeted to the users depending on the demographic information collected by the wireless service providers and the location of the user. Location sensitive advertisements such as shopping deals or on-going specials can be accomplished depending on the surrounding area of the mobile users. Issues in mobile advertising are: who owns the location information, how to share this information between wireless providers, what are the storage requirements and how to satisfy the need of real time processing in order to capture the user information.

Mobile inventory management is tracking the location of products, goods and services. This application is very helpful for logistic providers to determine the time taken for delivery to their customers in order to provide a better customer service and to compete against other businesses. Amongst different inventory management applications, ‘rolling inventory’ is one of the interesting applications which involve tracking of multiple trucks carrying large amount of inventory which helps for just in time delivery of goods when a store needs certain goods or services. Another category of mobile commerce application is proactive service management which involves collecting pertinent information of current or future needs of a user and providing the service proactively. Some of the issues in these applications are security, reliability and the cost of deployment.

Limitations of mobile devices

Mobile phones, hand held devices such as Personal Digital Assistants (PDA) and pagers, palm sized computers and laptops such as tablets and vehicle mounted interfaces are some of the examples of the current wireless devices. Although mobility and flexibility are the main advantages of the mobile terminals, they lack in several aspects when compared to personal computers. Most of the mobile devices have constrained display capabilities with low resolution and small screen size. Limited and complicated input options due to small and multifunctional keypad. The requirement of mobile devices to be physically light and small hinders the development of user friendly interfaces and graphical applications. Mobile devices also have limited processing and computational power, memory and disk capacity, limited battery life and surf ability. All these drawbacks which do not support complex applications and transactions may lead to the limited usage of mobile commerce.

Some of the must have features of smart phones are as follows: In order to satisfy multi-tasking and multi-application nature in smart phones, multi-tasking operating system is a necessary feature. Second feature for smart phones to conduct mobile commerce is a real QWERTY keyboard. The third feature is the QVGA or a high resolution display which is necessary for web browsing, gaming and MMS. Business productivity tools and application software for smart phones is a necessary feature to access business, sales, financial, inventory and real time information. Support of the 3rd generation technology for internet access is another important feature. Video and audio streaming, GPS and navigation capability and digital camera are another set of requirements which needs to be incorporated into the ideal client platform. Packing the above mentioned functionalities into a small handheld device with the multi-tasking operating system and a user friendly interface is a formidable task.

Figure 2 shows a graph of the global cell phone and the smart phone shipment. As seen from the figure the percentage of the fully featured handsets are growing every year. Although the growth of the smart phones makes smart phones an ideal client platform for mobile commerce, the specifications of today’s smart phones are not adequate for the transactions required for conducting mobile commerce. The success of the mobile commerce lies in the user satisfaction and the user experience in the new technology. Thus mobile device limitations have to be overcome for the widespread adoption of mobile commerce.

Figure 2: Global Cell phone and smart phone graph

Ethics and Privacy

In the recent years ethics and privacy have become a major and touchy issue where consumers do not want to expose every aspect of their daily lives. Web applications such as maps and financial applications require personal information from the users which has created a negative impact with consumers. The risk of openness is comparatively more in a mobile environment which has created higher demands of privacy protection amongst the users. Being able to control information about oneself is what has made privacy a major concern for the society.

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Inappropriateness of the ringing of cell phones such as in a meeting is one of the annoying situations. This raises an ethical concern of the intrusion of cell phones at inappropriate circumstances. This gives rise to several questions on if mobile commerce evolves in such a way that it follows us around, monitors us and tries to anticipate our needs and delivers services, how much does it intrude in our private lives and the lives of people around us? Will there be a boundary between the work and the personal life? These issues if not addressed in a satisfied manner may become the obstacles for the adoption of mobile commerce. The article ‘Mobile Commerce Adoption in China and the United States: A Cross Cultural Study’ states in its hypothesis 4 as ‘Privacy Perception is positively associated with consumer’s intention to use mobile commerce’ which is in fact a true analysis.

Federal Trade Commission has to increase its efforts in the inspection on mobile marketing industry. It is the responsibility of the wireless providers to protect the privacy of the consumers in the services they provide. A recent report shows that Verizon Wireless (VZW) customers were billed for downloading the ringtones and other mobile content which was advertised as free by the online marketers. Privacy has to be protected by the mobile service providers in order to make consumers feel comfortable doing business using mobile devices. It is very important for the wireless operators to protect their customers to the fullest and to stand by their word on treating every customer with respect.

Mobile devices provide convenience to the consumers with the slimmer and compact style. In addition to that with the increase in the storage capability consumers are able to store more and more data. Research shows that ninety four percent of the mobile users stored phone numbers, eighty three percent stored digital photos, sixty five percent stored contacts and addresses, fifty five percent stored videos and forty eight percent stored their calendar appointments and music and other important information. With the vast amount of private data stored on the mobile devices raises a question of the protection of these mobile devices. If lost or stolen or damaged there is no way to back up the data.

Wireless Infrastructure

The wireless communication infrastructure required for mobile commerce is complex. The development of appropriate services and standards determines the success of mobile commerce. The technologies used for mobile commerce include wireless local area networks and wireless telecommunication. Bandwidth and data transmissions are some of the obstacles for mobile commerce. Wireless networks bandwidth are less when compared to the wired network. Although applications are created in such a way that it functions effectively in both the wired and mobile environments organizations still need to research on the interaction of the users through the wireless devices and network. Applications running successfully in a wired environment may encounter new problems such as data availability, fault tolerance, concurrency control and processing efficiency when ported to a mobile environment.

The table below shows some of the wireless networking issues.

Table 1: Comparison of mobile and wireless networks

As seen from table 1, bit rate and coverage are two important factors. In addition to that the wireless quality of service which affects the performance in terms of delay and loss, reliability and survivability of wireless networks where a user can access mobile commerce application even during the network failures, roaming capabilities where a user can have access to multiple heterogeneous networks other quality attributes are some of the specific requirements of wireless infrastructure in order to conduct mobile commerce.

Wireless Application Protocol or WAP is the protocol used as a standard for mobile commerce in the United States. WAP uses a set of common protocols to facilitate the interoperability among different wireless networks, applications and devices. But in reality WAP has failed to fulfill the technological promises. WAP cannot handle complex transactions such as sequencing of several services distributed over different networks. WAP is not suitable for a distributed networking environment. Another issue with WAP is it tends to be slower since it was not originally designed for broadband communications. The last problem with WAP is its charges are minute based; hence time consuming activities may become expensive. GPRS was designed as an alternative to WAP which is faster than WAP but it has its own downside. Since the charges are based on kilobyte download (kb) in GPRS, it may become expensive if mobile commerce service download volume is considerable.

As there is an increase in the demand for bandwidth for new and existing applications, a lot of problems arise on how to obtain the unused airspace. Although reuse of frequency is increasing today the availability of frequency and bandwidth may become more limited in future. Wired devices such as laptops and PC’s use a set of established wireless standards such as IEEE 802.11 and IEEE 802.11b. Will the mobile devices have the ability to interface with more than one communication environment? Will the communication technologies itself have the ability to interfere with one other? All these questions remain as a challenge. The table below consolidates the wireless infrastructure and communication issues.

Table 2: Wireless Infrastructure Issues


Usability and user experience issues are often neglected in most of the businesses. It is necessary to understand and improve the usability of the web interfaces exposed through the mobile devices. Users conduct communication such as information search and transactions via user interface. Hence user interface is an important pre-requisite for satisfying customer’s sensory and functional needs. While mobile devices today can access a variety of applications, they enforce limitations in screen size resolution and have cumbersome input mechanisms. A survey from an internet on mobile internet users indicates usability as the biggest source of frustration. A complete understanding of different aspects of usability and how it might differ in a wireless context is necessary for all the designers and the organizations before leveraging the commercial benefits of mobile commerce.

Device inefficiency may become a major issue for the adoption of mobile commerce. User interfaces if not properly designed may lead to a fifty percent transaction reduction via mobile devices. Addition of what is called ‘cool features’ may make mobile devices less convenient for use. There are a number of guidelines available on web site usability such as on how to improve the layout and design of a web page, how to improve the components of a webpage. However these guidelines do not specify which aspects are critical and also the criticality may differ for different contexts and for different users. Furthermore there are limited guidelines on specific situation implementations. Thus it is necessary to understand what is important to users in order to create a more compelling mobile commerce and to drive revenues.

The following figure shows the linking of usability, context and value.

Figure 3: Linking of usability, context and value

Relevance, Structure and Personalization are the important factors for a successful wireless interface experience. In addition to that it is necessary for the designers to understand the value the consumers derive from these three relevance, structure and personalization aspects in order to provide that value. Web presence is not equal to wireless web presence i.e. ‘e’ # ‘m’. Mobile experience differs from web experience in both designs as well as in usage.

Legal and Regulatory challenges

Mobile commerce raises various legal and regulatory issues and challenges which is very broad as it includes safety along with many others. The difficulty in the application of the traditional laws and principles in the usage of wireless technologies is an issue facing mobile commerce. One particular case is when a seller tries to sell goods or services through a portal which is allocated to receive requests from wireless devices through specific network providers or when a person uses his or her mobile device (cell phone or a PDA) to purchase something poses many legal challenges between various parties as to who is responsible for regulating them and how should they be regulated. There are various legal issues need to be considered in mobile commerce, among them are the m-commerce contracts and identification of contracting parties and their legal capacities.

Another legal issue in mobile commerce is determining the ideal method for payment. What methods need to be devised for the payment of a purchase from one’s mobile? Another important question is what is the applicable law and jurisdiction if mobile devices are used for business transactions? The article on mobile commerce legal issues gives an example for the above question. What law would apply if a person residing in Lebanon who is a customer of Emarati uses his or her mobile to purchase software from a German firm whose server is located in the USA? Is it the law of the server location or the law of the country of citizenship of the customer or the law where the customer resides or the law of jurisdiction where the customer purchased software? If there is any dispute between the buyer and the seller, which court is responsible for the jurisdiction? Is it the court of the buyer’s country or the seller’s country or the court agreed by both the parties?

Digital cameras in mobile devices can be used for taking the photos and exchanging or sharing them over the internet instantly. The sharing or exchanging of the photos done without the proper authorization may result in the violation of the intellectual property rights including the copyright law. In that case who is liable for the infringement? The person who exchanged the photos on the internet or the network providers or the operators who facilitated the exchange? Is it possible to identify the person sharing the photo?

Another aspect of mobile commerce issue is the safety and health risks. Safety includes many regulatory concerns such as terrorism and exposure to wireless devices. Today cell phones and other handheld devices are used in airplanes, automobiles, boats and more. This convenience has made the transactions on the go, but is this safe? Cell phones or other mobile devices installed in an automobile or a motor vehicle can distract the user from driving. Mobile commerce in the context of driving may pose serious safety concerns. Health risks of using mobile devices for conducting m-commerce include cancer. A research from the Foster and Moulder from the medical college of Wisconsin indicated that the radiations produced by the wireless devices may cause brain cancer.

Cell phones are being used to set off the bombs remotely. A report from a Cellular news showed that terrorists used a cell phone to detonate the bomb in a min bus in Indonesia. Another recent bombing in London England was attempted by cell phones. A slight different issue in legal and regulatory is privacy. Today’s wireless technologies provide a lot of information about the users to the network operators which include tracking of the users’ location. Competitive companies can purchase such information from the network operators which may lead to a privacy breach. The last but not the least issue in mobile commerce is the risk of crime. Hackers can steal the data and information from the mobile devices or simply overload the wireless network traffic to deteriorate the service. Is there any criminal law to incorporate these new types of crime and how will these penalties be enforced?

Consumer Trust

Trust plays an important role in mobile commerce. Trust is part of security issue but it is more of a business and psychological issue than a technical issue. This does not mean that trust has nothing to do with the technology, however it is necessary for the potential mobile commerce users to perceive wireless environment as a secure environment in order for the mobile commerce to reach its potential. Business relationships would not exist today without the trust which exists in many forms in business context such as laws and regulations, contracts, company policies and personal reputations.

Building consumer trust in mobile commerce is a daunting task for the organizations, network providers and mobile vendors. E commerce is also facing the same issue because even today users do not trust technology. They are afraid to do any kind of financial transaction or any purchases using mobile handhelds. Trust plays an important role in business transaction too as trust lays the foundation between the businesses and the customers. The key characteristics in forming the trust include convenience, cost-efficiency, motivation, capacity and integrity. They all play an important role in gaining the consumer trust.

Interoperability and Compatibility

Interoperability is the ability of a mobile device to be used anywhere around the world. Compatibility as defined by the Gera and Chen is the ‘degree to which an innovation is consistent with existing facilities and practice’. Mobile commerce applications are said to be compatible if the applications and services satisfy the needs or lifestyle of a user. Compatibility can be classified into two types: Behavioral and Needs Compatibility. Behavioral compatibility is achieved when an innovation is consistent with the current technology and the users’ existing value. Needs compatibility is achieved when an innovation satisfies the needs of the users. Both behavioral and needs compatibility play a very important role in the adoption of mobile commerce.

An example for the lack of the interoperability is when a network provider offers a text message acknowledgement within their own network and not on other network carriers. Mobile commerce is impeded by the existence of a variety of network communication standards. Applications are developed around the network standards and device characteristics which is the main cause for the interoperability issues. Efforts are being made to overcome


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