Mobile Commerce or mCommerce is a loosely defined term representing opportunities for buying or selling goods and services through a mobile device/handset OR leveraging the handset to make purchases at a POP (point of purchase).

When evaluating the market for mCommerce, one must look at the past. In the past, SMS messaging and the like have had limited success in financial services for Over the Air (OTA) services between operators and handsets or account holders in applications like banking or brokerage. However, when looking at the retail based POP or POS transactions, OTA messaging has had less than enthusiastic support, especially when considering the cold user experience. The promise of mCommerce for buying something at a vending machine never gained momentum. However, the market is quickly being enabled through the introduction of RFID and Near Field Communications being built into handsets.

Mobilecom operators are in a unique position where they must begin to seriously evaluate the impact of how mCommerce will be delivered through their network or via their handsets from both a technology and commercial perspective.

When MasterCard tested their PayPass products (RFID 14443) built into a card, they had very positive feedback. In parallel, MasterCard and manufacturers like Nokia teamed together to demonstrate the technology and market interest for retail POS purchases in the Dallas, TX market. The results were excellent and the industry is proceeding to push forth with an integrated solution.

Market tests by the Associations (MasterCard and Visa) and handset manufacturers have demonstrated the demand and interest of the market and are challenging the very nature of the traditional card “Form Factor” for making POS purchases. From contactless cards and key FOBs to integrated handsets, the lines of form factors are blurring. Major card associations including MasterCard, Visa, Amex, and JCB are rolling out products supporting RFID with MasterCard and Visa as major partners in the NFC Consortium. The NFC Consortium consists of all major handset players, chip providers and many service providers including Sony, Nokia, Motorola, Samsung, and Philips to mention a few.

The promise of a RFID enabled handset is positive for all stakeholders. Issuers gain leverage in having a convenient and easy to use application built into the phone. Operators benefit by having more value-added services to their customers. Merchants benefit by RFID with less wear-and-tear on terminals, speedier checkouts and increased consumer spend. Consumers ultimately benefit by reducing the need for plastic cards in their wallet. When you include NCF applications, there is the potential to use the handset as a “connected” device for ticketing at theaters, trains, and events. You also have access to ‘power’, added security with the SIM and PIN protection, and a ‘network’ that can integrate to a PC (think syncing data). This is powerful in combating online fraud and online identity theft for many reasons. By establishing a secure connection with the PC, a cardholder can make purchases over the internet and verify the transaction and the merchant through encryption and PIN protection, all in a simplified format they are used to. This is the promise traditional smart cards and card readers could not deliver with cumbersome software and expensive hardware.