With people already spending billions on ring tones, wallpaper and games for their phones, analysts and retail executives say they believe it will not be much of a leap to get them to use their phones to buy shoes, books and laptops.

Statistics unveiled

New research from TowerGroup finds that a combination of market-ready and emerging technologies is aligning to drive a majority of consumer payment transactions from cash towards other payments "form factors"-and the most significant among them would be mobile payments. By 2015, a substantial share of consumer payments globally will have moved from cash to other payment mechanisms," said Theodore Iacobuzio, Managing Director in TowerGroup's Executive Research Office and content lead on the European Banking and Payments practice at TowerGroup.

TowerGroup expects the total market for micropayments in the United States to reach $11.5 billion by 2009, with almost $5 billion of that amount transacted via mobile phones. The global mobile commerce market is expected to become a major industry with revenues of $50 billion to $75 billion by 2009- with global micropayments generating about $40 billion in revenue.

M-commerce is maturing

M-commerce was touted to be the next big thing in early 2002. However, the wave died down soon after it was found that co-operation between companies, mobile network operators, portals, mobile service providers, media houses and global brands around the world can be achieved only when there is steadiness in terms of technology and security. However, research figures for year 2006 have been quite encouraging.

M-commerce is an entirely new sales and promotion channel; the enabler for an entire range of mobile Internet services, allowing payment for telecom, information, media and entertainment services, available anywhere, anytime. Several recent technologies, industry and standards developments are enabling the m-commerce market. One of the emerging trends in this space is that of integration with portals. Though this is not happening to a great extent now, experts believe that this will definitely happen in the days to come.

We might not see high-value transactions, till there is some clarity on the arrangement between the different parties involved. As far as applications are concerned, some that might fuel the m-commerce growth are pictures, MP3 downloads, games and smaller vending machines. Certain verticals-banking and finance, travel and transport, media and entertainment, and retail-can benefit quicker from m-commerce than others and they are likely to drive its growth.

The works

There are two types of transactions take place in m-commerce-low-value and high-value. Low-value transactions usually imply music downloads, logo downloads, picture downloads, ring tone downloads, etc. There can be some banking and value-added services like news and stock alerts. Then there are services like m-coupons and wallets. On the other hand, there are high-value transactions, which involve credit and debit card transactions, point-of-sale terminals, going to the merchant location and paying through the handset.

Constraints

The different parties involved in the entire m-commerce value chain are wireless infrastructure providers, wireless service providers, certifying authorities, applications/software providers, equipment manufacturers, credit card companies and banks. And the absence of proper coordination between them will hamper growth. Recently, SecureTest has demonstrated how hackers can break into a mobile phone application, modify the code and use this as a tool to manipulate the website itself.

The resolution of technology issues may pave the way for technology enthusiasts to pursue end user involvement. However, marketers need to make sure that mistakes as in e-commerce are avoided by adopting sales tactics that are not intrutive or annoying. This is easier said than done as most m-commerce aspirant businesses will race for critical mass of end users and in the process employ sales measures that on an aggregate level for the m-commerce players may end up creating an undesired effect on the consumer.

Despite its early hype, m-commerce has assumed limited diffusion potential in the present market scenario. Industry analysts attribute this lack of diffusion to infrastructure concerns and consumer adoption issues. As things progress we should see mobile becoming the de facto messaging and commerce tool.