Emergence of Mobile Commerce in Pakistan

Research Paper Emergence of M-Commerce in Pakistan

COMSATS Institute of Information Technology Lahore.

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Abstract Pakistan is emerging as a global capital of Telecommunication. Pakistan is the world’s fastest growing mobile market in terms of subscriber base and the fastest growing in the history of telecommunications. Although currently Pakistan lacks advanced mobile applications compared to Europe, North America, Japan and Korea, a number of cellular players are rapidly launching sophisticated mobile applications. Unique institutions and the nature of cellular market conditions of Pakistan, however, superimpose in a complex interaction that harbors an inconsistent nature. The Pakistani M-commerce market is thus drastically different from the Western world. This paper examines the Pakistani emerging market of M-Commerce and its brief analysis. Introduction "Mobile Commerce is any transaction, involving the transfer of ownership or rights to use goods and services, which is initiated or completed by using mobile access to computer-mediated networks with the help of an electronic device." (Source: www.wikipedia.org/m_commerce) Mobile commerce is electronic commerce over wireless devices. Mobile commerce refers to transactions using a wireless device and data connection that result in the transfer of value in exchange for information, services, or goods. Mobile commerce, facilitated generally by mobile phones, includes services such as banking, payment, and ticketing. Analysts say that close to 50% of all eCommerce will be mobile and the projections are staggering. (Source: www.ezinearticles.com) There are three basic types of m-commerce transactions The first is carrier-based; using a carrier's billing system to purchase something with a wireless device. This method lets the user bill their purchase to their monthly carrier bill (or deduct it from their pre-paid deposit) The second type of mobile commerce transaction involves using a credit card over a wireless network connection. In this type of transaction, the user securely stores their credit card data on their mobile phone, using their cell phone as a surrogate credit card. The third type of m-commerce transaction involves financial services. These transactions include activities such as transferring money between accounts or paying bills through a wireless transaction. (Source: www.wikipedia.org/m_payments) In Pakistan these things have just been started and the expectation of mobile users will be more to their service providers and then people will prefer to those service providers which are offering differentiated product and m-commerce facilities. There are a lot of benefits of m-commerce to conduct a financial transaction while mobile users are in considerable quantity. As soon as phones and point-of-purchase systems are Bluetooth-



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Enabled, almost everything and anything becomes possible. For example, a group of friends are having a drink and decide to take in a movie. they browse through the local entertainment service, decide which one they want to see, take a look at the seating plan, select the best free seats and purchase the tickets. The transaction is stored in the mobile, so when they arrive at the cinema there is no need to queue; the purchaser merely points his/her phone at the checkpoint and through they all go and enjoy their movie. But when it will get hype then security will be the primary concern over public networks for the mobile users. There is an obvious security distinction between a short-range, Bluetooth transaction and one made over the public network. The former represents the wireless equivalent of swiping a credit- or bankcard; it is virtually impossible to monitor this type of transaction and the information content is worthless. Information sent over a public resource can be monitored, so the best way of ensuring that the transaction is totally secure is to make this type of content equally worthless. This can be done in various ways; in fact there are so many ways and so many acronyms (PKI, X509, SSLl, Wtls, Rsa, etc.).That one can only conclude that a few of them simply must work. This perception will reinforce by the involvement of credit card companies, banks, and other financial institutions. Many countries are experiencing m-commerce and generating decent revenue through m-commerce, in the list of these countries we want to share the success of m-commerce in Japan. In Japan, however, m-commerce has been a huge success, accounting for over $400 million in revenues each year. As long as the technology is wireless, it is a candidate for M-Commerce. Europe is leading the way in M-Commerce related activities, Asia being somewhere in the middle (Fast-East) and USA following suit. The essential ingredient for M-Commerce is the Wireless Access Protocol (or WAP). WAP Gateways (to serve the websites) and WAP enabled phones to view such websites, are both slowly emerging. Market estimates show that WAP phones will have a significant market penetration by 2001 which is the likely year for WAP to really take off. Wireless Local Loop (WLL) Operators who are able to offer wireless Internet access are also riding high on M-Commerce bandwagon. PDA devices which are able to interact with such WLL systems can access websites that are "M-enabled" and be able to perform financial transactions (Source: www.telecompk.blogspot.com) Following are the some main kinds of Wireless Handheld Devices that are helpful for M-Commerce:

1. Palmtops/Notebooks 2. Smart Phones (WAP) 3. GPRS enabled Cell Phones 4. Video Game Consoles 5. Personal Digital Assistants (PDAs 6. Wireless E-Mail Handheld Devices



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Some Major Differences between E-Commerce & M-Commerce 1. M-Commerce keeps us in touch with the world wirelessly by the help of satellites no matter where ever we are but E-Commerce usually does not do that. It normally needs to be connected to internet by the help of wires. 2. M-Commerce is always reliable and easy to access as compared to E-Commerce. 3. Wireless Handheld devices are easy to carry anywhere because of very low weight. Benefits from mobile commerce Mobile commerce solutions mean mobile terminals such as cell phones and organizers can now be used to access the Internet. The benefits for your company include the following: Considerable flexibility when conducting business Intense customer orientation and high customer loyalty thanks to innovative

service strategies Lower transaction and personnel costs thanks to widespread automation Differentiation from competitors thanks to innovative solution strategies Field staffs are more effective because they have flexible access to internal

corporate data Investment security and independence from platforms (terminals, servers) and

network operators through the use of open standards The benefits of the Internet are transferred to mobile telephony applications

thanks to the systematic use of WAP (Wireless Application Protocol) and SMS (Short Message System)

Market Overview of Mobile Companies in Pakistan Let’s start with a review of recent subscriber growth. At 2006 year end the total subscribers were 48.2 million. In June 2007 the total mobile users reached over 63 million. Based on numbers published at PTA website for 2007, the total number of subscribers (technically it is the number of SIMs issued) was 76.6 million, a tele density of nearly 49%. In 2007 the average growth rate was about 2.5 million new subscribers each month. After second half of 2007 it seemed as if the growth had slowed down but overall it was fine. One remarkable achievement was by Paktel which launched very successful campaigns at the year end. See chart below for a breakdown of market share by mobile companies recently there are 79 millions mobile subscribers in Pakistan. With Mobilink with the largest share of 32 million subscribers, Ufone with 16 million, Zong 2 million, Telenor 15 million and Warid with 13 million. . (Source: www.pta.gov.pk)



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A brief description of mobile companies in Pakistan At the top is Mobilink, the Pakistani unit of Egypt-based telecom company Orascom. It has been operating in Pakistan since 1994. Subscriber share was around 42% at the end of June 2007. (Source: www.mobilinkgsm.com)

Ufone, a wholly owned subsidiary of Pakistan Telecommunication Co. Ltd (PTCL), is now under the control of Etisalat group of UAE. It has 22% of subscriber share and added the most lines (2.4 million) from 2006-07. For those in Pakistan it is the one company where they can easily invest locally. (Source: www.ufone.com)

Warid, owned by the Abu Dhabi group of the United Arab Emirates and sister of Wateen group is number 3 with 17% market of subscribers. Recently it sold 30% share to SingTel. (Source: www.waridtel.com)

Norway’s Telenor, a recent entrant with about a billion US dollar investment in Pakistan has been doing well, based on its recent earning report. It has about 16% of the market share. Telenor stock is listed in the Oslo stock market (TEL) and in USA. (Source: www.telenor.com.pk)

CMPak, formerly Paktel, is the latest target of foreign acquisition. After it got acquired by China Mobile it is in the process of re-branding. CMPak has 2% of market share. (Source: www.zong.com.pk)



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Recent offerings in M-Commerce in Pakistan There are signs that Telecom industry in Pakistan is maturing. The first Mobile Commerce conference is being held in Karachi on April 2, 2008. The event was a star-studded. The guest list which includes PTA Chief, mobile companies Mobilink, Warid and Telenor, Mobile commerce companies such as Amaana, Inov8, senior management from banks (both commercial and State Bank) and a few foreign company executives. 1-Genie: Mobile Payment Solution from Mobilink The anticipated mobile payment solution powered by inov8has been launched by Mobilink. The oddly named “Genie” is being promoted on their website for indigo and jazz customers. It is being marketed as convenient and secure so as to build trust, which is a huge factor for mass adoption in Pakistani market. It is only a matter of time before all mobile operators will start offering some flavor of mobile payment service. In Pakistan the telecoms are beginning to look at new value-added services, such as “micro payments, international remittances, and other transactions.” The application has to be downloaded to the phone and standard data charges apply. There’s a nominal fee associated with utility bill payments. (Source: www.mobilinkgsm.com/genie) 2-TCS and Mobilink Sentiments Express Service Recently TCS a courier service of Pakistan has launched a m-commerce promotion for their customers with collaboration with Mobilink .The service was launched on the mother’s day 2008.the theme of this service was to send gifts to loved ones by using the network of Mobilink as a carrier. The user can select the gift items for their loved ones via GPRS and Caller helpline. The payment is to be deducted from the users Mobilink Connection. This was a unique service in this regard that two things are assured in this one that delivery was to made by premium Courier service of Pakistan which is TCS. Secondly many people don’t have much time to spend on shopping for their loved ones, for them this was as a gift. (Source: www.mobilinkgsm.com) 3-Mobilink / Ufone payments through credit card Mobilink and Ufone are the two large telecom service providers in the country with large subscriber base. They both have offered secured mobile transaction of paying the mobile bills through credit cards. The simplicity is that both these carriers use Sms based credit card verification and payment of bills. The user type a text message in which he includes his credit card number along with relevant details and the transaction is made within minutes. In this way the prepaid and postpaid connection bills are paid easily with no hassle. (Source: www.telecompk.blogspot.com)



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4-UBL Orion In Pakistan a new SMS based payment solution from UBL called Orion was recently introduced. Each transaction is protected by a secret PIN which offers basic security. This is a good start as UBL has kept things simple enough that common users will not be overwhelmed. Usually such solutions come from mobile phone or value-added services companies but in this case UBL has taken the lead. UBL offered a card with the name “ORION” which users can use via any cellular network in Pakistan to make purchases on selected outlets and pay their utility bills, buy airline tickets, share money into accounts. Some Rewards promotions are also offered on the usage of the service (Source: www.ubl.com.pk/orion) 5-Citibank Citibank has unveiled Citi Mobile, the first downloadable mobile banking application from a major financial services provider. After enrolling online and downloading the application to a cell phone or smart phone, customers can view balances, pay bills, transfer money, locate ATMs, and click to call customer service (Source: www.telecompk.blogspot.com) 6-Amaana Amaana is the entirely new concept in Pakistan .It is a type of Mobile Pay pal of Pakistan. The idea of developing the Amaana was based on the fact that Pakistan is the growing market of telecommunications. The tele-density in Pakistan is about 49% which means that almost half of the population of Pakistan is using cellular services. Amaana was basically built under the concept that people usually in Pakistan don’t own credit cards. The Amaana will serve both types of household customers as well as business customers .People can shop over the Internet and the payments could be made through their cell phones which doesn’t require credit card. The user can registered the account with Amaana and use the services on the websites which are accepting the payments from Amaana. This would benefit the customers to pay large amount of money with in no time over the cellular network. Amaana is in the testing phase and this concept will be popular soon. (Source: www.amaana.com) 7-Warid Internet Hours Purchase Warid has just recently introduced a new way of purchasing internet hours. Through SMS customer can send a message to 1210 (for 1 hour), 1220 (for 2 hours) or 1230 (for 5.5 hours) and Warid will send an SMS with user id and password. The amount will be deducted from your mobile phone balance. (Source: www.waridtel.com) 8-Selling Airtime over the Cellular Network (Easy Load) Easy load option adopted by almost all the cellular operators in Pakistan is a type of m-commerce activity. People are benefited form this and are a source of income for many



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People who can just sell airtime while roaming around. This is a Great activity to boost mobile commerce in Pakistan. Recently Mobilink came with a new project, in conjunction with the GSM Association's Development Fund, to provide female health workers in Pakistan with mobile handsets. "The Lady Healthcare Worker" scheme serves two ends, In addition to giving mobile healthcare workers a means to communicate with local hospitals, ambulance services and so on, the project also helps spread the availability of mobile phones through the shared access method” It is also a catalyst for income-generation, since it enables the women involved to sell airtime to people in remote villages who would not otherwise have access to mobile phones. (Source: www.netexpress.com) Challenges and Problems of M-commerce in Pakistan In Pakistan, M-Commerce is yet to take off, and the two reasons that attribute to the delay are Unavailability of WAP enabled phones and WAP gateways. The PDA market and Wireless Local Loop market is yet to develop.

It is hard for mobile phone companies to justify (financially) nationwide WAP gateways when the market penetration of WAP enabled phones is near zero. In an absence of e-commerce transactions in Pakistan (Pakistani Merchants on the Internet dealing in Pak. Rupee) the situation is aggravated further. After all, WAP is a pre-requisite for the activity of M-commerce. It would be worthwhile mentioning - "wireless" users will easily exceed the number of fixed users in the coming two years time and ignoring this market would seriously undermine expansion keeping up-to-date with technological advancements happening worldwide (Source: www.b2bsolutions.com.pk) Conclusion The conclusion of this report includes two aspects. One aspect would be that after analyzing the whole report and data available we are proposing an M-commerce solution and in Second part we will critically highlight the whole M-commerce scenario in Pakistan. a) Proposed Solution We propose the following solutions for the Development of M-Commerce in Pakistan. As the market is new and m-commerce solutions are being provided to the customers gradually at different levels. We propose following type of M-commerce activities, that we think will be easily to implement under the current industry status, they could really promote the scene of m-commerce in Pakistan



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I-Mobile shopping Ordering, checking availability and prices, delivery information with acknowledgment and confirmation, this could be the first step in m-commerce in Pakistan, taking example of TCS and Mobilink initiative companies can launch Mobile shopping portals II-Mobile Banking Statements of account, sales and payment, these services are being provided by many banks, but they could be further improved by offering range of products. III-Mobile brokerage Checking and monitoring prices using watch lists, securities inquiries and orders could be done on mobile phones as the Pakistani stock markets are implementing the latest technologies needed for the trade. It would be easy for them to implement this type of activity. IV-Mobile travel information and booking Total Internet solution with WAP enhancement and travel guide and booking facilities could be offered via cellular network it could boost the traveling industry, People will don’t have to bother to stand in queues for booking. This would be a great idea for traveling industry. Example of M-commerce transaction (Proposal) We are explaining the simple m-commerce transaction which could be used by merchants in Pakistan to give boost to m-commerce and their businesses. Almost everyone has a mobile phone and a bank account. So here is the list of our proposition Customer will go to the bank – get their mobile phone registered to bank account. Then if customer visits the shopping website and liked this USB stick which is

worth Rs. 2,000, He places it to shopping cart and proceeds to checkout. The website owner is also registered with the bank and had a mobile account

associated with its bank account. So upon check out the website gives customer a total Rs. 2,000 and its merchant

number and transaction number. Customer from their mobile sends an SMS to the bank – entering the transaction

number and the amount. Bank checks the account balance and since they have linked customers mobile to

make transactions on account it (the bank) will provide them be back with a 10 digit code via SMS (valid for 30 minutes).

This code will ONLY make payment to the defined Merchant Account that Customers had sent and for Rs. 2,000 only.



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This code will not make sense or be of any use to anyone if Customers mobile get

stolen Customers could be probably given a PIN, when a mobile is stolen wouldn’t the

PIN be in there. I place the code on the website and hit ‘Submit’ and the website will verify the

transaction – and complete In case of data-snooping, cell phone theft, etc. No information is compromised. The merchant will never know customers mobile number (rather does not need to

know), its unique one SIM to a Bank account – but it does require a clearing house at the bank’s end (interfacing).

b) Critical View As well as Mobile commerce has many benefits but it has also certain limitations like the problems of short storage memory and small screen of PDA’s and cell phones and also the hidden costs of ISP’s and mobile phones which make mobile commerce expensive and inconvenient to use. The Mobile commerce is yet in its primary stage and has not been implemented fully especially in under developing countries like Pakistan where even basic e-business facilities have not been given completely implemented. So a lot of work is still needed in this way to expand the services of M-commerce. We can have the better example of country like Australia where it has been adopted rapidly. So the Government should take necessary steps to enhance the services of Mobile commerce in Pakistan so we can stand together with these latest 2.5 and 3G services.M-Commerce though as rosy at it may be, has a few problems (or hurdles) associated with it. Predominantly all transactions performed are essentially non-catalog based shopping, i.e. one cannot 'browse' a catalog online - be able to see actual high-resolution images and colors, etc. With the catalog shopping topping the list of retail consumers, M-Commerce faces a daunting task by relying on shoppers to "Buy" using textual descriptions alone. Second hurdle is payment and security. Currently a consensus does not exist on the security methodologies that must be incorporated in all M-enabled websites, thus consumer confidence in utilizing your phone or PDA to make payments is not well established. Mobile phones (WAP enabled) are finding new usages, the billing system of the parent mobile companies are now allowing WAP enabled transactions and billing to be applied towards a subscriber's bill. One can use a WAP phone to log into a travel website or dial into a Kiosk machine and charge the "bill" to their "phone-bill". Such billing is not wishful thinking but already being used in Europe where M-Commerce is very much practiced normally in day-to-day activities. Across-the border integration of billing systems may pose a serious problem of interfacing coherently different billing structure and tariffs, but the challenge is being faced and attended to.USA and Asia have 'just' emerged from the e-commerce cocoon and are starting regional and metropolitan deployments of M-Commerce applications and systems. Global key players have already started cashing in on this. At the forefront are



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Large B2C websites like Yahoo and Amazon.com who have already translated websites to be viewed by PDA and WAP phones. In Europe WAP applications are much more advanced, linking multitude of services together like metro, travel, online banking, directory services, stock trading, email and others enabling consumers to truly benefit from the convenience of M-Commerce Adoption of m-commerce by a common Pakistani customer would be a problem also. The customers in Pakistan are using cellular services in everyday life but still on the average the people of Pakistan are not literate enough to use WAP or GPRS enabled phone. So the market for m-commerce would be very limited in the initial phase of implementation. But offering the basic services will give the customers more scope of adapting to the technology slowly. This is the age of Generation-D (Digital).With the availability of Broadband Connections and basics infrastructure in Pakistan people will be more familiar with the Digital age. In Real Sense the start of E-Business activities in the country will give the customers an ease of using the m-commerce services also. So, firstly we have to promote E-Commerce in the country and in the next step M-commerce could be a huge success.

Documents

Emergence of Mobile Commerce in Pakistan