What is Mobile Commerce?

Mobile commerce, often called m-commerce, refers to any financial transaction that is completed through a mobile device like a smartphone or tablet. In essence, this is the next logical step in ecommerce. This is because it allows users to buy and sell goods and/or services from virtually anywhere, as long as they have a mobile device and an internet connection.

That said, m-commerce is more than simply an evolution of ecommerce. In fact, it’s also helped many industries grow, while also spawning new businesses and services, including things like:

• Mobile money transfers;
• Mobile banking;
• In-app purchases and contactless payment;
• Electronic tickets and boarding passes;
• Purchase and delivery of digital content;
• Location-based services;
• Mobile coupons, loyalty cards, and marketing.

Mobile Commerce vs eCommerce

While ecommerce and m-commerce are very similar, there are a few key differences. Let’s peel back these layers a bit to get a better understanding.

By definition, ecommerce refers to basically all commercial transactions that take place via the internet. M-commerce, on the other hand, refers specifically to those digital transactions that take place on smartphones. So, if you’re browsing a shoe website on a desktop computer and make a purchase, that’s ecommerce. If you browse and purchase from that same website on a smartphone, that’s m-commerce.

In a nutshell, m-commerce basically allows consumers to access online shopping platforms, browse, and buy, all as seamlessly and conveniently as possible through a mobile device.

Types of m-Commerce

Mobile commerce covers a lot of different kinds of transactions, however they can all be sorted into three categories.

Mobile Shopping

The mobile shopping category is where m-commerce and ecommerce are the most similar. Mobile shopping is now available through mobile optimized websites, apps dedicated to shopping, and even social media platforms like Instagram.

Mobile Banking

Again, mobile and online banking are very similar. However, when it comes to banking through a mobile device, some transaction types can be limited – or even restricted. Furthermore, most mobile banking is done through a dedicated app.

Mobile Payments

M-Commerce mobile payments refer to all payments made through a mobile device. This includes even things like using an app to send your half of the restaurant bill, or Google or Apple Pay to make purchases while shopping.

Advantages of m-Commerce

Once, not long ago, developing a mobile app and switching to a mobile-friendly platform was prohibitively expensive unless you were a big company. However, as the cost of mobile app development has decreased, companies of all sizes have been able to reap the rewards.

Let’s take a look at some of the most important benefits any sized business can enjoy if they switch to an m-commerce system

Improved User Experience

Ecommerce represented a giant step forward in how we shop. Allowing consumers to browse and buy from their computer, instead of stepping into a physical store, gave them access to a much wider range of products. It also gave consumers the ability to compare prices at a glance.

Now, mobile commerce has given us even more freedom; consumers can do everything they could on a computer with the smartphone they carry everywhere. What’s more, thanks to the nature of m-commerce, it offers specific user experience capabilities ecommerce simply can’t:

• Mobility: The portability of laptops cannot be disputed. However, people don’t carry laptops around with them everywhere they go. And even if they did, most need WiFi or an ethernet cable to connect to the internet. On the other hand, no one leaves the house without their smartphone, and as long as there is a signal, there is internet access.

• Reachability: Apps that take advantage of m-commerce can send users push notifications. This means retailers can reach a wider range of consumers who have already proven they are interested in the products. Additionally, they can reach these customers any time, with targeted offers.

• Location Tracking: With the aid of WiFi and GPS technology, online retailers and m-commerce apps can locate users and send them personalized and location-specific content and offers.

Incredible Growth Capacity

Mobile commerce has already been around long enough to have amassed a large user base, but there is no sign of slowing growth.

In 2021, retail m-commerce sales reached $359.32 billion. This was a leap of 15.2% over 2020. By 2025, retail m-commerce is expected to more than double 2021’s numbers, hitting $728.28 billion, and making up nearly 45% of all retail ecommerce sales in the US alone.

Omnichannel

The goal for most retailers is to achieve a truly omnichannel experience. This means they can sell their products to consumers both in a brick and mortar store, and online through a variety of platforms; an ecommerce website, a mobile commerce app, Amazon, Instagram, etc. This helps create a seamless, more enjoyable user experience, and provides a united message across all platforms.

Additionally, a true omnichannel experience is all about speaking to your customers in their language, wherever they are – and making it as easy as possible for them to buy from you. That makes mobile devices perfect for omnichannel commerce.

Customer Data

One area where mobile commerce is especially valuable to businesses is data. M-commerce has the ability to gather massive amounts of consumer data, allowing you to gain better insights regarding your customers’ journey.

With in-store retail, your customer arrives, browses, makes a purchase, and leaves. Practically no information can be gathered from this interaction for analysis.

On the other hand, with mobile commerce, your business connects with your customers from the moment they visit your digital store – be it an app or website. Data regarding the products they consider, what they buy, and when they buy can be gathered. All this gives you a better picture of who your consumers are, and what they are interested in.

Disadvantages of m-Commerce

As with any emerging technology, there are still some downsides to mobile commerce. However, with a little research and effort, even then disadvantages can be overcome.

Extremely Competitive Environment

As mobile commerce has caught on, a great many businesses have begun investing in it. That means, if you start implementing m-commerce today, you’ll have thousands of competitors on day one. To gain a competitive edge, you’ll need a clearly defined market or niche market.

Continuous Optimization

One of the most obvious differences between desktop and mobile is the size of the display. With desktop computers, you get a nice, big screen, and content can spread out. However, on a mobile device, the view must be compressed to fit everything. That said, when done with skill, a mobile display can be easy to navigate and offer a positive user experience. However, if done poorly, the process becomes frustrating, which causes users to leave – and not come back. Furthermore, it’s not enough to simply make your desktop website accessible on mobile devices; mobile users have come to expect a separate, unique experience.

Creating that separate experience can be challenging, as tablets and smartphones are used differently. Smartphone users tend to use apps rather than searching for a website in a browser. Generally, tablet users do the opposite, spending more time in browsers. Additionally, mobile commerce through smartphones is expected to reach $553.28 billion by 2024 and tablet m-commerce is expected to make $64.06 billion in 2022.

In order to get in on this massive market, you’ll need to continuously optimize your m-commerce platforms for multiple devices, display sizes, and user behaviors to ensure the best possible user experience.

Price Comparisons

One of the side-effects of the growth of the mobile experience is that users can now compare prices across multiple stores in an instant. With just a few taps of a finger, customers can find out how much similar products or services cost at your store, and five others. Often, users will search for the least expensive product for the highest value.

The best way to contend with this issue is to know where you match up against your competitors. Watch out for when the competition adjusts their prices, in either direction, and be ready to react.

Customer Security

In today’s increasingly digital world, privacy and security is a growing concern. Everyone wants and expects their data to be safe, and remain in the proper hands, but the fear it won’t be is pervasive. Therefore many customers don’t completely trust that their data is safe when shopping online.

You can overcome this fear by letting your customers know what security measures you have put in place. Add the logos of the security system you utilize to reassure them that their data will remain safe. Be as transparent as possible with how you are complying with all regulations governing how you collect and share your users’ information.

Conclusion

There’s no denying that mobile commerce is on the rise. Every day, more consumers learn that m-commerce is the most convenient and efficient way to shop online. That means that brands that keep up with emerging mobile commerce trends will be positioned to offer the best user experience possible. Carrying through on a well thought out and properly structured mobile commerce strategy, which may include an m-commerce app or website, can drastically improve your conversions and ROI.

Keep Reading:

• 5 Ways to Conduct Better User Experience Research
• An Introductory Guide to Customer Journey Mapping
• 3 MVP App Examples That Are Now Massive Successes

Apple Pay launched in 2014 as the first mobile wallet, which enables people to connect credit cards, debit cards, and bank accounts to mobile devices to send and receive money. Out of the cornerstone mobile wallet services today (Google Pay, Samsung Pay, and Apple Pay), the Apple wallet remains the largest, claiming 34 percent of the market share.

This article offers an overview of Apple Pay, how it works, the market outlook, and reasons you should consider integrating the payment service in your mobile application. 

What is Apple Pay?

Apple Pay is a mobile wallet service that facilitates mobile payments or regulated transactions from an iOS device. Apple Pay works on the iPhone (version 6 or newer) and the Apple Watch and Mac operating systems. To make a payment with Apple Pay, users add credit cards, debit cards, or prepaid cards to the Wallet app on their device, which allows them to make contactless payments in stores, in apps, on the web, or anywhere an Apple Pay badge is present. To complete payments, users can use Face ID, Touch ID, or a passcode to authenticate the purchase. 

Is Apple Pay Secure? 

Apple Pay allows users to make frictionless, secure, and private transactions. Specifically, Apple Pay leverages security features built-in to the hardware and software of iOS devices to help protect transactions. Apple doesn’t store or even have access to a user’s original credit, debit, or prepaid card information. Apple doesn’t save any transaction history, either. When a user adds their banking credentials, Apple decrypts the data, determines the card’s payment network, and re-encrypts the data with a key that only the user’s payment network, bank, the bank’s authorized service provider, or card issuer can unlock. 

To securely transmit payment information when a user makes a purchase in an app or on the web, Apple Pay receives the encrypted transaction and re-encrypts it with a developer-specific key before the transaction information is sent to the developer or payment processor. This key ensures that only the app or website the user is purchasing from can access the encrypted payment information. Additionally, websites are required to verify their domain whenever they offer Apple Pay as a payment option. 

The Apple Pay Market Outlook

According to eMarketer, Apple Pay’s dominance, as well as the increase in retailer adoption of proximity payment technology, is driving transaction volume in the United States. eMarketer estimates that proximity mobile payment transactions will total $98.88 billion in 2019, growing 31.8 percent to $130.36 billion next year. By 2021, the total transaction value will reach $161.41 billion.

Much of this growth is a credit to Apple Pay, which currently captures the largest share of the proximity mobile payment market in the United States. Additionally, this is the first time a universal mobile payment app has surpassed the Starbucks mobile app, which had long led the category despite being specific to one retailer. Apple Pay became the market leader last year when 27.7 million Americans used the app to make a purchase.

User adoption of mobile proximity payments is also witnessing favorable projections. As of 2019, there are 441 million Apple Pay users worldwide.

Source: Statista

Further research estimates that roughly 80 million U.S. users will access mobile payments in 2023, up from 69.4 million in 2020. 

Where and how consumers make purchases has dramatically evolved—from walking into a store to shopping online using smartphones, tablets, and wearable devices. Connected devices and the commerce they enable are becoming increasingly integral to consumers’ willingness to pay for purchases. As Apple Pay continues to grow in popularity, there are plenty of reasons to integrate the payment option into an app. Many colossal brands from Airbnb, Etsy, Ticketmaster, Target, Lululemon, and countless others have already made Apple pay an opportunity for consumers. Let’s look more closely at the reasons Apple Pay is a smart integration for a mobile app. 

Three Reasons You Should Offer Apple Pay in Your App

1. Consumers Have New Shopping Behaviors

Connected devices give consumers the freedom to shop anytime, anywhere — and now while doing anything. Convenience and saving time drive those behaviors, allowing consumers to “multitask commerce” as part of their everyday lives. A research study from PYMNTS, in collaboration with Visa, discovered that respondents reported making purchases while carrying out daily activities like commuting, cooking, and even exercising, many doing so while using connected devices such as smartphones, tablets, computers, wearables or voice-activated devices. In fact, across the group of respondents, more than three-quarters of consumers (76 percent) made purchases during at least one of their everyday activities, every day. 

Most impressive is the very long tail of activities that defines the connected consumer’s daily journey. PYMNTS found that no one consumer follows the same path, though there are some common threads: making purchases while paying bills (39 percent), eating lunch (34 percent), eating dinner (27 percent), and browsing the internet (33 percent). Connected commerce creates an environment of serendipity for consumers — shoppable moments, whatever the device, whatever the time and whatever a consumer happens to be, and sellable moments for merchants.

2. The Home is Now a Commerce Hub

Devices that connect to the internet give consumers more options to do things at home that they once could do only while away from it. Connected devices also make “going shopping” at a store that consumers can choose to but don’t have to buy things. 

Connected devices not only give consumers more opportunities to make purchases during the course of their day-to-day activities, but also give consumers more options to do so while at home. Specifically, purchasing while watching TV has increased by 19 percent (from 12.2 percent to 14.5 percent), while eating dinner has increased 4.9 percent (from 14.4 percent to 15.1 percent) between 2018 and 2019.

3. Extend the Value of Your Loyalty Programs 

Most customers will not download a brands’ mobile apps, so business owners and marketers need to smartly leverage the mobile ecosystem to borrow mobile moments from the popular apps that their customers already use every day. Mobile Wallets and such apps.

A consumer can still use Apple Wallet even if they’re not using Apple Pay to make purchases. Brands can leverage Apple Wallet by creating Passes for loyalty cards. Passes are digital representations of information that might otherwise be printed on small pieces of paper or plastic. They let users take action in the physical world. Passes can contain images and a barcode, and passes can be updated at any time. A user views and manages their passes using the Wallet app. Passes can be used to check-in for flights, get and redeem rewards, get into movies, or redeem coupons. Passes can include useful information like the balance on your coffee card, membership tier and points, your coupon’s expiration date, your seat number for a concert, and more.

Final Thoughts

It is increasingly clear that, for many consumers, connected devices’ primary benefit lies in their ability to provide secure, ubiquitous, and universal access to retail goods and services, anywhere, anytime and now while doing anything. The future belongs to brands that can create use cases so compelling that consumers barely even notice that they’re engaging in commerce while using them at all. Apple Pay integrations will play a massive role in this shift by creating seamless checkout experiences and simplifying the purchase path. 

Central to every contactless mobile action is a little microchip and radio antenna conducting the tap-and-go operation that is near field communication (NFC). NFC encryption technology is transforming the way users access information, make payments, and share data across devices.

This post will break down all there is to know about NFC mobile payments. What is it, how it works and is it secure? Here’s our guide to NFC. 

What is NFC?

NFC is a system of contactless communication that enables data sharing between devices like smartphones, tablets, and laptops. With NFC, a user can gesture their phone towards an enabled device and share information without manually establishing a connection. With its speed and convenience, technology has already become mainstream. 

How it Works

It’s easy to assume that NFC operation is an extension of Wi-Fi or Bluetooth technology. All three systems support wireless communication and data transfer, but NFC operates using electromagnetic fields, whereas Wi-Fi and Bluetooth use radio transmissions. 

NFC is a subset of RFID (radio-frequency identification), a technology that allows us to identify things through radio waves. RFID is nothing new—it’s been used for decades for things like scanning items in grocery stores and luggage on baggage claims. While the basic principles of each technology are incredibly similar, NFC operation is limited to a proximity radius. Most users consider NFC’s proximity control to be a significant security asset given the considerable role it plays in mobile payment.  

There are two types of NFC devices: active and passive. Passive devices like smart posters, merchandise beacons, and contactless POS terminals can hold information for active devices to read, but cannot access external information itself. Active devices can send radio-frequency currents that interact and collect data from other enabled hosts.

More Than a Digital Wallet

While mobile payments may be the easiest way to understand NFC, the technology can be applied to more than tap-and-go purchases. 

NFC introduces a more complex environment for interactive marketing. With NFC, marketers can target consumers more efficiently by collecting real-time data to deliver personalized content. This technology will make it easier to evaluate and promote loyalty programs and eliminate the need to collect multiple rewards cards. Passive hosts are already starting to pop up on advertisements, signs, and merchandise. 

The real estate market is a prime example of how NFC can dramatically improve customer engagement. Including NFC tags on real estate, signs, or listings can benefit a buyer in several ways. An agent can provide details about the property, but they can also offer photos, floorplans, virtual tours, and other listings based on the buyer’s desired criteria. This communication method has the potential to create in-depth and valuable connections between brands and their mobile consumers.

Security Concerns

The idea of paying for something through a mobile device can make some people uncomfortable. Consumers want to ensure that their data – and their money – is safe. Merchants want their systems and customers protected. The same goes for banks and credit card issuers. The more secure the transaction is, the better it is for all parties involved.

While there is always an element of risk with any electronic transaction, NFC payments are considered to be extremely secure. The data involved in an NFC transaction is encrypted and dynamic, meaning it’s always changing, unlike the data on a magnetic-stripe card, which is static—it’s all right there on the back of your card. Making mobile payments one of the most secure ways to pay.

How Does Dynamic Encryption Work

Mobile payments don’t store the credit card number of the device. Instead, they use something called tokenization.

If a user uses Apple Pay, once they take a picture of their credit card and load it into their iPhone, Apple sends the details to the card’s issuing bank or network. The banks and networks then replace the bank details with a series of randomly generated numbers. That random number is sent back to Apple, which then programs it into the user’s phone. This means that the account details on their phone can’t be cloned into anything valuable to fraudsters. Anytime contactless pay is initiated, the user’s phone sends temporary numbers to the point-of-sale that can only be used for that specific transaction. Then the number changes and can’t be used again.

This type of encryption dramatically limits the risk of shared security concerns, and as a bonus, Apple Pay is protected by Touch and Face ID, Apple’s fingerprint technology. To initiate an Apple Pay transaction, a user needs to unlock the phone with a verified fingerprint or passcode. So even if a device is stolen, no one can get to a user’s data. This is also why Apple Pay only works on the most recent iPhone models, which come equipped with Touch ID.

HCE and Google Pay

However, unlike Apple Pay, Google Pay uses HCE, or host card emulation, to emulate the user’s physical card and stores the secure account information in the cloud, as opposed to on the device itself. While this does use some level of tokenization because the payment data is stored in the cloud, the tokenization process is also cloud-based, which some believe makes it less secure.

EMVCo

EMVCo facilitates global interoperability and acceptance of secure mobile payments. The organization has been working towards defining the architecture, specifications, requirements, and type approval processes for supporting EMV mobile NFC payments. These include:

• Requirements for the product type approval
• Sets of basic functional requirements for mobile devices
• Cardholder verification methods
• Certification requirements such as a security evaluation for the SE holding the payment application
• Requirements for the identification of EMV application on a device
• Conformance to a reference application activation user interface (AAUI) on the device (Source: Smart Card Alliance).

The Future of NFC

Moving forward, there is potential for NFC to replace every card in your wallet. In light of our current circumstances, accelerated digital transformation initiatives are accelerating the possibility of a cashless society. Not only do NFC mobile payments reduce the number of surfaces we physically touch (i.e., credit card, POS terminal, etc.), this form of payment is also faster, more convenient, and more secure. Now is the time for businesses to investigate possible ways to incorporate NFC into their mobile strategies. A whole world of digital communication is simply a tap away.

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