Module-1

Introduction of E-Commerce
History of e-commerce
 In 1968 e-commerce got its start through an electronic
data interface which allowed companies the ability to
complete transaction with each others.

 In 1984, one standard called ASCX12 was introduced

for more reliability of data.

 In 1992, Netscape introduced an internet browser that

allowed for point and click capabilities.
Major Component of e-commerce
 Web browser: A software program that allow
people to access the WWW ex-Internet
explorer and Netscape navigator
 Web server: It is the special computers that

store and delivers web pages.

 Transaction Manager: Electronic money
exchanges including via credit cards,
electronic checks, smart card, digital cash .
 Standards: It means to ensure security,

reliability.
Types of E-commerce
 Business to Business (B2B)
 Business to Consumer (B2C)
 Consumer to Business (C2B)
 Consumer to Consumer (C2C)
 Business to Government (B2G)
CONSUMER-TO-BUSINESS(C2B)
 Consumer-to-business (C2B) is a business model where an end
user or consumer makes a product or service that an organization
uses to complete a business process or gain competitive advantage.
 The C2B methodology completely transposes the traditional
business-to-consumer (B2C) model, where a business produces
services and products for consumer consumption.
 In C2B, the companies typically pay for the product or service.
However, it can assume different forms like an idea generated by
an individual (like an innovative business practice) which may be
used and implemented by an organization. 
Security
 E-commerce security refers to the principles
which guide safe electronic transactions,
allowing the buying and selling of goods and
services through the Internet, but with
protocols in place to provide safety for those
involved.
 A weak link in the chain can provide an

opening for a security breach.

Components of Security
 Integrity: sender and receiver want to make sure that the
message are not altered without detection
 No repudiation: prevention against any one party from reneging
on an agreement after the fact
 Authenticity: sender and receiver want to confirm the identity of
each other
 Confidentiality: only sender, intended receiver should
understand message contents;
 Sender encrypts the message
 Receiver decrypts the message.
 Privacy: provision of data control and disclosure
 Availability: prevention against data delays or removal
Features of Security
 Authentication- It verifies the authenticity of the
person logging into the account.

 Authorization- Allows only the authorized

people to manipulate resources in specific ways.

 Encryption- Deals with information hiding.

 Auditing- Merchants use auditing to prove that

a customer bought a specific merchandise.
Security threat in E-commerce
 In e-commerce there are three types of parties. Each party has
to face some kind of threats. The classification is given below:

 Threat to Client
 Threat to Server
 Threat to Communications Channel
Threat to Client
Client threats mostly arise from malicious data or code, malicious code
refers to viruses, worms, Trojan horses & deviant.

 Virus- A computer virus is a program or piece of code that is loaded onto

your computer without your knowledge & runs against your wishes. Virus
can also replicate themselves.

 Trojan House- A program that performs a desired task but also performs
unexpected function.

 Worms - It is a self-replicating program that a self continued & does not

need any host program to execute. Clients must scan for malicious data &
executable program fragment that are transferred from the server to the
client.
Server Threat

Server threat is mostly arises from three things which

are given below:
 Unauthorized eavesdropping
 Denial of services(Dos)
 Modification of incoming data packets
Contd…
 Unauthorized eavesdropping- Watching data or
information as it travels through the internet. Hackers can
use to trap username & unencrypted password sent over
that network.
 Denial of services- A denial of service attack is an effort

to make one or more computer system unavailable. It is

typically targeted at web servers but it can also be used on
mail server, name servers & any other type of computer
system.
The 2 most common types of these attacks are:-
 Service overloading
 Message overloading
Contd…
 Modification of incoming data packets- It is an
integrity threats that involve modifying a message
packet or destroyed the message packet. In many cases,
packet information not only be modified, but its
contents may be destroyed before legitimate users can
see them.
Communication Channel Threat
Messages on the internet travel a random path from a source code to a
destination code. It passes through a number of intermediate computers on
the network before reaching the final destination. It classified into three
categories: Confidentiality threat, Integrity threat, Availability threats.

 Confidentiality threat- It is the prevention of unauthorized information

disclosure. Breaching confidentiality on the internet is not difficult.

 Integrity threat
◦ Integrity means you will get the same response every time.
◦ An integrity threat presents when an unauthorized party can alter the
message stream of information.
◦ Unprotected payment transactions are come in integrity threat. Example-
Cyber vandalism
Contd…
 Availability threats- Every system has defined
availability. It is also known as denial and delay
threat. It bringing down the availability of the system.
Example- ATM/IRCTC
Encryption
 Encryption is the process of converting data to an
unrecognizable or encrypted form. In generic term it
refer to act of encoding data, so that those data can be
securely transmitted via the internet.
 The purpose of converting data that only authorized

person can view it.

Elements of Encryption
 Encryption algorithm
 Encryption keys
 Keys length
 Plain text
 Cipher text
Types of Encryption
 Secret-Key Encryption
 Public-Key Encryption
Secret-Key Encryption

 It is also known as symmetric or private key

encryption.

 In this encryption one key is used for both

encrypting and decrypting the data.

 The best known secret key algorithm is DES

(Defense’s Data Encryption Standard).
Elements of Secret-Key Encryption

 Plaintext
 Encryption algorithm
 Secret key
 Cipher text
 Decryption algorithm
Advantage of Secret Key Encryption
 It is extremely secure.
 Encrypting and decrypting the data from secret key is

relatively easy.
 In this system only secret key can decrypt the message.
Disadvantage of Secret Key
Encryption
 It cannot provide digital signature that can be
repudiated.
 The only secure way of exchanging keys would be

exchanging them personally.

 The secret key is to be transmitted to the receiving

system before the message to be transmitted.

Public Key Encryption
 It is also known as asymmetric encryption. It uses two
keys, one key to encrypt the message and a different
key for decrypt the data.
 In this encryption pairs of key is used, one is public key

and another private key.

 In this private key must be kept confidential.
 The best known public key algorithm is RSA(Rivest

Shamir Adleman).
Elements of Public Key Encryption
 Plaintext
 Encryption algorithm
 Public and private key
 Cipher text
 Decryption algorithm
Advantage of Public Key Encryption
 Only one part must be kept secret.
 It can serve as a digital signature.
 The pair of keys can be used with any other entity.
 There is no need for initial key exchange.
Disadvantage of Public Key
Encryption
 It is not efficient for long message.
 Keys must be long (at least 1024 bits).
 Slow do the enormous amount of computation

involved.
 Association between an entity and its public key must

be verified.
Digital Signature
 A digital signature is an electronic rather than a written
signature that can be used by someone to authenticate
the identity of the sender of the message or of the
signer of a document.
 It is also referred as electronic signature or e- signature.
 It is used to validate the authenticity and integrity of

message.
 It confirms that the information originated from the

signer and has not been altered.

Significance of Digital Signature
 It can be used to ensure that the original content of the
message has been conveyed.
 It is easily transportable.
 It can not be repudiated by the originator.
 It is automatically time-stamped.
Purpose of Digital Signature
 Authenticity- It refers to positively establishing an
individual’s identity in an electronic transaction.
 Data Integrity- It refers to ensuring that data is in its

original form and it not tampered/ altered in any

form.
 Non-repudiation- An entity that has signed some

information cannot at a later time deny having signed

it.
Advantage of Digital Signature
 Speed
 Cost
 Security
 Authenticity
 Non-Repudiation
Disadvantages of Digital Signature
 Institutional overhead
 Expiry
 Compatibility
Digital Certificate
 It is a certificate issued by the CA to verify the identity of the
certificate holder.
 It actually uses a digital signature to attach a public key with
a particular entity.
 Digital certificates authenticates the web credentials of the
sender. Similar to identification cards such as passports and
drivers licenses. Digital certificates are issued by recognized
(government) authorities. When someone requests a
certificate, the authority verifies the identity of the requester,
certifies that the requester meets all requirements to receive
the certificate, and then issues it.
Contd…
A digital certificate contains the following information:
 A serial number
 Organization identified by the certificate
 Algorithm that is used to create the signature
 A CA that verifies the information in the certificate
 Expiry date
Advantage of Digital Certificate
 It is used as an attachment to an electronic mail
message for security purpose and to verify the
authenticity of the senders.
 Restricting access to a department web site or set of

pages.
 It enables encryption of sensitive information on e-

commerce sites.
 Digital certificate negate the increasing perils and

threats of online fraud and identity theft.

Disadvantage of Digital Certificate
 It always come with a expiry time.
 The certificate revocation process is costly.
 Difference Between Digital Signature
and Digital Certificate
Digital Signature Digital Certificate

A digital signature is to ensure that A certificate binds a digital

a data/information remain secure signature to an entity.
from the point it was issued.
Digital signatures are used to verify Digital certificates are used to
the trustworthiness of the data verify the trustworthiness of a
being sent. person (sender).
These are issued primary for These are issued mainly for entities.
individual.
Cryptography

 Cryptography or cryptology is the practice and study of

techniques for secure communication in the presence of third
parties called adversaries.
 Cryptography is a method of protecting information and
communications through the use of codes so that only those
for whom the information is intended can read and process it.
 In computer science, cryptography refers to secure
information and communication techniques derived from
mathematical concepts and a set of rule-based calculations
called algorithms to transform messages in ways that are hard
to decipher.
Objectives of Cryptography
 Authentication: The sender and receiver can confirm each
other's identity and the origin/destination of the
information.
 Integrity: The information cannot be altered in storage or
transit between sender and intended receiver without the
alteration being detected.
 Non-repudiation: The creator/sender of the information
cannot deny at a later stage his or her intentions in the
creation or transmission of the information.
 Confidentiality: The information cannot be understood by
anyone for whom it was unintended
Types of Cryptography
 Secret Key Cryptography- Use a single key for both encryption
and decryption.

 Public Key Cryptography- Use one key for encryption and

another key for decryption.

 Hash Function- It is known as message digests or one –way

encryption, are algorithms that, in essence, use no key. Instead, a
fixed-length hash value is computed based upon the plaintext
that makes it impossible for either the contents or length of the
plaintext to be recovered. Normally it is used to ensure that the
file has not been altered. It is also used for passwords encryption.
Differences between Cryptography vs. Encryption

Cryptography is the study of concepts Encryption is the process of encoding

like Encryption, decryption, used to a message with an algorithm.
provide secure communication.
Cryptography can be considered as a Encryption is more of a mathematical
field of study, which encompasses a and algorithmic in nature.
whole lot of techniques and
technologies.
Cryptography, being a field of study Encryption is one of the aspects of
has broader categories and ranges, Cryptography can encode
encryption is one such technique. communication process efficiently.

Cryptography involves two major Encryption is a process of

components called Encryption and safeguarding an information to
Decryption. prevent unauthorized and illegal
usage.
 Secure Socket Layer
 It was designed by NETSCAPE for secure client–server communication over the
internet.
 It is the method of providing security for web based application.

 It uses public key cryptography and digital certificate in such a way that client
and server can authenticate each other and engage in secure communication.

 In the initial phase client and server select a key crypto scheme to use. Client then
sends the secret key to server using the server public key from the server
certificate. To see that information exchange between client and server being
encrypted.
 In order for SSL connection to be made it is mandatory to have a digital
certificate installed on the web server.

 SSL implementation is easier as it can be plugged at the socket layer. There is no

impact on application layer.
Significance of Secure Socket Layer
 SSL should be used to establish a secure connection between
two parties.
 Independent programmers can make a secure connection
without the knowledge of one another code.

 SSL seeks to provide a framework into which new public key

and bulk encryption methods can be incorporated as
necessary.

 Cryptographic operation tends to be highly CPU intensive,

particularly public key operation.
Secure Socket Layer Protocol
 It is a security protocol that provides communication privacy over the
internet.
 It allows client and server application to communicate in such a way that
is designed to prevent eavesdropping, tampering and message forgery.
 It is developed by Netscape for transmitting private documents via the
internet.
 SSL is a transparent protocol which requires little interaction from the
end user when establishing a secure session.
 SSL protocol includes two sub-protocols:
 SSL handshake protocol- it comes into pictures when client and server
want to establishing secure connection.
 SSL record protocol- it is mainly used when data transaction take place.
Benefits of Secure Socket Layer
 Authentication
 Message privacy
 Message integrity
 Increasing business
Uses of SSL
It is mainly used to secure:
 Online credit card transaction
 System login and sensitive information exchanged

online
 E-mail exchanges
 Transfer of files
 Remote login
Smart Card
 A smart card is a device with the dimensions of a credit card
that uses a small microchip to store and process data. In many
cases, smart cards have replaced old magnetic cards because
they can handle more information and provide more
functionality. Smart cards are now in use in many industries,
including retail, transit systems and security services.
 It is plastic card with embedded microprocessor chip,
electronic memory and a battery.
 It is used for information storage, authentication and payment
mechanism.
Features
 Small plastic card embedded with an IC chip.
 Chip can be either a memory or microprocessor type.
 Useful for storing and transacting data.
 Data is associated with either value, information or both.
Types of Smart Card
 Contact smart cards are the most common type of smart card. Contact
smart cards are inserted into a smart card reader that has a direct
connection to a conductive contact plate on the surface of the card.

 Contactless smart cards require only close proximity to a card reader to

be read; no direct contact is necessary for the card to function. The card
and the reader are both equipped with antennae and communicate using
radio frequencies over the contactless link. A contactless smart card
functions by being put near the reader to be read.

 Dual-interface cards are equipped with both contactless and contact

interfaces. This type of card enables secure access to the smart card's
chip with either the contactless or contact smart card interfaces.
 Hybrid smart cards contain more than one smart card technology. For
example, a hybrid smart card might have one embedded processor chip
that is accessed through a contact reader as well as an RFID-enabled chip
used for proximity connection. The two different chips may be used for
different applications linked to a single smart card, as when the proximity
chip is used for physical access to restricted areas while the contact smart
card chip is used for single sign-on authentication.

 Memory smart cards contain memory chips can only store, read and
write data to the chip; the data on memory smart cards can be over-written
or modified, but the card itself is not programmable so data can't be
processed or modified programmatically. Memory smart cards can be read-
only and used to store data such as a PIN, password or public key; they can
also be read-write and used to write or update user data.
 Microprocessor smart cards are cards with a
microprocessor and memory.
 This smart card contains a small microchip that can
process and store thousands of bits of electronic data. 
 This type of chip is similar to those found inside all
personal computers and when implanted in a smart card,
manages data in organized file structures, via a card
operating system (COS).
Examples of Smart Card
 Transit cards can be used by local and regional transit systems to
process payments as well as give riders points on their
purchases( Metro card).
 Smart cards are used as ID cards issued by schools, corporations
and government entities to control access to physical locations.
 Medical institutions use smart cards to securely store patient
medical records.
 Loyalty Card
 Simcard
 Gift voucher
 Memory card
Advantages
 More secure – these card use encryption and
authentication technology which is more secure than
previous method.
 Safe to transport- these card give the freedom to

carry large sums of money around without feeling

anxious about having the money stolen.
 Double as an ID Card- Driver license
 Prevent fraud- it can be used by government to

prevent benefits and social welfare fraud to ensure

the right person is receiving the welfare benefit.
Disadvantages
 Easily Lost
 Possible Risk of Identify Theft
 Expensive
EDI(Electronic Data Interchange)
 Electronic Data Interchange (EDI) a major part of Electronic
Commerce (EC), is the computer-to-computer exchange of business
data in a standard, machine - processable format without human
intervention.
 It is a electronic exchange of business data/documents between two
organizations using pre-defined transaction formats.
 A process which allows one company to send information to another
company electronically rather than with paper.
 It can handle the high volume transactional traffic between companies.

 It is a technology that enables the automated exchange of electronic

business documents between an organization and its trading partners.
Constituents of EDI process
 Hardware
 Software
 Standards
HISTORY
 In 1968, the transportation industry recognized that the abundance of
paperwork was beginning to present a problem.
 Transportation Data Committee (TDCC),is formed to develop
standard formats for exchanging business information electronically
 But, all the standards that were developed at this time supported only
transportation related issues
 In 1978, The American National Standards Institute (ANSI) used the
pioneering work of TDCC to charter a committee known as the ASC
(Accredited Standard Committee) X12
 The main objective was to develop uniform standards for inter-
industry electronic interchange of business transactions
Contd..
 In 1983, ANSI published the first five American National Standards
for EDI. Using X12 standards, users ran into problems when
communicating electronically outside of their national boundaries
 In 1988, the United Nations chartered UN/EDIFACT (Electronic
Data Interchange For Administration, Commerce and Trade) to
develop international EDI standards
 These standards take the form of United Nations Standard
Messages (UNSMs), which are analogous to what ANSI X12 calls
Transaction Sets
 Users involved in EDI will reap various benefits: overseas
expansion, expense control and the elimination of support for
multiple formats
Data Processing
EDI Standards
A set of rules, agreed upon, accepted, and adhered to by two
entities, through which data is structured into electronic formats
for exchange of information.
Common standards requirements
 Compatible hardware and software

 Agreed data exchange templates

Common standards
 ANSI X12 is the standard that any industry can use

 (UN/EDIFACT) is the standard for international EDI transactions

EDI Benefits
Cost Reduction
 Manpower, resources, reduced inventory (JIT inventory

management)
Speed
 Electronic transfer Vs mail/ courier

Accuracy
 Avoids duplicate data entry and error margin

Security
 Information less susceptible to interception/ falsification
 EDI Issues
 Initial and operative costs
 Need to share master data with external partners

Security Concerns
 Confidentiality of information
 Authenticity of information
 Requires continuous maintenance and resources
EDI APPLICATIONS IN
BUSINESS
Four different scenarios in industries that use EDI
extensively:
 International or cross-border trade
 Electronic funds transfer
 Health care EDI for insurance claims processing
 Manufacturing & retail procurement
Module -2
Electronic Payment System
 Electronic payment system is a system which helps the
customer or user to make online payment for their
shopping.
 It is also used to transfer money over the Internet.

Method of traditional payment:

Cheque or cash.
Methods of electronic payment:
Electronic cash, software wallets, smart cards and
credit/debit cards

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Examples of EPS
 Online reservation
 Online bill payment
 Online order placing
 Ticket booking (Movie)

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Designing an electronic payment
system
 Technological Requirements   
 Economic Requirements
 Social Requirements
 Legal Requirements

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Technological Requirements
 When designing an electronic payment system, the system’s ability
of the effectiveness and the security of each transaction and the
degree of compatibility with the online shopping must be taken into
consideration.
 A payment system requires the greatest level of security in
electronic commerce transactions. 
 It must have confidential, authenticity, integrity and non-repudiation
of transactions.

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Economic Requirements
 These deal with the cost of transaction which refers to the amount paid by the
client.

 Economic assessments include also atomic exchange which means that the
consumer will pay money or something equivalent in value. 

 An electronic payment system must also be accessible in all countries of the

world, to all ages (user range) or currency in equal value and must not be
restricted to the company that created the value. 

 Economic needs also deal with financial risks, because consumers and merchants
are very concerned about the degree of security involved in online transactions.

 Return On Investment(ROI) is a economic parameter and a performance measure

used to evaluate the efficiency of an investment
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Social Requirements
 Payment system must prevent companies or financial
institutions from tracing user information.

 It must be simple and user-friendly. As social needs, electronic

payment methods.

 It should also be accessible anywhere.  

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Legal Requirements
 Electronic payment system must abide by governmental
regulations and the law and guaranty all necessary proofs
(digital signature, certificate) to protect users performing
domestic/international transactions.

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Phases in E-Payment
 Registration: This phase involves the registration of the payer
and the payee with the issuer and acquirer respectively. Most
electronic payments designed require registration of payers and
payees with their corresponding banks so there is a link
between their identities and their accounts held at the bank.
 Invoicing: In this phase, the payer obtains an invoice for
payment from the payee. This is accomplished by either
browsing and selecting products for purchase from the
merchant’s (payee’s) website in case of purchases made
through the internet or obtaining an electronic invoice using
other electronic communication medium like e-mail.

91
Contd…
 Payment selection and processing: In this phase the payer
selects type of payment (card based, e-cash, e-wallet, etc)
based on the type of payment the payee accepts. Based on the
selection, the payer then sends the relevant payment details
like account number, unique identifiers of the payer to the
payee along with accepted amount based on the invoice.
 Payment authorisation and confirmation: In this phase, the
acquirer on receiving payment details from the payee
authorises the payment and issues a receipt containing the
success or failure of the payment to the payee. The payee
based on the message may also issue a receipt of payment to
the payer.

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Generic E- Payment System

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Advantages of Electronic
payment system
 Convenience: Individual can pay their bills and make
purchases at any location 24 hours a day, 7 days in a week and
365 days a year.
 Time: Once the initial set up of the payment system for each
account is completed, an individual can pay his bills in a flash.
 Cost: For the majority of the merchants, vendors and
businesses, there is no fees or charge to pay online.
 Security: E- payments are secure because of encryption
technique.

94
Disadvantages of Electronic payment
system
 Authentication: There is no way to authenticate or verify that
the individual entering the information online. There is no
request for picture identification or even a signature.

 Online account: It is compulsory for e-payment to open a

account with them. One has to register with the institution in
order to be authorized to perform money transaction with
them.

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Participants and Elements involved in
processing payment
 Acquiring bank- Acquiring bank is associative with merchant or
seller. For this merchant must open an account with acquiring bank
to enable online credit card authorization and payment processing.
 Authorization- The process by which a customer’s credit card is
verified as active and the credit available to make a transaction.
 Credit card association- A financial institution that provides credit
card services that and distributed by customer issuing bank. Ex-
Master Card , Visa and American express
 Customer- The holder of the payment instrument such as a credit
card, debit card.

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Contd…
 Merchant- Someone who owns a company that sells product
or services.
 Payment gateway- Payment gateway protects credit cards
details encrypting sensitive information, such as credit
card numbers, to ensure that information passes securely
between the customer and the merchant and also between
merchant and payment processor.

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Types of electronic payment system
 Payment card
Credit card
Debit card
Smart card
Charge card

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Credit Card
 A credit card is a plastic card issued by a financial company,
that lets cardholders borrow funds with which to pay for goods
and services.

 Credit cards allow consumers to borrow money from the card

issuer up to a certain limit in order to purchase items or
withdraw cash. 

 Credit cards impose the condition that cardholders pay back

the borrowed money, plus interest, as well as any additional
agreed-upon charges. 

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 Purchase process by Credit Card
Making the Purchase
The customer finds a product that he or she likes and decides to make the purchase. The customer
can use a credit card to pay for the item in the store, through an online payment gateway, by phone
or by mail.

Entering the Transaction

The credit card is swiped through a secure credit card terminal, or the card and transaction
information is entered in. For e-commerce transactions, the cardholder keys in the payment option.

Transmitting the Data

The credit card data is transmitted for approval as the terminal, POS system or secure payment
gateway is connected to the processing network.

Authorization

Once the data is transmitted, the credit card issuer can approve or decline the transaction. This is
based on the validity of the card, the transaction, as well as the cardholder’s available funds.

10
0
Contd…
 Responding
If the transaction is approved, the processor and the merchant receive an
authorization response.

 Completing the Transaction 

The merchant completes the transaction.

 Submitting a Batch Closure

The merchant completes the credit card payment process at the end of the
day with a batch closure. This closes out the transactions that have been
processed on that day. The processor’s acquiring bank then collects the funds
from the credit card issuers.

 Depositing the Funds

The processor’s acquiring bank then deposits the funds into the merchant’s
business account. This typically takes up to 48 hours.
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1
Advantages of credit card
 Easy access to credit- Credit cards function on a deferred payment basis,
which means you get to use your card now and pay for your purchases
later. The money used does not go out of your account, thus not denting
your bank balance every time you swipe.
 Building a line of credit- Credit cards offer you the chance to build up a
line of credit. This is very important as it allows banks to view an active
credit history, based on your card repayments and card usage. Banks and
financial institutions often look to credit card usage as a way to gauge a
potential loan applicant’s creditworthiness, making your credit card
important for future loan or rental applications.
 Incentives and offers- Most of the credit cards come packed with offers
and incentives to use your card. These range from cash back to rewards
point accumulation each time you swipe your card, which can later be
redeemed as air miles or used towards paying your outstanding card dues.

10
2
Contd…
 Flexible credit- Credit cards come with an interest-free period,
which is a period of time during which your outstanding credit is
not charged interest.
 Purchase protection- Credit cards offer additional protection in the
form of insurance for card purchases that might be lost, damaged or
stolen. The credit card statement can be used to vouch for the
veracity of a claim, if you wish to file one.

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3
Disadvantages
 Ease of overuse- With revolving credit, since your bank balance stays the
same, it might be tempting to put all your purchases on your card, making
you unaware of how much you owe. This could lead to you overspending
and owing more than you can pay back.
 High interest rate- If you do not clear your dues by your billing due date,
the amount is carried forward and interest is charged on it. This interest is
accrued over a period of time on purchases that are made after the interest-
free period. Credit card interest rates are quite high, with the average rate
being 3% per month, which would amount to 36% per annum.
 Security- Neither the merchant nor the consumer can be fully
authenticated.

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Debit card
 A debit card (also known as a bank card, plastic card or check card) is
a plastic payment card that can be used instead of cash when making
purchases. It is similar to a credit card, but unlike a credit card, the money
is immediately transferred directly from the cardholder's bank
account when performing a transaction.
 The major difference between debit card and credit card is that payment
through debit card, amount get deducted from bank account immediately
and there should be sufficient balance in bank account for the transaction
to get completed. Whereas in credit card there is no such compulsory.

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Charge Card
 Charge cards are similar to credit cards except they have no revolving
credit line, so the balance must be paid off every month.
 A charge card is a type of electronic payment card that charges no interest
but requires the user to pay his/her balance in full upon receipt of
the statement, usually on a monthly basis. Charge cards are offered by a
limited number of issuers. They can include an uncapped spending limit
with generous reward benefits for the cardholder. These cards however,
typically include a high annual fee that can range from $150 to $550.

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Smart Card
 A smart card is a device with the dimensions of a credit card that
uses a small microchip to store and process data. In many cases,
smart cards have replaced old magnetic cards because they can
handle more information and provide more functionality. Smart
cards are now in use in many industries, including retail, transit
systems and security services.
 It is plastic card with embedded microprocessor chip, electronic
memory and a battery.
 It is used for information storage, authentication and payment
mechanism.

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Classification of Payment System
 Payment Instruments
 Pre-paid, pay now and post pay
 Offline and Online
 Mobile payment
 Payment Instruments- There are three common electronic payment instruments,
e-cash, cheque and card.

 Pre-paid, pay now and Post pay- In pre-paid system the payment is debited
from the payer account before a payment is processed and hence the term pre-paid.

Most cash like system such as an electronic cash system fall in this category. In pay

now system, when an electronic transaction is processed, the payer account is

debited and payee account is credited with the payment amount. In Post pay system

the payer account is debited only when the payee make a request for payment

settlement ex- cheque.

Offline and Online System

 Offline system- In the offline system, the communication does not involve

any third party, an electronic transaction takes place only between payee and

payer. In this case authorization decision is made by the chip based on the

data on the last transaction which are stored on the chip.

 Online system- In this system payee typically connects to the bank to obtain

a payment authorization, it increasing the communication requirement for

payment system. The advantages of this system is that payee obtain a

guarantee on the payment, as the bank is able to authorize and check for

availability of the funds in the payer account.

 Mobile Payments
 There has been an increasing effort to use mobile as “electronic wallet” to
store payment and account information.
 Currently two main wireless protocols are used for m-commerce - Wireless
Application Protocol (WAP) developed by the WAP forum and iMode
developed by the NTT DoCoMo Japan.
 WAP – It helps mobiles devices with WAP enabled browsers to access
information and services. It uses Wireless Markup Language (like XML)
for displaying information on mobile device browser. The WAP
specifications are designed to reduce bandwidth requirements.
Contd….

 I-mode uses Personal Digital Cellular-packet (PDC-P) to provide

network services. It allows efficient network usage by using
packet switching technology for wireless communication and
TCP/IP for wired communication. I-mode uses compact-HTML
for display on mobile devices.
CYBERCASH
 It is a complete system for conducting financial transactions on the
internet. It accepts both credit card payments and cash/coin transactions.
The CyberCash system is a great solution for any web site that wants to
accept electronic payment for goods or services. It has been servicing
credit card transactions over the internet since April 1995 by Bill Melton.

 This software offers three methods for authorizing consumer purchases and
actually billing the consumer's credit card: online capturing, post-
authorization capturing, and batch capturing.
Nature of CyberCash
 Online Capture: With online capturing, transactions are captured and
charged to the consumer's credit card as soon as they are authorized. This
method is appropriate for merchants selling on-line services, information,
or software that is being delivered immediately to the consumer over the
internet. It also appropriate for merchants who can guarantee shipment of
material goods on the same day that they are ordered.

 Post-Authorization Capture: With post-authorization capturing, the

merchant uses Cash Register's administrative server to capture individual
transactions using a post-authorization message that is sent to the
processing bank. This message tells the bank to capture the transaction
and charge the transaction to the consumer's credit card. This method is
appropriate for merchants shipping merchandise more than a day after the
consumer has ordered it.
 Batch Capture- It is a variant of post-authorization capturing. The
merchant uses the cash register administrative server to capture
transactions using a batch capture model where the merchant saves
up the authorizations and submits them in a batch to the processing
bank. The batch data contains all of the authorized transactions that
the bank needs to reconcile your merchant account and transfer
funds. If a merchant is processing a lot of orders, this procedure is
probably more efficient than using post-authorization capture for
each transaction.
E- Banking
 Electronic banking is also known as e-banking, virtual banking, online
banking, or internet banking. It is simply the use of electronic and
telecommunications network for delivering various banking products and
services. Through e-banking, a customer can access his account and
conduct many transactions using his computer or mobile phone.

 E-banking is the form of banking in which funds are transferred

electronically between financial institution instead of cash, cheque and
other negotiable instruments being physically exchange.
Importance of E- banking
Bank
 Lesser transaction costs – Electronic transactions are the cheapest
modes of transaction
 A reduced margin for human error – Since the information is
relayed electronically, there is no room for human error
 Lesser paperwork – Digital records reduce paperwork and make
the process easier to handle. Also, it is environment-friendly.
 Reduced fixed costs – A lesser need for branches which translates
into a lower fixed cost.
 More loyal customers –Since e-banking services are customer-
friendly, banks experience higher loyalty from its customers.
 Customers
 Convenience – a customer can access his account and transact
from anywhere 24x7x365.
 Lower cost per transaction – since the customer does not
have to visit the branch for every transaction, it saves him
both time and money.
 No geographical barriers – In traditional banking systems,
geographical distances could hamper certain banking
transactions. However, with e-banking, geographical barriers
are reduced.
Types of E- banking
 ATM (Automatic Teller Machine) – It is an electronic banking outlet that
allows customers to complete basic transactions without the aid of a
branch representative or teller. Anyone with a debit card can access most
ATMs.
 Telephone banking – It is a provision through which bank clients can
obtain the necessary information by dialing a telephone number provided
by bank in advance.
 Home banking – It is a service that enables bank clients to handle their
accounts from a computer placed at his home or office (non-branch
location).
 SMS banking – It uses short text messages sent through client’s mobile
phone.
 WAP(Wireless Application Protocol)- It presents its output on a small
mobile phone display. In order to use it, client must have mobiles with
WAP enabled technology. This has not been very successful.
Electronic Fund Transfer(EFT)
 Electronic funds transfer (EFT) is a electronic transfer of money from
one bank account to another, either within a single financial institution or
across multiple institutions, via computer-based systems, without the direct
intervention of bank staff.

 This systems have shortened the time of payment instruction transfer

between banks, and in the process have reduced float.
Various modes of EFT in India
 NEFT-National Electronic Funds Transfer
 RTGS-Real Time Gross Settlement
 IMPS-Immediate Payment Service
 NEFT

 The acronym “NEFT” stands for National Electronic Funds

Transfer.  It is an online system for transferring funds from one
financial institution to another within India usually the banks.

 The fund transfers are processed in 12 batches between 8 a.m. to

7 p.m. on weekdays and 6 batches between 8 a.m. to 1 p.m. on
Saturdays. NEFT is not available on Sundays and bank holidays.

 The service fee for NEFT transactions varies from Rs. 2.50 to

Rs. 25 per transaction
RTGS
 The acronym “RTGS” Stands For ‘Real Time Gross Settlement’. RTGS
is a funds transfer system where money is moved from one bank to
another in ‘real-time’, and on gross basis. When using the banking
method, RTGS is the fastest possible way to transfer money. ‘Real-time’
means that the payment transaction isn’t subject to any waiting period.
The transaction will be completed as soon as the processing is done, and
gross settlement means that the money transfer is completed on a one to
one basis without clustering with another transaction.
 Standard timing: 
9:00 a.m. to 4:30 p.m. on Weekdays
9:00 a.m. to 2:00 p.m. on Saturdays 
 There’s a minimum limit of Rs. 2 lakhs for RTGS transactions, and
there’s no maximum limit as such. The service fee is a bit higher for
RTGS transactions: each transaction is charged from Rs. 30 to Rs. 50. 
IMPS
• The acronym IMPS stands Immediate Payment Service. This
is another real-time payment service, but the distinguishing factor is
that IMPS is available 24⁄7 and you can avail the service even on
bank holidays. Using IMPS, you can transfer comparatively
lower amounts, up to Rs. 2 lakhs, instantly. The service fee for
IMPS transactions is pretty low, ranging from Rs. 2.5 to Rs. 15.
Digital token based Electronic
Payment System
 The digital token based payment system is a new form of electronic
payment system which is based on electronic tokens rather than e-
cheque or e-cash. The electronic tokens are generated by the bank or
some financial institutions. Hence we can say that the electronic
tokens are equivalent to the cash which are to be made by the bank.
Categories of Digital token
 Cash or real time- In this mode transaction takes place via
exchange of electronic currency ex-e cash
 Debit or prepaid- In this mode, user has to pay in advance. It is
used in smart card, electronic purses etc.
 Credit or postpaid- These tokens are issued based on identity of
customers who are authenticated and verified by a third party.
Electronic Cash(E-Cash)
 E-cash (also referred to as digital cash, digital currency or electronic
money) is a method of online payment — a digital representation of
real money that can be placed on a computer hard drive, smart card,
other devices with memory (including cellular phones and other
electronic communication devices), or in an online repository.
Key elements of a e-cash system
 Secure
 Anonymous
 Portable (physical independence)
 Infinite duration (until destroyed)
 Two-way (unrestricted)
 Divisible (fungible)
 Wide acceptability (trust)
 User-friendly (simple)
 Unit-of-value freedom
E-Cheque
 It is designed to accommodate the many individuals and entities that
might prefer to pay on credit or through some mechanism other than
cash.
 It is an electronic version or representation of a paper cheque. The
account holder writes an e-cheque using a computer or other type of
electronic device and transmits the e-cheque to the payee
electronically. It is rather than handwritten or machine-stamped
signatures, however, e-cheque are affixed with digital signature
using a combination of smart cards and digital certificates.
Risk of electronic payment system
 Operational Risk
 Reputational Risk
 Legal Risk
 Other Risk
Operational Risk – It is risk of loss resulting from inadequate
or failed internal processes and systems or from external event. It
arises from the potential for loss due to significant deficiencies in
system reliability and or integrity. Security consideration are
paramount, as banks may be subject to external and internal attacks
on their systems or products.
 Reputational Risk- it is the risk of significant negative public
opinion that results in a critical loss of funding or customer.
 It involve actions that create a lasting negative public image of
overall bank operations.
 It may also arises when systems or products do not work as
expected and cause widespread negative public reaction.
 Legal risk- It arises from violations or non- conformance with
laws, rules, regulations or prescribed practices or when the legal
rights and obligations of parties to a transaction are not well
established.
 Ex- application of consumer protection rules to electronic banking
and electronic money activities in some country is not clear.
Other risks
All the traditional banking risk such as credit risk, liquidity risk, interest
risk and market risk will come under other risk.
 Credit risk- is the risk that a counterparty will not settle an obligation for
full value, either when due or at any time thereafter.
 Liquidity risk- is the risk arising from a bank’s inability to meet its
obligation when they come due.
 Market risk- is the risk of losses in on and off balance sheet positions
arising from movement in market prices, including foreign exchange rates.
 Interest risk- it refers to the exposure of a bank’s financial condition to
adverse movements in interest rates. Banks specializing in the provision of
electronic money may face significant interest rate risk to the extent
adverse movements in interest rates decrease the value of assets relative to
electronic money liabilities outstanding.
Secure electronic payment system
In order to ensure the integrity and security of each electronic transaction.
They should have all the security elements like;
 Digital signature
 Public key cryptography
 Digital certificate
 Secure socket layer
 Public and private key(encryption)
Secure Electronic Transaction (SET)
 It is a system for ensuring the security of financial transaction on the internet. It is
jointly designed by MasterCard and Visa with backing of Microsoft, Netscape, IBM,
GTE, SAIC and others
 It uses different encryption and hashing techniques to secure payments over internet

done through credit cards.

◦ With the help of Secure Socket Layers (SSL) protocol, SET validates consumers and
merchants in addition to providing secure transmission using Secure Transaction
Technology (STT).
◦ It restricts revealing of credit card details to merchants thus keeping hackers and
thieves at bay
 SET specification

 Public key cryptography and digital certificates for validating both consumers and
merchants
 Provides privacy, data integrity, user and merchant authentication, and consumer
non repudiation
 Module-3
M-Commerce
M-commerce
 It is also called mobile commerce. It is defined as all activities related to
a potential commercial transaction conducted through communications
networks that interface with wireless or mobile devices.
 M- commerce is any type of transaction of an economic value having at
least at one end a mobile terminal and thus using the mobile
telecommunication network.
 It is the use of wireless hand-held devices such as mobile phone,
personal digital assistance (PDA) and smart phone etc.
 It provides a new dimension to this space by extending the reach of
traditional e-commerce to the millions of mobile phone and wireless
device users worldwide.
 By 2021, mobile e-commerce sales are expected to account for 54% of
total e-commerce sales.
History of M- commerce
 Mobile Commerce Services were first delivered in 1997, when the
first two mobile-phone enabled Coca Cola vending machines were
installed in the Helsinki area in Finland. The machines accepted
payment via SMS text messages. The first mobile phone-based
banking service was launched in 1997 by Merita Bank of Finland,
also using SMS.
 The M-Commerce server developed in late 1997 by Kevin Duffey
at Logica.
 Since the launch of the iPhone, mobile Commerce has moved away
from SMS systems and into actual applications.
 Features of M-commerce
 Ubiquity-Mobile users must have the ability to receive information and
perform transaction in real-time, regardless of the location.

 Flexibility- Users of mobile device should be able to engage in activities

such as receiving information and conducting transaction with ease.

 Instant connectivity-Easy and quick connection to Internet, intranets,

other mobile devices.

 Personalization- It offers services and application that should be

personalized according to their preferences.

 Localization of products and services- Knowing where the user is

located at any given time and match service to them. 
con
Infrastructure
 Hardware- Hardware refers to the physical elements of a computer. Also referred
to as the machinery or the equipment of the computer. Examples of hardware in a
computer are the keyboard, the monitor, the mouse and the processing unit.
 Server operating system- it is also called a server OS, is an operating
system  specifically designed to run on servers, which are specialized computers
that operate within a client/server architecture to serve the requests of client
computers on the network.
 Web server software- In addition to the web server operating system, each
e- commerce web site must have web server software to perform a number of
fundamental services:
• Security
• Retrieving and sending web pages
• Web site tracking
• Web site development
• Web page construction
 E-commerce software - It must support the five core task.
• Catalog management
• Product configuration
• Shopping cart
• E commerce transaction processing
• Web traffic data analysis
 Types of M-commerce
 Entertainment- Mobile entertainment includes content services such as music
downloads, videos, gaming and ring tones as well as text – based messaging
services such as audience voting.

 Banking and bill payment- It enables customers to use their mobile phones to
receive alters, manage their accounts, pay bills and transfer fund.

 Ticketing- It allows devices users to purchase tickets for events, transportation and
parking.

 Retail and peer to peer- Customers are increasing comfortable with paying for
goods and services and transferring money via mobile devices. In India,
consumers are using their mobile devices to pay for home-delivery shopping
services, vending machine and in store purchases, taxis and purchases at fuel
stations and retails outlets.
Benefits of M-commerce
 Portability/ Mobility
 Instant connectivity
 Personalization
 Localization
Limitation of M-commerce
 Bandwidth - The limited bandwidth that can be support by mobile device
currently is very small which causes web developers to reduce the usage of
rich data.

 Screen size - The screen size of a mobile device is very limited. This also
limits the viewing capacity of the user.

 Less powerful processors - Due to the slow processing speed web

developer would have to use server side scripting which will bring more
loads to the services.

 Cost of wireless connection- As wireless connection of a mobile device to

the internet is still a relatively new technology the cost of using such
connection is also expensive as the technology is still under heavy
development.
Technologies for M- commerce
Technology suppliers are the market drivers for M- commerce. There
would not be significant growth in M- commerce market until the
necessary technology are developed and deployed.

 Network Technologies- The main barriers to M –commerce are the

limited network bandwidth and long call establishment time. Because
higher bandwidth allows simultaneous access to voice, video and data
services at one. Its packetized nature also enables“ always on mobility”.

 Services Technologies- Short message service(SMS) and Wireless

Application Protocol(WAP) have been the most popular mobile services
that enable most of the M- commerce application today.
Contd…
 Wireless Application Protocol (WAP)- It is an open, interoperable framework
for delivery of internet content and application to mobile devices. It presents
information in Wireless markup language format that is optimized for wireless
handheld mobile terminal. It is the stripped down version of HTML.
 Security Technology – Public Key Infrastructure(PKI)- Security is the most
important factor in M- commerce. In M-commerce security services is
provided by the Sonera smart Trust who has offered PKI for mobile Since
early 1999. By means of certificate encryption and digital signature.
 Infrared (IRIT)- It is a cordless, low cost transceiver signaling
technology.
 Bluetooth- It came into market in 2001. it is a short range radio, energy
saving, low- cost and safe wireless technology that allows voice and data
connection to be made up to 10 meters.
 Mobile Location Technologies- the ability to locate the position of
the mobile device is the key of M – commerce. It locates the
position by GPS(Global Positioning System), is a system that
consists of 24 satellites revolving around the earth. Since the
satellites are continuously broadcasting their own position and
direction, the GPS receiver can calculate its position very exactly.

 I-Mode- It is rival standard to WAP developed by Japan NTT

DOCOMO mobile phone network. It uses compact HTML to
deliver content. It uses packet switching which allows users to be
constantly connected to the web.
Mobile Advertising
 It is the communication of products and services to mobile device
and smart phone. A effective advertising means understanding
your mobile audience, designing content with mobile platform in
mind and making use of SMS/MMS marketing and mobile apps.

 It can build brand awareness; increase consumer involvement and

interaction; and influence consumer response and activation
(Sultan & Rohm, 2005).
Benefit
 Accessibility- Most people who use mobile phones keep them handy
throughout the day. This means you can reach potential customers
wherever they are instead of having to wait until they log on to the internet
with a computer, notice your physical sign or tune in to a broadcast. 
 Personal- Generally a mobile is not shared and is always personal so the
data managed for a user by demographic behavioral history and presence
will be always correct.
 Measurement- As with online, it should be possible to measure the impact
of campaigns directly.
 Instant Result- The mobile is always carried by user.
 Fraud resistance - Any carriers can audit usage and click to call can easily
be verified. So fraud detection is very easy as compared with desktop/
laptop advertising.
 Easy to work- It is simpler and less expensive as compared to desktop/
laptop advertising.
Limitation
 Technology- Differing screen sizes and software for mobile, other
standards for mobile web and rich clients is also a big challenge while
framing the advertisement.
 Reach over world- The reach over world is not as high as consumption of
mobile content is small and penetration of 3G devices is still low in most
penetration.
 WAP- The wap technology is still inadequate which discourages web
surfing but is increasing with high pace.
 Scarcity- Mobile sites as compared to desktop/laptop sites is very minimal
 Data transfer -Slow data transfer as compared to desktop/laptop.
 Not user – Friendly- Majority of the user still consider d desktop/laptop
are more user friendly than a mobile to operate a website.
Types of M-marketing/advertising
 Mobile web poster
 SMS advertising
 MMS advertising
 Mobile games
 Mobile video
 Audio Advertisement
M- commerce Application
 During the designing of new mobile commerce applications,
the general capabilities of user infrastructure mobile devices
should be taken into consideration.
 It provides a developer and provider plane to address the
different needs and roles of application developer, content
developer and other parties.
 They are grouped into two categories:
Consumer Based
Business Based
Consumer-Based
 Consumer-based m-commerce application refer to normal
daily commerce activities that are most likely to be conducted
by anyone who is a user of a wireless device.
Business Based
 Business based m-commerce refers to business application
that are applied in a corporate or business environment to
facilitate business transaction and to improve productivity
within in a company.
•ERP(Enterprises resources planning) software typically integrates
all facets of an operation — including product planning,
development, manufacturing, sales and marketing — in a single
database, application and user interface.

•It is a integrated applications to manage the business and automate

many back office functions related to technology, services and
human resource.
M- commerce application and its
trends
 In developed countries mobile customer are starting to use handsets to
make purchases from retails stores, to conduct personal banking and make
travel reservation, view sports and news program. In India, around 35% of
population are interested in m-commerce possibility.
Contd…
 SMS- Since 1997, SMS has allowed people to send data and receive text
message using their mobile phone. Now SMS is becoming the backbone of
M-commerce. In Singapore, 52% of mobile user are using SMS more than
once in day for doing transaction.

 Micro payment- It offer vast opportunities to make micro purchases

(buying from a vending machine, paying a parking meter) easier. In this
case if you are using SMS, then payment will done through post paid
account linked to debit card. In case of subscription, it charges the
customer through the monthly bills.
Contd…
 Financial services- Now we have various method and systems for
making payment in M-commerce. Various countries are using
different method. In Republic of Korea, mobile customers prefer to
pay charges in the monthly bills. Whereas in Japan, people prefer to
pay in prepaid manner.
 In 2002, new system was developed named Infra-red to make the
payment easier. In infra-red interface, payment is automatically
debited through your debit card.
Contd…
 Logistics/E-Logistics- The potential of mobile communication for
generating greater efficiency in transport is widely acknowledged.
With the expand of m-commerce /wireless data access will make it
possible to follows goods movement throughout the supply value
chain.

 With the growing use of information technologies in cargo booking,

tracking and delivery by major shipping lines, internal and external
trade will become more efficient.
Contd…
 Information services- Value added text messaging in the use of
SMS to provide a content service or product to customer at a
premium price. Now for the content service consumers are ready to
pay more.
 In Ireland , this is known as premium text messaging. It will involve
the allocation of 5- digit short code so that customer will understand
they are accessing the premium services.
Mobile Payment
 A transfer of funds in return for a good or service, where the mobile
phone is involved in both the initiation and confirmation of the
payment.
 Mobile payment also referred to as mobile money, mobile money
transfer and mobile wallet generally refer to payment services
operated under financial regulation and performed from or via a
mobile device.
Categorization of m- payment
system
 Most e-payment systems are not suitable for use in a mobile context.
So, we categorized m – payment systems according to the concern
of the customer money.
Software electronic coins
Hardware electronic coins
Background account
Contd…
 Software electronic coins- In this case, monetary value is stored
on the mobile device in the form of file. This file contain
information like; a value, a serial number, validity period and the
signature of the issuing bank. Since these coins are easy to copy,
the validity of an electronic coin depends on the uniqueness in terms
of serial number.

 Hardware electronic coins- In this case, monetary value is stored

on a secure hardware token, typically a smart card in the mobile
device. In order to get the money, the costumer smart card and the
merchant payment server authenticate each other and a secure
channel is set up between them.
Contd…
 Background account- In this type, the money is stored remotely on
an account at a trusted third party. Under this method when
customer will get the bill from the merchant, then authentication and
authorization message to the merchant that allows the trusted party
to identify the customer and to verify the payment authorization.
The accounts can then be settled.
Application and services of M-
commerce
 Mobile ticketing
 Airline ticketing
 Cinema ticketing
 Railway and Bus
 Concert/ Event
 Consumer voucher distribution
contd…
 Mobile money transfer- by this service we can transfer money
from one person to another by using a mobile phone. Ex- ICICI
bank started IMPS

 Content purchase and delivery- the convergence of mobile phone,

portable audio player and video player into a single device is
increasing the scope of m- commerce.
Contd…
 Information services- a wide variety of information services can be
delivered to mobile phone users in much the same way as it is
delivered to PC. These services include:
◦ Traffic reporting
◦ Sports scores
◦ Stock quotes
◦ News

 Mobile banking- banks and other financial institutions use mobile

commerce to allow their customer to access account information
and make transaction such as purchasing stocks, remitting money,
receive notification and transfer money.
Mobile wallet
It is a mobile wallet payment strategy deals with how, where,
and when the payment can be accepted and processed using
the user wallet accounts.
 Prepaid- under this users top up their mobile wallet accounts
upfront and such mobile wallet accounts are used to make the
payment in context of the mobile sales transaction.
 Postpaid- in this case, a user mobile wallet account is linked
to his ort her carrier billing account. this is charged to the
associated mobile billing amount that is usually paid on a
monthly or quarterly basis.
 Card linked mobile wallets- in this strategy, the mobile
wallet account are linked to user’s debit or credit cards. In a
mobile sales transaction, with card linked mobile wallet
payment, final payment is made from the wallet account that
is linked to user card.
Mobile Advertising
 It is the communication of products and services to mobile device
and smart phone. A effective advertising means understanding
your mobile audience, designing content with mobile platform in
mind and making use of SMS/MMS marketing and mobile apps.

 It can build brand awareness; increase consumer involvement and

interaction; and influence consumer response and activation
(Sultan & Rohm, 2005).
Benefit
 Accessibility- Most people who use mobile phones keep them handy
throughout the day. This means you can reach potential customers
wherever they are instead of having to wait until they log on to the internet
with a computer, notice your physical sign or tune in to a broadcast. 
 Personal- Generally a mobile is not shared and is always personal so the
data managed for a user by demographic behavioral history and presence
will be always correct.
 Measurement- As with online, it should be possible to measure the impact
of campaigns directly.
 Instant Result- The mobile is always carried by user.
 Fraud resistance - Any carriers can audit usage and click to call can easily
be verified. So fraud detection is very easy as compared with desktop/
laptop advertising.
 Easy to work- It is simpler and less expensive as compared to desktop/
laptop advertising.
Limitation
 Technology- Differing screen sizes and software for mobile, other
standards for mobile web and rich clients is also a big challenge while
framing the advertisement.
 Reach over world- The reach over world is not as high as consumption of
mobile content is small and penetration of 3G devices is still low in most
penetration.
 WAP- The wap technology is still inadequate which discourages web
surfing but is increasing with high pace.
 Scarcity- Mobile sites as compared to desktop/laptop sites is very minimal
 Data transfer -Slow data transfer as compared to desktop/laptop.
 Not user – Friendly- Majority of the user still consider d desktop/laptop
are more user friendly than a mobile to operate a website.
Types of M-marketing/advertising
 Mobile web poster
 SMS advertising
 MMS advertising
 Mobile games
 Mobile video
 Audio Advertisement
Module-4
Wireless device for m commerce
 Wireless communication is a technical and business revolution.
 Mobile phone are a common sites in most cities around the world.
 Wireless personal and local area networks provides digital connectivity
among mobile computing devices, including
◦ Desktop
◦ Laptops and
◦ Personal digital assistants(PDA).
Wireless MOBILE technology
 GSM( Global System for Mobile communication) – It is a
digital mobile telephony system that is used in Europe and other
parts of the world.
 GSM technology was first launched in Finland in 1991.
 It uses a variation of time division multiple access (TDMA) and
it is most widely used of the three digital wireless telephony
technologies(TDMA, CDMA, GPS).
 It digitizes and compresses data, then sends it down a channel
with two other stream of user data, each in its own time slot.
 It operates at either the 900 MHz or 1800 MHz frequency brand.
 One of the features that was introduces into GSM network was
the SMS( Short Messaging System).
 GSM network operators have roaming agreements with foreign
operators, so user can often continue to use their mobile phones
when they travel to other countries.
GPRS
 GPRS(General Packet Radio Service)- it is a non-voice service added
to existing TDMA network.
 GPRS complements existing technologies like cellular phone
connections/SMS.
 It is a packet based wireless communication service that promises data
rates from 56 upto 114 Kbps.
 GPRS is an upgrade over the basic features of GSM.
 It allow mobile handsets to obtain much higher data speeds than what
standard GSM can offer.
 It higher data rates allow users to take part in video conferences and
interact with multimedia web sites.
 GPRS packet based services cost is lesser than circuit switched services
since communication channel are being used on a shared-use.
CDMA
 CDMA(Code division multiple access) is an example of multiple
access, where several transmitters can send information
simultaneously over a single communication channel. This
optimizes the use of available bandwidth.
 The technology is used in ultra-high-frequency (UHF) cellular
telephone systems in the 800-MHz and 1.9-GHz bands.
Cdma v/s gsm
Impact of Technology Advances on
Strategies For Mobile Commerce
 Mobile device will enable product and services to be offered direct
to an individual pocket facilitating more tailored product and service
offerings than internet access through a PC.
 Following are the various wireless services:

1. Financial services
2. Travel and tourism
3. Retail
4. Entertainment and gambling
5. Personal information management
6. Location based service
1. Financial services
M-banking services, which are an extension of internet banking (or
home banking) allow customers:
 To manage personal account information
 To transfer funds in bank account or pre-paid accounts
 To receive alerts regarding bank information or payment due
 To handle electronic invoice payment
2. Travel and tourism
 With enhanced messaging and location based mobile services,
offered by the mobile operator and enterprises travel companies,
travelers get in touch will all traveling tips, news, financial
information, weather and ticketing anytime.
 For example; if a crisis arises while traveling( a flight delay or
diversion) you will get immediate message from the company.
3. retail
 In the retail trade industry, the possible uses of wireless internet
access devices are almost limitless.
 Shopping app will enable regular internet e-commerce via mobile,
that is related with ordering and payment of goods and services.
4. Entertainment and gambling
 One of the most appealing group of application for m- commerce is
likely to be entertainment.
 The service provider will supply a means for users to pay or sign
contract electronically.
5. Personal information management
 It allow users to manage their daily information and events
easily and in a simple way. E.g- email, dictionary checking,
contact list, event reminder and data storage management.
 It cooperates with third party software like lotus notes and
mail messenger.
6. Location based services
 It is a revolutionary services for the mass.
 User can get instant information based on their current geographical
position or location.
 These services are based on GPS(Global positioning System),
TOA(Time of arrival) and Angle of arrival(AOA).
1G telecommunication
 1G refers to the first generation
of wireless cellular technology (mobile telecommunica
tions).
 These are the analog telecommunications standards
that were introduced in the 1980s and continued until
being replaced by 2G digital telecommunications.
 The main difference between the two mobile cellular
systems (1G and 2G), is that the radio signals used by
1G networks are analog, while 2G networks are digital.
 It's Speed was upto 2.4kbps. It allows the voice calls in
1 country. AMPS was first launched in USA in 1G
mobile systems.
Advantages of 2G
 It provides the digital signal which requires very little battery
power.
 Digital coding also reduces the noise in the line, thus
improving the clarity of voice.
 2G phones are greatly more private than 1G phone, as the call
on the digital cell are almost impossible to eavesdrop or by
use of radio scanner.
3g technology
 3G technology refer to third generation which was introduced in
year 2000.
 It is the upgrade for 2G and 2.5G GPRS networks, for faster internet
speed.
 3G is the next generation of technology which had revolutionized
the telecommunication industry. Apart from increasing the speed of
communication, the objective of this technology is to provide
various value added services like  video calling, live streaming,
mobile internet access, etc on the mobile phones.
 History of 3g
 The evolution of 3G technology was the result of high speed demands of smart
phones. Smart phones, which is a combination of PDA and mobile supports
different applications. Since, these smart phones require high speed data transfer
therefore, high speed network become the demand which led to the evolution of
3G networks. 
 NTT DoCoMo launched the first 3G network in Japan, in the year 2001. In
December 2007, 190 3G networks were operating in 40 countries and
154 HSDPA networks were operating in 71 countries, according to the Global
Mobile Suppliers Association (GSA). In Asia, Europe, Canada and the USA,
telecommunication companies use W-CDMA technology with the support of
around 100 terminal designs to operate 3G mobile networks.
 On 11 December 2008, India entered the 3G arena with the launch of 3G enabled
Mobile and Data services by Government owned MTNL in Delhi and later
in Mumbai MTNL becomes the first 3G Mobile service provider in India. After
MTNL, another state operator (BSNL) launched 3G services on 22 Feb 2009
in Chennai and Kolkata and later launched 3G as Nationwide. The auction of 3G
wireless spectrum was announced in April 2010 and 3G Spectrum allocated to all
private operators on 1 September 2010.
Difference between 2g vs 3g
Basis 2G 3G
Terms 2G is the second generation 3G is the third generation
of mobile networks. of the mobile network.

Function 2G networks is primarily 3G technology offers the

the transmission of voice additional benefit of data.
information.
Security Normal security High security
Speed The downloading and While in 3G technology the
uploading speeds available downloading and uploading
in 2G technologies are up speeds are up to 21 Mbps
to 236 Kbps. and 5.7 Mbps respectively.
Features That are not available with The features like mobile
2G technologies. TV, video transfers and
GPS systems are the
additional features of 3G
technology.
Data Bandwidth 14-64 Kbps 2Mbps
4 g technology
 4G  is the term used to describe the fourth-generation of
wireless cellular service.
 4G is a big step up from 3G and is up to 10 times faster
than 3G service. Sprint was the first carrier to offer 4G
speeds in the United States beginning in 2009. Now all
the carriers offer 4G service in most areas of the country.
 Kolkata is the First 4G City in India and Launched by
Airtel Network.
 It is capable of providing 100Mbps-1Gbps speed.
 It is the next generations of wireless technology that
promises higher data rates and expanded multimedia
services.
 Features
 More Security
 High Speed
 High Capacity
 Low Cost Per-bit
A framework for the study of mobile commerce
Framework for the study of m- commerce
1. User plane
 This framework has four levels: m-commerce applications,
user infrastructure, middleware, and network
infrastructure.
 The framework shows that the design of new mobile commerce
applications should take into consideration the general
capabilities of user infrastructure (mobile devices), and not the
individual devices.
 Mobile middleware hides the details of underlying wireless
and mobile networks from applications and at the same time
provides a uniform and easy to use interface. It is an extremely
important component in developing new mobile commerce
applications.
 The network infrastructure also plays an important role in
mobile commerce, as the user perceived service quality depends
on available resources and capabilities of wireless and mobile
networks.
Wireless user infrastructure
 To realize these application, we need several functional
components, starting with a mobile device with sufficient
memory, an appropriate display and communications
functionalities.
 As these devices gain more functions and grow in storage and
processing capabilities, they will need an operating system to
manage resources.
 As the number of functions on a mobile device increase along
with increased storage, we need an operating system which can
run on handheld and other small device. E.g- Microsoft
releasing the pocket version of outlook, Excel and Word and
striped down version of UNIX.
Wireless networking infrastructure
 Besides mobile devices and middleware, mobile commerce applications
depends on networking support.
 Two of the most important factors are bit rate and coverage
 Developers are now standardizing the fourth generation of wireless
network.
 Requirements:
Location management, an integral part of many mobile commerce
application
Reliable and survivable wireless network so that users can access
mobile commerce application even under varying degree of network
failure.
Roaming across multiple heterogeneous network so that users can
access mobile commerce applications from anywhere.
2. Developer and provider plane
 This plane addresses the needs and roles of application developers,
content providers, and service providers.
 Each of them could build its products/services by using the
functionalities provided by others.
 Service providers can also act as content providers.
NTT docomo’s I mode
 I-mode is a wireless multimedia service popular in Japan and is
increasing in popularity in other parts of the world.
 It is a multimedia and messaging service for mobile phones.
 Developed by NTT Docomo
 NTT Docomo is the spin off of Japan telecommunication giant Nippon
telegraph and Telephone(NTT).
 I-mode was launched in Japan on 22 February 1999
 I-mode users have access to various services such as e-mail, sports
results, weather forecast, games, financial services, ticket booking and
internet browsing.
 I-mode was developed as an inexpensive method of packet switched
high-speed communication which give the feature of always on.
 Based on WWW standards(TCP/IP,HTTP,HTML)
Popularity of I-MODE
 There are multiple reasons attributed to I mode success.
◦ It is based on packet switched wireless technology.
◦ The second big factor for the popularity of I mode, high
penetration rate of mobile phone than the PC.
◦ It is less expensive.
Personal digital Assistants(PDA)
 It is a hand-held microcomputer that trades off power of small size and
greater portability.
 They are tightly integrated computers that often use flash memory instead
of a hard drive for storage
 These devices usually do not have keyboards but rely on touch sensitive
LCD screen for both output and input.
 WIRED V/s WIRELESS
Wired Wireless
Communication happens Communication occurs via
using a wired media radio signal and line-of sight
base station.
Faster Speed Relatively slower.
Secure, very difficult to Inherently insecure
breach
Limited location and reach is Mobile supports all devices
restricted because of physical in hotspot range.
accessibility.
Fixed work location Devices can be accessed from
anywhere.
 Module – 5
ECOLOGY OF MOBILE COMMERCE
Wireless application protocol
 It is a set of communication protocols to standardize the way that
wireless devices, such as cellular phone and radio transceivers, can
be used for internet access.
 It is a universal standard for bringing internet based content and
advanced value-added services to wireless devices such as phone
and PDA.
 It is hosted on web server and use the same transmission protocol as
web sites that is Hypertext transport protocol(HTTP).
 The most common difference between the web and WAP sites is the
application environment.
 Web site is coded mainly using HTML whereas WAP use a more
streamlined formatting language WML(Wireless Markup language).
Architecture of WAP
The WAP protocol suits contain four protocols that are responsible for
the communication between clients and WAP gateway.
These can be used in four different configuration;
 Connectionless mode – Only WSP and WDP are involved, no

acknowledgement on the sent data.

 Connectionless mode with security- Additional encryption by

WTLS
 Connection mode- They are additional use of WAP, now the data

being sent must be acknowledge and may be retransmitted if lost.

 Connection mode with security- Additionally encrypted by

WTLS.
Layers of WAP Protocol
WAP has a layered architecture. Following are the various layer
of WAP architecture;
◦ Wireless Application Environment (WAE)
◦ Wireless Session Protocol (WSP)
◦ Wireless Datagram Protocol (WDP)
◦ Wireless Transaction Protocol(WTP)
◦ Wireless Transport Layer Security (WTLS)
◦ Wireless Markup Language (WML)
Wireless Application Environment (WAE)- It defines the
user interface on the phone.
 It provides the general purpose environment for application

to be used on wireless devices.

 It connects the technologies used in the WWW and mobile

telephony to allow interoperability.

 This layer contains of two logical layers:

◦ User layer – Browser, phone book and message editor

◦ Services layer- It deal with common elements and formats
accessible to user agent, like programming languages, WML,
and WML Script.
Wireless Session Protocol- This protocol layer provides a
lightweight session layer to allow efficient exchange of
data between WAE and the rest of the protocol stack.
 When running WSP in connection mode, this session is
assumed to be long lived and can be resumed if suspended.
Wireless Datagram Protocol (WDP)- It is the transport
layer that sends and receive message via any available
bearer network.
 It is the base of the WAP protocol and hides the
characteristics of different underlying bearers
(GSM,CDMA).
 It allows WAP to be bearer-independent by adapting the
transport layer of the underlying bearer.
Wireless Transaction Protocol- The WTP runs on top of
a datagram service, such as User Datagram Protocol (UDP)
and is part of the standard suite of TCP/IP protocols used to
provide a simplified protocol suitable for low bandwidth
wireless stations.
 It makes sure that message are unique and retransmitted if
they are lost.
 Messages are divided into three different classes.
◦ Unreliable send with no result message
◦ Reliable send with no result message.
◦ Reliable send with reliable result message.
Wireless Transport Layer Security (WTLS)- It
incorporates security features that are based upon the
established Transport Layer Security (TLS) protocol
standard. It includes data integrity checks, privacy, service
denial, and authentication services.
 It is an optional security layer which incorporate encryption
facilities that provide the secure transport service for
application that must be secured during transaction
between the client and WAP gateway.
Wireless Markup language-The wireless markup
language (WML) is WAP counter part to the hypertext
language on WWW.
 It is the page describing language used for authoring
services and is designed to fit small handheld devices.
 WML is designed to handle issues like small display size,
limited user input capabilities, narrowband network
connection with high latency, limited memory and
computational processing power.
Contd…
 Each of these layers provides a well-defined interface to the
layer above it. This means that the internal workings of any
layer are transparent or invisible to the layers above it. The
layered architecture allows other applications and services to
utilize the features provided by the WAP-stack as well. This
makes it possible to use the WAP-stack for services and
applications that currently are not specified by WAP.
advantages
 WAP is open standard. It is totally vendor and network
independent.
 WAP transport mechanism is optimized for wireless data
bearers.
 It is possible to configure the WAP gateway in such a
manner that it requires the phone to use WTLS and enforce
sufficiently strong encryption.
 The WAP gateway inside the corporate premises it is harder
for someone to listen or modify traffic between the WAP
phone and web server.
 Some of the WAP features are similar to HTML.
disadvantages
 If WTLS is enforced, all WAP phones that do not
support WTLS may be disabled.
 A separate gateway computer must be purchased

that requires configuration and support.

 Another problem that the gateway might be used

by a hacker to modify or break into other

applications that may reside behind the same
firewall.
 There is no way for the web server to know the

identity of the WAP user in a secure way.

MOBILE BUSINESS SERVICES
Mobile business services
 Mobile business is a very recent, but promising industry
created by the emergency and widespread adoption of wireless
data network, which enable the convergence of the internet,
e-business and the wireless world.
 This sector is driven by both the demand and supply side
factors.
 According to the Gartner Group, over 80% of European
corporation consider mobile devices and application are very
important for their business.
 Mobile business services are attracting increasing attention and
they promise a multibillion dollar market whose characteristics
are quite distinct compared to mobile consumer services.
Competitive activity among players keen on tapping into this
opportunity is increasing rapidly. 
Important players in mobile business
services
Network Operators Technology Providers
Devices
Cellular networks
Enabling infrastructure
Wireless
Middleware
LAN
Business Application

Market for mobile

business services

Transaction and Content

Service providers
Banking Solution Providers
Business content
Marketplace
Network operators
 Business segment has been the main source for telecom
operators, but now the profitability is at risk.
 Mobile is becoming bundled as part of overall data

service offering.
 With newer technologies, new players are emerging in

the network operator market.

 Mobile operators need to think through their approach

to mobile business services.

Technology providers
 Technology providers, such as middleware and
application developers are primarily leading innovation
in mobile business services.
 Their role is very important since many services cannot

be managed by network providers.

 Technology solutions need more tailoring since it is

needed to integrate corporate IT systems.

Transaction and content service
providers
 They belong to a key group of players in the consumer
market.
 After the setup is enabled, content providers are needed

to do real business on the mobile platform.

 For a successful commercial business, financial

transactions have to be done and thus banking services

are also needed.
SOLUTION PROVIDERS
 Solution providers manage the IT customer interface
since they have knowledge and experience of IT
infrastructure and legacy applications.
 Mobile solutions are increasingly being integrated with

other systems and hence system integration skill is

needed.
 Most of the companies prefer external service provider

for mobile solution deployment.

Mobile portals
 An Internet gateway that allows mobile devices to
connect remotely via a Web browser. Mobile portals
aggregate content from many sources and present it in
a format designed for the smaller screens and limited
bandwidth common to mobile devices.
 It is also known as portable portal.
 The most lucrative feature of mobile portal is degree

of personalization and localization point.

 The mobile portals are emerging today, in many ways,

a stripped down version of traditional web portals.

Characteristics of mobile portal
1) Ubiquity
2) Convenience
3) Localization
4) Personalization
5) Device optimization
1. Ubiquity
 It offer users the ability to receive information and perform
transaction from virtually any location on a real time basis.
 Thus mobile portal users can have a presence everywhere or in
many places simultaneously.
2. convenience
 The agility and accessibility provided from wireless devices will
further allow m-commerce to differentiate its ability from e-
commerce. E.g- Many people use their mobile devices when they
are commuting, get stuck in traffic and are waiting in lines.
 In these situation, m-portal act as time saver by allowing performing
task that a person would do anyway but on the account of other
important activities.
3. localization
 Knowing the geographical location of an internet user creates a
significant advantage for m-commerce over e-commerce.

 Through the GPS technology, service providers can accurately

identify the location of the user so that M- commerce providers will
be able to receive and send information relative to a specific
location.
4. Personalization
 Mobile devices are typically used by a single person, making them
ideal for individual-based and highly personalized target marketing
efforts.
Eg- advertising messages tailored to individual preferences can be
provided.
5. Device optimization
 It is an automatic generation of m-portal content based on device
configuration, such as screen size, memory and CPU, characteristic
of a communication channel, such as bandwidth and supported and
protocols.
 Since service providers know in detail about a device, bandwidth
and supported language, they may optimize the content of their
portals to each user individually in order to achieve fast
transmission speed, simple navigation, an intuitive graphical user
interface and consistent page layout.
Driver of mobile service strategy
 It should be able to increase the probability of success by
incorporating these three major driver into mobile portal strategy:
◦ Portal must be easily customizable
◦ Portal must optimize flexibility
◦ Portal must contain relevant content
IT adoption in small
business
IT adoption in small business
 An important and fast growing technological innovation during this century
is information technology (IT) in the form of computers.
 IT provides an opportunity for businesses to improve their efficiency and
effectiveness, and even to gain competitive advantage.
 For a small business, embarking on IT adoption for the first time is non-
trivial as there is a lot of uncertainty and risk involved.
 There are many reported cases of the positive contribution of IT to large
businesses. With the decreasing cost and ever more powerful user-friendly
microcomputers and standard software packages, today the benefits are
accessible even to the smallest business. Yet, while large businesses have
been using computers for some time, small businesses have been slow in
adopting these technological innovations.
 We have identified a variety of factors thought to affect
m-commerce/Internet technology adoption in small business:
 1. Owner/Manager Characteristics: These are based on
behavioral and attitudinal factors, being:
 Perceived benefits affect technology adoption in terms of the
perceived ease of use and/or usefulness of the technology. If the
owner/manager does not perceive the technology in a positive
way, they will be reluctant to adopt technology.
 The Computer literacy of the business owner can also influence
technology adoption. If the owners are unaware or do not
understand the technologies available, they are unlikely to adopt
them into their own business.
Contd…
 The level of assertiveness, rationality and interaction of business
decision processes can also impact on IT adoption. If owners of the firm
are assertive in business decision processes, understand the benefits and
uses of the technology to their organization, and are able to rationalize that
information, they will be more likely to adopt IT.
 Perceived control relates to the amount of requisite opportunities and
resources (time, money, skills, co-operation of others) someone possesses
to be able to carry out the course of action (technology adoption). For
example: a small business owner may decide that connection to the
Internet is an important competitive use of IT. Yet if there is a possible
budget shortfall, or lack of time or understanding of the technologies, their
decision to adopt will be influenced.
Contd…
 Subjective norm: It is the impact of groups decision on an
individual group perception for technology adoption can influence
a individual decision.
 Mistrust of the IT industry relates to the attitudes of
owner/managers that IT professionals are untrustworthy, difficult
to understand and overcharge.
 Lack of Time refers to the owner/managers’ attitude that they do
not have sufficient time to invest in gaining knowledge and
purchasing and implementing new technologies.
 2. Firm characteristics:
 Organizational readiness refers to the level of technology

currently incorporated into business processes. If there is

little technology incorporated, or outdated/inefficient
technology being utilized, a firm is less prepared to
incorporate the technologies and therefore less likely to
adopt.
 A small business owner/manager will be reluctant to adopt

innovative IT unless there is a specific request for it by their

trading partners and/or customers. If this external pressure to
adopt IT is not present in the industry sector, then the
business owner may perceive the technology as a waste of
resources.
Contd…
 The structural sophistication of the firm in terms of centralization
and complexity will also influence technology adoption in its ability
to incorporate new technologies into its work practices. A particularly
complex structure could either inhibit or facilitate technology
adoption and would be dependent on whether the owner believed that
IT could be easily incorporated and enhance operations, or
excessively disrupt operations.
 The size, sector and status of the organisation have been shown to
influence technology adoption, particularly in relation to the sector
and status. If competitors and trading partners within the sector have
adopted IT, an owner may be more inclined to adopt as well.
 The size of the business can also influence technology adoption, as a
very small business with only two or three employees may not have
the time or expertise to devote to implementing and using new
technologies
Contd….
 Customer and the supplier are also contributing in the adoption
of technology by the firm.

 Finally, the level of information intensity within the organization

may influence the owner to adopt or not adopt a technology. For
example: if large amounts of data and information are part of the
business processes, an owner may be more likely to adopt
technologies that could streamline operations and lead to
improved information process within the organization.
Location–based service

 A location based service is any applications that offer

information, communication or a transaction that satisfies the
specific need of a user in a particular place.

 Traffic information for the highway a user is currently driving

on, or a discount for a coffee shop around the corner from
where a user is walking are both classic examples of location
based services.
 Diffusion of mobile data technologies
 Major innovation may have to prove themselves in new market before they
can displace other technologies.
 The usefulness and ease of use will impact on owner/manager acceptance
of the technologies.
 The attributes of the technologies may improve their acceptance by small
business owner/manager.
 Small business owner/manager do not buy technology, they just want
benefits.
 Lack of speed is a barrier to adoption as mobile data technologies are slow
and hence inefficient.
 Another barrier is the perception of a lack of standardized IT environment
for developing mobile data application.
 Limited bandwidth, higher usage costs, and a susceptibility to transmission
noise and call dropout are also possible barrier for adoption.
 Security is also a concern for slow adoption.
Factor influencing the adoption of
mobile gaming services
Following are the factors influencing the adoption of mobile gaming
services;
Relative Advantage- It the extent to which an innovation is
perceived as being better than an idea it supersedes.
◦ Consumers are not likely to start using new technology just
because it is here.
◦ The main advantage of mobile services is that are accessible
anytime, anywhere.
◦ Time killing displays one of the goals of using mobile
entertainment services.
Contd…
Compatibility
 It related to the fit between the innovation and existing value,
past experience and needs of potential adopters.
Complexity
 It is also refer to as ease of use.
 It is the extent to which an innovation is perceived as relatively
difficult to understand.
Communicability
 It refers to the extent to which the innovation lends itself for
communication.
 Particularly the extent to which the use of the innovation is
observable by others.
 This factor resembles social influence, which has been
identified as a critical factor in the adoption process.
Constraints of wireless data services
 The constraints of technology and human behavior compel wireless
data services to exhibit three key attributes to achieve market
adoption. So the wireless services must be:

◦ Personalized
◦ Localized
◦ Actionable
Mobile network operator opportunity
 Mobile network services operators enjoyed rapid growth throughout
the 1990.
 New subscribers were acquired at high double-digit growth rates and
network infrastructure was upgraded from the first generation (1G)
analog phones to (4G) digital phones to meet the increasing demand
for data traffic over the mobile network.
 Network operator enjoyed the double benefit of rapid subscriber
growth and increasing voice traffic per subscribers.
 In the era of initial mass adoption of mobile phone ended in the
industrialized countries, new subscriber growth rates and average
revenue per user(ARPU) began to moderate.
 High subscriber turnover which operators could accept in periods of
rapid subscriber growth began to affect profitability.
 Now network provider make an efforts to differentiate and brand
themselves based on the voice quality, voice traffic became
commoditized and pricing highly competitive.
M-commerce in automotive industry
 M-commerce in the automotive industry could be characterized in
parallel and in conjunction with another term framed within the
industry telematics.
 The telematics industry is an emerging business area that allow car
manufactures and aftermarket producers to provide innovative
solutions for information services.
 These services include automatic and manual emergency call,
roadside assistance services, GPS, traffic and dynamic route
guidance.
Impact of M-commerce in automotive
industry
The following trends demonstrate the dynamic of the automobile
industry:
 The automotive/transportation platform becoming technologically
current/internet ready.
 Wireless computing becoming pervasive in society
 Product and services prices dropping.
 Rapid increase in growth.
 Rapid rate of technological innovation.
 Increased demand for call center and convenience services
integration.
Mobile advertising
It includes push and pull message as well as promotional
sponsorship.
Push messaging
◦ It is equivalent to spam e-mail.
◦ Typically push campaigns includes offers sent to existing
customers, mobile alerts and information sent via a mobile
device.
◦ Sending push messages illegally without permission is
commonly called spam.
Pull messaging
◦ It attract the customer to order further information and other
content through the mobile devices.
◦ Customer can receive discount coupons or samples by sending
their contact information via their mobile device.
Mobile advertising in building a
brand
 The internet and mobile are often considered personnel that
enable effective one to one marketing.
 It is often used as an integral part of internet marketing.
 Currently, mobile advertising campaigns primarily include
advertising messages sent via SMS to registered of a web
portal.
 Mobile advertiser today should thoroughly consider how
they use the mobile channel for advertising purpose.
 Customers should be given the possibility to choose where,
when and by whom they are contacted.
 It is getting popular compared to direct marketing because of
its personal nature.
 It is always be based on the customers needs it should be
communicated in the right context.
M- commerce business models
 Brand Building and Media Mix
◦ Every company has a corporate website which details its
products and services.
◦ Many consumer oriented website not only have product
information but also useful content.
◦ Media mix is a successful derivative of this model.
◦ Blending the content of I-mode with other media helps in
driving business.
◦ I-mode is not intended to replace other media but a useful
access point for other content or media.
Contd…
 Customer Relationship Management
◦ CRM is providing support for one’s customer with useful
online services in mobile environment. E.g- Shipment
tracking services, Mobile banking services
◦ Consumer oriented stockbrokers, direct or Nomura
securities, offer real-time trading functionality to their
account holders, while offering other useful services to non-
clients.
Contd….
 Online Retail
◦ It is the most discussed business model of the internet
revolution.
◦ Walt Disney has developed a strong business model
which is providing an excellent revenue stream.
◦ They provide downloadable ringtones, screen savers and
these premium services cost 100 to 300
yen/month/subscription.
 Aggregation
◦ They are part of database category of content.
◦ They include restaurant guides, job search sites, etc
◦ Classic aggregator would be yellow pages telephone
directory.
Contd….
 Advertising
◦ Revenue from advertising is totally dependent on
number of subscribers.
◦ Schemes for advertising:
 Simple banner Ads – Small banners with on being
clicked take the user to advertiser’s website.
 Message Free Service – It is a special push mail
function where cost is borne by advertiser.