m-commerce (mobile commerce)

M-commerce (mobile commerce) is the buying and selling of goods and services through wireless handheld devices such as smartphones and tablets. As a form of e-commerce, m-commerce enables users to access online shopping platforms without needing to use a desktop computer. Examples of m-commerce include  in-app purchasing, mobile banking, virtual marketplace apps like the Amazon mobile app or a digital wallet such as Apple Pay, Android Pay and Samsung Pay.  

Over time, content delivery over wireless devices has become faster, more secure and scalable. As of 2017 the use of m-commerce accounted for 34.5% of e-commerce sales. The industries affected most by m-commerce include:

  • Financial services, which includes mobile banking (when customers use their handheld devices to access their accounts and pay their bills) as well as brokerage services, in which stock quotes can be displayed and trading conducted from the same handheld device.
  • Telecommunications, in which service changes, bill payment and account reviews can all be performed from the same handheld device.
  • Service and retail, as consumers are given the ability to place and pay for orders on-the-fly.
  • Information services, which include the delivery of financial news, sports figures and traffic updates to a single mobile device.

Types of m-commerce

M-commerce can be categorized by function as either mobile shopping, mobile banking or mobile payments. Mobile shopping allows for a customer to purchase a product from a mobile device, using an application such as Amazon, or over a web app. A subcategory of mobile shopping is app commerce, which is a transaction that takes place over a native app. Mobile banking includes any handheld technology that enables customers to conduct fanatical transactions. This is typically done through a secure, dedicated app provided by the banking institution. Mobile payments enable users to buy products in-person using a mobile device. Digital wallets, such as Apple Pay, allow a customer to buy a product without needing to swipe a card or pay with physical cash.

How mobile commerce works

With most m-commerce enabled platforms, the mobile device is connected to a wireless network that can be used to conduct online product purchases. For those in charge of developing an m-commerce application, important KPIs to monitor include the total mobile traffic, total amount of traffic on the application, average order value and the value of orders over time. Similarly, tracking the mobile add to cart rate will help developers see if users are becoming customers. M-commerce developers may also be interested in logging average page loading times, mobile cart conversion rates and SMS subscriptions.

In terms of mobile payment products specifically, they operate through a form of peer-to-peer (P2P) sharing. Once a mobile device is paired with a bank card’s information, the phone can be waved over a payment terminal to pay for a product. This contactless payment using a mobile device is possible due to the use of Near Field Communication (NFC).

Advantages and disadvantages of mobile commerce

The advantages of m-commerce include:

  • Added customer retention by being more easily accessible.
  • More convenience for customers in comparing prices, reading reviews and making purchases without the need of a desktop computer.
  • Wider variety of products and services.
  • Automates a businesses’ point of customer contact and sales.

Disadvantages of m-commerce include:

  • A poorly executed mobile experience can deter customers from making purchases.
  • Mobile payment options are not available in every geographic location and may not support every type of digital wallet.
  • Businesses must know and comply with tax laws and regulations of all countries they ship to (some businesses will avoid this by only allowing purchases and shipping from their country of origin).
This was last updated in April 2019

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