Brighter days ahead for mobile commerce?

When will mobile commerce pick up in Malaysia? Even though limited transactional services are now available in the country, critical mass remains a long way off. What more needs to be done to get mobile users to dish out the dough?

Long way from wireless utopia

The concept of mobile commerce is actually not a new phenomenon, even in Malaysia where telephone penetration rate is still deemed relatively low. In recent times, we have seen mobile phone operators offering mobile commerce services over their networks like banking, booking and payment of small purchase items such as cinema tickets.

However, mobile commerce has never really captured the imaginations of local users. There are several reasons for this, security issues being in the forefront. But with WAP firmly in the limelight, mobile commerce may just get a new burst of life. Or will it?

The extent to which mobile commerce will succeed, it seems, will depend on how successful mobile Internet access will be with the utilization of technologies like WAP. How different is a mobile commerce transaction on a WAP device compared to a similar transaction via a PC? According to CEO Leong See Meng, online shopping--in the manner that users have come to know by using a PC to browse a Web site--provides a richer experience.

"You can look around, choose the product that you want, view it in different colors and do a lot more on the Web," he says. "Mobile commerce on a WAP device, on the other hand, is more suited for buying items that you already know what it looks like. So you just grab what you want, essentially providing you with the convenience and mobility to shop wherever you are."

SB Lim, the executive director of MTech which operates the GSM and WAP portal,, says some users find it difficult to shop with a WAP device because WAP only conveys information in a purely text format.

"Some people also complain that it's difficult to key in details," he points out. "As far as mobile commerce on WAP is concerned, I believe it's good for buying small items or paying bills, which in recent times, are already offered to consumers."

When will things improve?

Despite the nascent market, several major WAP service providers are moving fast to offer mobile commerce services to their subscribers. Maxis, for instance, is offering its users the opportunity to order flowers and also to participate in an auction site via WAP. Meanwhile, is running its first pilot test to offer users the ability to purchase flowers from Leong says users can expect to see a lot more of such services on the company's WAP portal within the next quarter.

Naturally, WAP portal operators aren't holding their breath, waiting for mobile commerce to contribute significantly to their revenue streams. Not just yet, anyway. "We don't expect mobile commerce to take off significantly in the next 12-18 months," says Leong. "But when that time comes, I believe it will form a bigger portion of our total revenue."

Lim however doesn't think so. He believes it will take a longer time before mobile commerce will really take off. "It's really a matter of changing the mindset of the people," he argues. "Maybe in five or six years, more people will be prepared to make a purchase effortlessly via WAP. At the moment we are in a transition period."

Like any other form of e-commerce, the payment issue is critical. Currently, users are provided with several alternatives to pay for their purchases. For instance, users of Maxis' WAP services can order flowers from but no credit card details need to be revealed. Instead, users are asked to key in their phone number. Once the order is confirmed, the merchant will place a call to the number that was keyed in and details such as delivery arrangements and payment options will be finalized with the customer.

Obviously, there are pros and cons for such an arrangement. The benefit is that users need not provide credit card details over WAP, thus providing a certain sense of security for users. On the other hand, having the merchant call customers to confirm the order and ask for credit card details somewhat defeats the purpose of e-commerce.

Alternative billing possible

According to a company representative from, the current arrangement is only an interim measure. As the payment gateway and related applications are continually developed, users will eventually have the ability to provide credit card details over a secure network as well as provide information for delivery options via WAP.

Another method users can reveal their credit card details over WAP is to have the data stored online on a server operated by the WAP service provider. This way, users would not have to key in their credit card details each time a transaction is made. Instead, once a particular transaction is confirmed, the necessary card details that are encrypted using WTLS and stored on a secure server, will be used to authenticate and verify payment to the relevant merchant. is currently testing out such a system to gauge customer acceptance.

Yet another alternative being touted to handle payment for mobile commerce is the use of a unified billing system. The idea is that since telcos will be charging the connectivity cost to WAP sites, users can then add on their purchases to the access fee or tagged onto their monthly phone bill.

Leong agrees that from a consumer viewpoint, unified billing is an attractive proposition. But he warns that merchants must first be comfortable having a third party handle the collection of payments.There is also the question of whether the telco is prepared to offer a credit line since users would only settle their phone bills at the end of each month.

"In mobile commerce there are two elements. The first element is the settlement part and that's essentially getting the telco to provide a credit line," Leong explains. "The second part is the security aspect because you need to have a secure gateway before people are reassured."

Security concerns

Security is a huge concern in this respect because the WAP gateway is essentially a Http-to-WAP converter or a protocol translator. Internet devices like PCs communicate using Http, but such protocols are not suitable for mobile phones because Http protocols are too complex and requires more processing power. Anyway the mobile phone has limited processing power to handle Http. Hence, a secure gateway is required to ensure that the password and credit card numbers do not fall into the hands of a third party while in transit from a WAP gateway to a Http gateway.

Although the password and credit card numbers are encrypted using WTLS on a WAP gateway, it will have to be decrypted once it reaches a Http gateway before being encrypted again using either SSL or SET. So, there is a moment in time whereby the customer data is not encrypted. This is a concern if different parties own the WAP gateway and Http gateway.

Lim explains that apart from the issue of fraud, there is also the question of whether telcos have the necessary manpower to handle and authenticate transactions of this nature under a unified billing system.

"My suggestion for settlement issues would be to look at the possibility of integration with banks," says Lim. "If you can do that, then any purchases can be immediately deducted from the user's bank account thus eliminating the need to provide credit card details."

For mobile commerce to succeed, merchants and mobile Internet service providers will need to work closely to iron out any prevailing issues faced by users. While convenience is the selling point for mobile commerce, the ease of payment and mindset of consumers remain as the real challenges.