Is mobile e-commerce the future?

Ericsson and Visa think so, while a new Forrester report says content and services will be key to an 'm-commerce' future

Ericsson and Visa International have entered into a strategic relationship to drive mobile e-commerce, as a report suggests expanding possibilities for so-called "m-commerce".

Under a memorandum of understanding the two companies have agreed to develop secure payment solutions for purchasing goods over mobile networks. The partnership will work to drive open standards for wireless payment transactions.

The first major area of cooperation will be in developing a mobile payment solution using Ericsson's Bluetooth enabled wireless wallet. This will contain multiple smartcard readers and will communicate with a mobile handset via Bluetooth technology.

This could help in overcoming one of the major hurdles to e-commerce. At present smartcard enabled mobile e-commerce requires a dedicated handset incorporating a slot for the card. However, as Declan Lonegan, director of wireless service at Strategy Analytics, points out: "This raises the question of how you get the equipment into people's hands. If customers have to go out and purchase a new piece of equipment that is a barrier in itself."

Ericsson and Visa will also participate on standards committees, and cooperate on market testing of prototypes and payment solutions, joint business development activities, and the adoption of other secure payment solutions such as the SET Secure Electronic Transaction protocol, to a mobile environment.

Earlier this month Visa and MasterCard International agreed to work together on a common technical standard for smart cards. The standard will be for the servers that manage the transactions, enabling banks to support cards from the two companies on one system.

Partnerships such as that between Visa and Ericsson will be crucial in driving mobile e-commerce forward, according to a Forrester report published Wednesday. According to Forrester, wireless companies should not rely on new technologies to drive mobile e-commerce, or "m-commerce" as some analysts are beginning to call it, but should enhance their data services using current infrastructure and form partnerships to deliver compelling content to subscribers.

The report suggests that there is no market for the applications that 3G technology will allow, such as real-time video-conferencing or large multimedia downloads. The services that consumers will want to access over mobile phones, and will be willing to pay for, will be largely text-based content such as event information, travel updates and location-sensitive transactions.

"There's been a lot of hype about 3G, but this has come mainly from the vendor community," said senior Forrester analyst Mark Zohar. "Operators have been going at this the wrong way round. Consumers want thin, simple applications and those who take a bullet approach to 3G will be sorry."

Forrester predicts that it will be 2001 before "we see any real action" in the mobile e-commerce arena, and 2002 until it reaches mass market penetration. The key drivers will be the uptake of WAP phones, which Forrester expects to experience "significant" growth in Europe in the next two years, and an always on Internet such as UMTS.

Zohar hints that it is unlikely that smartcards will act as the main security enabler for mobile e-commerce, but instead sees server side solutions as more likely. "Carriers will be able to take advantage of their trusted relationships with subscribers and act as their billing and security intermediary," said Zohar. Mainly this is down to logistics, as consumers, having just upgraded to WAP phones, would be unwilling to upgrade again to a handset with smartcard capabilities.

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