MAKERERE UNIVERSITY BUSINESS SCHOOL

FACULTY OF COMPUTING AND MANAGEMENT SCIENCE

DEPARTMENT OF BUSINESS COMPUTING
E-BUSINESS AND WEB DESIGN
BBA II
SEMESTER II, 2018/ 2019

TOPIC THREE: M-COMMERCE (REVISED)

 Introduction to M-Business and M-Commerce
 Features of M-commerce
 Mobile Payment Models (Additive and Transformational)
 Key drivers and challenges facing Mobile Payments

3.0 Introduction
Traditional commerce is regarded as the buying and selling of commodities on a large scale,
between different places or communities. This type of commerce has been with us for a very
long time.
However, advances in the banking system and the development of a new knowledge society
based on information technology has led to the emergence of a new type of commerce known
today as electronic or e-commerce, defined by the US Census Bureau as “any business
transaction whose price or essential terms were negotiated over an online system such as an
Internet, Extranet, Electronic Data Interchange network, or Electronic Mail System.”
Today, e-commerce has evolved into a set of technologies, applications, and business processes
that link business, consumers, and communities.

A subset of electronic commerce that has evolved over the years is mobile or m-commerce,
defined by Tiwari and Buse as “any transaction, involving the transfer of ownership or rights to
use goods and services, which is initiated and/or completed by using mobile access to computer-
mediated networks with the help of an electronic device.”

J.P. Morgan views it as “Business-to-consumer transactions conducted from a mobile device.”

Generally, it is regarded as any transaction with monetary value that is conducted via a mobile
telecommunications network.

The technology of using the mobile phone to purchase goods or services has been around for
quite some time. In one way or the other, most of us have made use of m-commerce without
formally acknowledging or according it that status.
For example, we have used our mobile phones to purchase airline tickets, ordered food from a
restaurant, made a booking at a hotel, transferred money from one account to the other, etc.

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Mobile is a great enabler for commerce in Africa. In Uganda alone, close to 23 million people
are connected to the mobile telecommunications network (Uganda Communications
Commission, 2017), transacting different kinds of business on a daily basis. The increase in
mobile penetration rates means that more and more customers are checking out and paying for
orders directly from their mobile phones. This presents a shifting trend, where previously, mobile
would mainly be used during the research stage of a purchase, with customers then moving to a
brick and mortar outlet or desktop to complete the purchase.

Mobile commerce is a win-win for both the customer and the retailer. For the customer, it brings
a new level of convenience, and they are now free to shop on the go, anytime, anywhere. For the
retailer, it allows for easy personalisation of offers and instant customer experience (CX) tactics.

Mobile Commerce, or m-Commerce, is about the explosion of applications and services that are
becoming accessible from Internet-enabled mobile devices. It involves new technologies,
services and business models. It is quite different from traditional e-Commerce. Mobile phones
impose very different constraints than desktop computers. But they also open the door to a slew
of new applications and services. They follow you wherever you go, making it possible to look
for a nearby restaurant, stay in touch with colleagues, or pay for items at a store.

As the Internet finds its way into our purses or shirt pockets, the devices we use to access it are
becoming more personal too. Already today, mobile phones know the phone numbers of our
friends and colleagues. They are starting to track our location. Tomorrow, they will replace our
wallets and credit cards. One day, they may very well turn into intelligent assistants capable of
anticipating many of our wishes and needs, such as automatically arranging for taxis to come and
pick us up after business meetings or providing us with summaries of relevant news and
messages left by colleagues. But, for all these changes to happen, key issues of interoperability,
usability, security, and privacy still need to be addressed.

Buying and selling products and services through mobile devices are the new trend. A housewife
can purchase her kitchen appliances from the comfort of her living room, a busy person can
order lunch from office, one can use mobile platforms to sell goods and services − all with a few
clicks.

M-commerce Opens businesses to global trade

There is the emergence of a new trend – the accidental exporter. A manufacturer of bespoke
menswear in South Africa, for example, is suddenly receiving orders from a customer in
Australia who has come across their internet page. Overnight, their business has gone global.

Contrary to what many retailers think, cross-border shipping is actually simple and retailers in
sub-Saharan Africa are perfectly positioned to take advantage of international opportunities.
‘Brand Africa’ is something that has increased exponentially in popularity in recent years which
provides great opportunity for businesses on the continent. It’s time for retailers to remove the
boundaries and open up their business to seamless international trade.

In the m-commerce value chain, service delivery is of utmost importance. More often than not,

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your delivery partner is the only party with direct, personal contact with your customer, so
they’re essentially an extension of your business. With no barriers to entry in m-commerce,
competition is fierce, so you need to ensure that you take every opportunity to delight your
customer, just as importantly, at the end of the transaction stage – at delivery.

M-commerce and international customers

M-commerce allows the pursuance of international customers. An international m-commerce

strategy, is a possibility; it’s not too difficult to manage and deliver products and services around
the globe.

Evidence shows that international customers will spend significantly more than local ones. So
even if the international traffic to a company’s website is small, it can be worth a lot for limited
effort. There are free online tools available which will provide an indication of international
traffic on a website – this will give an idea of which countries to focus efforts on.
Customers in many markets are also becoming more discerning, citing product availability and
trust, as well as attractive offers, as the motivating factors for shopping with overseas online
retailers.

There is no risk in offering customers express delivery options. Customers want choice, not only
in their product selection, but also when and how they receive it. In our experience, customers
will be willing to pay a fair price for a faster more efficient service.

It has been found that that basket values often increases with the introduction of international
express shipping. Customers tend to buy more to justify the premium shipping costs.

Boosting intra-Africa trade

Intra-Africa trade is also something that shouldn’t be ignored. Regional integration has
increasingly become paramount in development agenda especially in Africa; and the mobile
phone offers a seamless means of integrating markets without the need to deal with traditional
trade impediments like Tariff and Non Tariff Barriers (NTBs) Home to one of the fastest
growing middle classes in the world, Africa is a captive market, filled with consumers who are
looking for variety and easy access to goods. It’s also widely reported that Africa is the fastest
growing mobile market, so businesses should be looking for opportunities to connect. There are
also a number of trade blocs (like the East African Community, EA Customs Union, and EA
Common Market, and the South African Development Cooperation) in place to boost Intra-
Africa trade, which make products more affordable for buyers.

There are a wide variety of off-the-shelf solutions (such as payment providers and programs that
localise a website’s check-out experience for the visitor), helping retailers to adapt their offering
to the digital world and to transact with customers in foreign markets.

Global logistics partners can provide support in identifying the right trade-off between
centralised and local warehousing and fulfillment, while fast, reliable and flexible delivery
options can be an important tool in turning speculative interest into long-term customer loyalty.

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3.1 M-Business, M- Commerce, M-wallet Definitions
Mobile Business is often referred to as “M-Business” or “mBusiness”. Mobile Business is often
described as an extension of the traditional Electronic Business to wireless devices or as an
additional channel for it.
Kalakota and Robinson (2002) claimed that m-business should combine Internet, wireless
technologies, and e-business indicating that m-business includes aspects of information, services,
and products with mobile devices on wireless network infrastructures.

What is M-Commerce? Mobile commerce or simply M-Commerce means engaging users in a

buy or sell process via a mobile device. For instance, when someone buys an Android app or an
iPhone app, that person is engaged in m-commerce. There are a number of content assets that can
be bought and sold via a mobile device such as games, applications, ringtones, subscriptions etc.

Mobile Commerce is an extension of e-commerce conducted over wireless devices such as

smartphones or tablets. It presents a new business model, that provides more ubiquity and
accessibility to the users, and MC can allow the consumer to conduct online transactions at
“anytime” and “anywhere” (Yan, 2017).

Mobile Commerce is often referred to as “M-Commerce” or “mCommerce”. Mobile Commerce

is also known as Mobile Electronic Commerce. Mobile Commerce transactions are basically
electronic transactions conducted using a mobile terminal and a wireless network. Mobile
terminals include all portable devices such as mobile telephones and PDAs, as well as devices
“mounted in the vehicles that are capable of accessing wireless networks” and perform Mobile
Commerce transactions. A simple definition of Mobile Commerce describes it as “any
transaction with a monetary value that is conducted via a mobile telecommunications network”
“M-Commerce is the buying and selling of goods and services, using wireless hand-held devices
such as mobile telephones.” [UNCTAD, 2002, p. 89]

Difference between “Electronic” and “Mobile” Aspects

To understand the difference between Electronic- and Mobile Commerce or between Electronic-
and Mobile Business it is essential to understand the similarities and differences between the
terms “electronic” and “mobile”. The adjective “electronic”, used within the specific contexts of
“Electronic Business” or “Electronic Commerce”, signifies an “anytime access” to business
processes managed by computer-mediated networks. Furthermore, the access to such networks
is, in this case, stationary. The services are, therefore, not available independent of the
geographic location.
The adjective “mobile”, used within the specific contexts of “Mobile Commerce” or “Mobile
Business”, signifies an “anytime and anywhere access” to business processes managed by
computer-mediated networks. The access takes place using mobile communication networks,
making the availment of these services independent of the geographic location of the user.

M-Commerce versus E-Commerce

Frequently m-commerce is represented as a "subset of all e-commerce" thus implying that any e-
commerce site could and should be made available from a wireless device. We believe that such

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conclusions are misleading. M-commerce should be recognized as a unique business opportunity
with its own unique characteristics and functions, not just an extension of an organization’s
Internet-based e-commerce channel. Of course there are similarities between e-commerce and m-
commerce from being able to purchase a product or service in a "virtual" vs. a build and mortar
environment.

Technology E-Commerce M-Commerce

Device PC I-Phones, Smartphones, PDAs,

Android OS (Google Inc.) ...

Bada (Samsung Electronics) ...
BlackBerry OS (Research In Motion) ...
Operating Windows, Unix, iPhone OS / iOS (Apple) ...
System Linux, Mac OS MeeGo OS (Nokia and Intel) ...
Palm OS (Garnet OS) ...
Symbian OS (Nokia) ...
webOS (Palm/HP)

Presentation
HTML HTML, CSS mobile, XHTML mobile,SVG Tiny, HTML 5
Standards

Microsoft Internet
Google's flagship browser
Explorer,
Chrome (iOS, Android) ,Firefox(iOS, Android), Flynx,
Browser Netscape,
Opera,(Android), Dolphin, Mercury (iOS, Android) and
Chrome, Safari,
many others
Mozilla Firefox

Bearer TCP/IP & Fixed GSM, GSM/GPRS, TDMA, CDMA, CDPD, paging
Networks Wireline Internet networks

Advances in wireless communication technologies are basically extending the net to various
portable devices and appliances such as cellular phones and pagers and palmtop computers.
What's more, the content possibly delivered to the handset, laptop, or palmtop computers is
crippled for low bandwidth, low battery life, and high latency issues, network companies have
more incentive to provide end-users with personalized and location dependent content.
Competition has resulted in the wireless infrastructure becoming cheaper. It is becoming faster
than wire and easier to use as well. With that in mind, it should be inferred that cellular
telephony is on its way to becoming a commodity. Portals and content providers as well as phone
operators are taking advantage of a potentially huge market. The wireless revolution will be
driven in the short term by the "anytime anywhere access."

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 Communication Statistics in Uganda 2011-2015
Table 3.7 A: 2011 2012 2013 2014 2015 Annual
Internet Percentage
subscription increase
s, 2011-2015
Users and
subscribers
Fixed 88,786 96,000 100,900 113,400 130,200 14.8
Internet
Subscribers

Mobile 977,500 2,692,705 3,625,559 5,694,930 7,349,540 29.1

wireless
internet
subscriptions
Estimated 4,800 6,200 7,314 10,813 13,842 28.0
internet users
('000)
Internet 3.2 8.2 20.7 29.5 39.7 34.6
penetration

3.2 The Features of Mobile Commerce

Mobile Commerce is characterised by some unique features that equip it with certain advantages
against conventional forms of commercial transactions, including Electronic Commerce.
1. Ubiquity: Ubiquity means that the user can avail of services and carry out transactions largely
independent of his current geographic location (“anywhere” feature).
2. Immediacy: Closely related to the feature of ubiquity is the possibility of real-time availment
of services (“anytime” feature). This feature is particularly attractive for services that are time-
critical and demand a fast reaction, e.g. stock market information for a broker. Additionally, the
consumer can buy goods and services, as and when he feels the need.
3. Localisation: Positioning technologies, such as the Global Positioning System (GPS), allow
companies to offer goods and services to the user specific to his current location. Location based
services can be, thus, offered to meet consumers’ needs and wishes for localised content and
services.
4. Instant connectivity: Ever since the introduction of the General Packet Radio Service (GPRS)
mobile devices are constantly “online”, i.e. in touch with the network (“always-on” feature). This
feature brings convenience to the user, as time-consuming dial-up or boot processes are not
necessary.
5. Pro-active functionality: Mobile Commerce opens, by the virtue of its ability to be immediate,
local and personal, new avenues for pushmarketing, such as content- and product offers. Services
like “Opt-in advertising” can be offered, so that a user may choose the products, services and
companies which he wants to be kept informed about. The Short Message Service (SMS) can be
used to send brief text messages to consumers informing them of relevant local offerings that
best suit their needs.

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6. Simple authentication procedure: Mobile telecommunication devices function with an
electronic chip called Subscriber Identity Module (SIM). The SIM is registered with the network
operator and the owner is thus unambiguously identifiable. The clear identification of the user in
combination with an individual Personal Identification Number (PIN) makes any further time-
consuming, complicated and potentially inefficient authentication process redundant.
These unique features of Mobile Commerce can provide the user with some concrete and
specific advantages.

3.3. Mobile Payment Models (Additive and Transformational)

Mobile payments are payments initiated through a mobile device, could be via SMS, WAP, or a
device-specific application.

Additive models are those in which the mobile phone is merely another channel to an existing
bank account. Additive approaches, primarily target existing banked customers, and which offer
the mobile channel as an additional channel, alongside or as part of others (such as internet).
Transformational models are those in which the financial product linked to the use of the phone
is targeted at the unbanked, who are largely low income people. Transformational approaches,
intentionally reach out to markets beyond the existing banked groups, through a product offering
which meets the known needs of the unbanked groups. Unbanked people, by far the majority in
most developing countries, are in fact a heterogeneous group, including people who may have
adequate incomes but from an informal source, as well as poor, rural dwellers.

Mobile banking has the potential to be transformational because:

 It uses existing mobile communications infrastructure which already reaches unbanked
people
 It may be driven by new players, such as telecoms, with different target markets from
traditional banks
 It may harness the power of new distribution networks for cash transactions, such as
airtime merchants, beyond the conventional merchant POS or ATM networks of banks.
 It may be cheaper than conventional banking, if the offering is competitive

3.5 Mobile Money Transfer (MMT) and Mobile Banking

The definition of “mobile money” varies across the industry as it covers a wide scope of
overlapping applications. In general, mobile money is a term describing the services that allow
electronic money transactions over a mobile phone. It is also referred to as mobile financial

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services, mobile wallet and mobile payment. Mobile money is a broader term that includes all
types of monetary transactions executed via mobile phones.
A wide range of mobile money applications have developed throughout the years. Some major
categories include:
1. Mobile banking (requires a bank account) is the use of a mobile phone to remotely access a
bank account, primarily for account balance checkup and bill payment services
2. Mobile money transfer (person to person) is a peer-to-peer application making use of a
mobile phone to send money to family or friends, primarily across international borders
3. Mobile commerce /payment (person to business) is the use of a mobile phone to perform
financial transactions for purchases or sales, either remotely or on-site, retrieve promotion
information or coupons, and deliver gift items.

3.5.1 Mobile Banking Models (Bank focused, Bank led and Network Operator led)
Models of branchless banking can be classified into three broad categories - Bank Focused,
Bank-Led and Non Bank-Led.
 Bank-focused model
The bank-focused model emerges when a traditional bank uses non-traditional low-cost
delivery channels to provide banking services to its existing customers. Examples range
from use of automatic teller machines (ATMs) to internet banking or mobile phone
banking to provide certain limited banking services to banks’ customers. This model is
additive in nature and may be seen as a modest extension of conventional branch-based
banking.
 Bank-led model
The bank-led model offers a distinct alternative to conventional branch-based banking in
that customer conducts financial transactions at a whole range of retail agents (or through
mobile phone) instead of at bank branches or through bank employees. This model
promises the potential to substantially increase the financial services outreach by using a
different delivery channel (retailers/ mobile phones), a different trade partner (Telco /
Chain Store) having experience and target market distinct from traditional banks, and
may be significantly cheaper than the bank based alternatives. In this model customer
account relationship rests with the bank. Bank-led models prevail in Africa as major
banks look at mobile banking as a competitive necessity to expand their service reach.
For example, First National Bank in South Africa has rolled out mobile banking since
2002. The bank developed the applications in-house while it also worked with a third-
party provider to deploy a SMS messaging gateway. The service, accessible from all
mobile networks, has moved from a “first to market” product to a significant transaction
channel, with millions of transactions worth hundreds of millions of rand per month
reported by the bank.
 Non Bank-led model (Operator led)
The non-bank-led model is where a bank does not come into the picture (except possibly
as a safe-keeper of surplus funds) and the non-bank (e.g. Telco) performs all the
functions. Operators are in the best position to monetize transactions from mobile money
services as one of the value-added service offerings. A representative case is the M-
PESA money transfer service, developed by Vodafone in Kenya. The operator,
Safaricom, positions itself as a financial service provider under its own brand, although it

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 does not manage the financial side of the service. It partners with a local bank, which
manages the M-PESA account and is legally responsible for the financial liabilities.

Task: Explore the MomoPay system by MTN Uganda and identify the services provided
there, plus the advantages of using the system.

3.6 Use of M-commerce applications in various industries:

1. Mobile games may do for the wireless Internet what e-mail did for the wired one. Mobile
gaming is expected to generate significant revenue for the wireless phone industry. Mobile
games are the wireless Internet’s killer app, and that 3G handsets with color displays are its killer
devices. Mobile gamming has particularly become a popular trend among sports enthusiasts who
conduct mobile sports betting. With companies like BetWay Uganda and BetPower, one can
place odds on different games online, using their phones, and have their wins (if they win)
delivered on their mobile money account.
2. Financial Inclusion: Mobile financial services strategies will open a significant channel
through which organisations can add value to service offerings and differentiate from
competitors. In Uganda, there are about 3milllion bank accounts, compared to a population of 40
million people. This means that there is a huge percentage of people who are unbanked
(financially excluded). Considering the fact that the 3million accounts are severally operated,
with some individuals having more than one account in different banks, the picture is grimmer
than reported. Such individuals cannot access credit from the formal financial sector, and it is
also difficult for the Central Bank and government to plan for them. The Mobile Money Transfer
(MMT) economy has been identified by financial sector players as one of the leading tools of
financial inclusion (Kasekende, 2016). MMT is now offering a number of commercial products
that have included more people in the financial sector, like mobile savings, mobile credit
(Wewole, Airtel’s Beerako and MTN’s Extra Time for borrowing airtime), Mobile Payments
(MomoPay), Mobile Banking (e.g. Mobile Agent Banking in all leading Banks, Equi-Mobile for
Equity Bank, Flexi Pay in Stanbic Bank and Cente Mobile with Centenary Bank), Mobile
Payments for Utility Bills (Umeme TouchPay, NWSC payments, mobile solar payment services
on both MTN and Airtel, including Ready Pay, d-Light, Solar Now), mobile information
services, buying FMCGS in supermarkets, gas stations, restaurants, and registered businesses on
MomoPay and Airtel Money, schools fees (using the Mobile School Pay system), among other
transactions. These have improved how the banking sector works with hitherto unbanked people.
3. One of the major problems with old-fashioned paper coupons is that people forget to bring
them. The way out is e-couponing. Short-lived coupons meant to fill seats that will otherwise go
unused. But Coupon retrieval is also not as streamlined as it could be. Although the new system
may mean no more paper coupons littering up the bottom of a purse, it also means scrolling
through messages which are stored in date order on most systems, one at a time, to find the "buy
one get one free" offer. "We have no control over how [devices] present the messages that are
received," says Dusig.
4. Ring tone in the mobile phone : Experts point out that early m-commerce efforts have not
been a total bust. several cell phone makers and wireless providers already are making money by
selling a variety of customized ring tones. "The most successful m-commerce services to date are
downloadable ring tones. "This makes sense because ring tones are digital, not physical goods."
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"The ring tone is tied to your phone, so it is logical for the cost to be on your phone bill. "They
are delivered via SMS, not the Internet."
5. Travelocity: "You're obviously mobile when you're traveling. Travelocity alerts customers
when a flight is delayed. And it lets them book or change a flight, car or hotel reservation. Few
are buying airline tickets: Keying in departures, arrivals and cities can be tough. But a growing
number are making simpler rental-car and hotel reservations.

With the introduction of 3G technologies, many M-commerce applications can be

launched, some of them are:
 Mobile shopping. With mobile terminal at hand, customer can buy anything at anywhere
he wants.
 Mobile Ticketing. Customer can purchase or reserve ticket for cinema, train, airplane
without going to booking office.
 Mobile Reservation. Customer is able to make remote reservations for restaurants and
hotels that suit personal taste and relevant criteria.
 Mobile Auction. Gaining benefit of mobile terminal, bidder can participate in auction
action while he is not in front of it.
 Mobile Advertising. Because of personalization feature of mobile telecommunication, it is
more than conventional advertisement. It is a customer awareness advertisement.
 Mobile Gaming. Customer can play multi-player games through wireless network.
 Mobile Video. Customer can select any movie he likes then enjoys it.
 Mobile Music. The mobile terminal can play a role as customer’s portable music player.
 Mobile Betting. Customer can make a bet on his favorite horse in a horse racing while
betting on his favorite football team in a football match while doing other things.
 Mobile information provisioning. It can provide customer his interested information like
sport news, political news.
Thus as m-commerce applications and wireless devices are evolving rapidly, one will take
forward the other one towards empowering innovation, versatility and power in them. There are
a number of business opportunities and grand challenges of bringing forth viable and robust
wireless technologies ahead for fully realizing the enormous strength of m-commerce in this
Internet era and thereby meeting both the basic requirements and advanced expectations of
mobile users and providers. But there are many limitations in the technologies that Once its
relevant technologies get matured, widely available and competent, the host of portable devices
will be ready to handle the bigger transactional activities not envisioned so far successfully apart
from these minor activities.

3.7 Advantages of M-commerce

 Completely Customization: the service provider has access to data about the user’s
preferences and status which facilitates better, personalized service. In addition, the
service provider can be constantly updated about the current status and location of the
customer so that the service can be customized; for instance, a request for a certain
product can be met with the nearest possible source.
 More Convenience: the small size and ease of use of mobile receivers, coupled with
freedom from problems caused by infrastructure, makes for a higher degree of user
convenience.

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  Expanded reach: the presence of a wireless link between the customer and the service
provider eliminates the need for a fixed interface such as a computer for communication.
Providers of e-commerce services can therefore reach customers over a longer range,
creating the opportunity for new value added services.
 Quicker access: connecting through a mobile is faster than dial-up connections using
wire line modems.
 Electronic wallet: Analysts believe that easy mobile payment is one of the main
prerequisites for the success of m-commerce, When the mobile phone can function as an
electronic wallet for mobile payments, including micropayments, application developers
and service providers will find it attractive to introduce new mobile communication
services to the market.
 Time Sensitivity: Access to real-time information such as a stock quote that can be acted
upon immediately or a sale at a local boutique.

3.7.2 Limitations of m-commerce:

 Lack of Standards:
 With a host of device operating systems and platforms, middleware solutions and
networks, make application development for the wireless Internet a formidable task,
versus the level operating environment of the wired Web.
 Even though efforts are underway to standardize the operating environment, especially
in North America, where standardization is most lacking, companies will have to work
within this scattered environment, at least in the short –term.
 Device Constraints:
 Weak processors
 Limited memory
 Tiny screens, poor resolutions
 Poor data entry

 WAP: While WAP has been a very important in the evolution of the wireless Internet and
in turn m-commerce, there are problems/difficulties with the standard, such as the lack of
WAP-enabled devices and security issues.
 Networks: Current data speeds between 9.6-14.4 kbps are too, expensive vs fixed.
 Services: M-commerce has flopped in the consumer arena -- or at least has failed to live
up to the hype. There may be compelling reasons for business users to adopt transaction-
based services offered on wireless devices, though -- but the mobile commerce tools used
by enterprises are nothing like the services pitched to consumers.
 The Unlike Promises: Proponents have been promising a mobile-commerce surge for
years, yet consumers show little if any interest. That could be because development of
the concept has not budged since its so-called early stages. Until buying something on a
wireless device progresses from being different to being better, the "m" will likely stand
for "maybe not."
 Technology Issues Hindering Mobile Commerce: Device quality issues persist along
with turbulence in the network protocol arena (CDMA,GSM/GPRS).There's no shortage
of ideas - content to sell, transactions to facilitate -- but there is still a shortage of
bandwidth. If you cannot get network access, if you cannot get the coverage, who cares
what kinds of applications your carrier says you should be able to implement. Network

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 protocols likewise remains a question mark, with different carriers pursuing divergent
next-generation technologies. The end-user will not care [which network protocol a
carrier chooses]. How the carriers support it and market it and bill for it - those will be the
key questions."

 Regulations and Taxation: In May 2018, Government of Uganda introduced a tax on

Mobile Money Transactions (1% on all transactions, which was later reduced to 0.5% on
withdrawals). This, together with a 200Ugx tax on social media applications (categorized
as “Over the Top” services), has hugely affected Mobile Commerce. MTN Uganda and
other MNOs for instance reported to have lost over Ugx. 672billion in only two weeks of
introducing these taxes (Mugabi, 2018). Users opted to adopt Virtual Private Networks
(VPNs) which by pass official internet connectivity routes. This lead to subversion of
payment of some services, reduction in the usage of mobile data and loss of revenues
(Whitehead, 2018; NilePost, 2018). Many MMT dealers exited the business. Such
regulations, meant to increase revenue generation by governments in Africa, only end up
hurting m-Commerce growth and curtailing financial inclusion (since most unbanked
people had joined the formal financial sector using their mobile accounts).

3.7.3 Key Requirements of M-Commerce Systems

 Device Independence . To be successful, M-Commerce systems typically need to run
on a variety of mobile device platforms. Examples include conventional phones (WAP,
SMS), Smart Phones (Running the Java MIDP platform), PDAs (such as the Palm),
Communicators (Such as Symbian ìQuartzî and ìCrystalî devices). A browser-based
architecture such as WAP might be sufficient for some m-commerce solutions, but
others will require the deployment of a mobile application (for example a trading user
interface) onto the mobile device.
 Bearer Independence. This also means that different wireless bearers need to be
supported: WAP, SMS, GPRS, and possibly UMTS.
 Security. Identification, authentication (via the Security Authority), access control, and
end-to-end data encryption must be supported for any m-commerce solution to be
acceptable.
 Reliability. What happens if a device has weak or intermittent network coverage while
an m-commerce purchase is performed? Guaranteed, exactly-once executionof m-
commerce transaction is another important requirement, especially when stocks or other
expensive items are purchased from a mobile device. This feature is not supported by
WAP, typically the deployment of a special piece of software on the mobile device is
required.
 Notifications. Another requirement is being able to send notifications to the customer to
inform him/her that the merchandise has been shipped, that the supplier is out of stock, or
that the credit card could not be charged. Such notifications typically occur after the user
has issued a purchase transaction.
3.8 Key drivers for Mobile Payments
1. No bank account is required for MMT enabling many to receive funds
• Only one out of three people in East Africa has a bank account, for reasons of uncertain
income, income which is too low or lack of collateral.

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• In addition, the network of bank branches and ATMs is limited largely to urban centres as the
banking infrastructure cannot accommodate the widespread nature of the population. This could
pose a problem if people receive funds but have no access to a bank.
• MMT does not require users to have a bank account as money can be converted into airtime or
‘virtual’ money that is stored in the SIM card and used to and receive money to and from others.
2. Cheap transfer costs and no subscription fees an attractive feature of MMT
• The transfer costs involved in MMT are low in comparison to traditional banks and informal
financial services.
• The inexpensive service enables people without regular income, or who fall into a very low
income bracket, to avoid bank charges and send or receive money free-of-cost.
3. Large amount of remittances allow people to transfer funds to others effortlessly
• MMT enables people working in other countries to send money home to friends or family with
relatively little effort, when compared to normal banking processes.
3.8.1 Factors that determine adoption of M-Commerce

Users adoption and usage of these mobile internet systems is dependent on a number of factors
including technical ones, like network reliability, network coverage, possession of internet
enabled handsets, speed of connectivity, network robustness at peak times, bandwidth provided
(Uganda Communication Commission, 2018; Xu, 2015), user-related demographics like age
(younger users are more likely to adopt them), gender (women and men use internet services
differently), education level, where more educated subscribers are more likely to use them
(Bednarowska and Jędruszek, 2012); economic factors like income levels, cost of service,
service quality, service levels, customer help provided, prices of competitors, number of service
providers, product ranges provided by a particular MNO (Chen, 2015); political, policy, and
regularity factors like government policy towards MNOs, taxation of mobile internet platforms
(Greenstein and Mazzeo 2006), among other factors.

3.8.2 Global trends: Access to the Internet, Mobile Internet and Mobile Commerce
As the world continues to be inter-linked via wired, wireless and intelligent communication
channels, access to internet continues to swell day by day. Indeed there are more people online
today than there were 20 years ago. The International Telecommunication Union estimated in
June 2017, that about 3.2 billion people access the internet (ITU, 2017) on a daily basis to
perform a wide range of activities. Statistica (2108) indicates that the number may have actually
surpassed 4.1billion in 2018, with China, India, and the USA having the largest number of users.
These figures represent over half of the world’s population (which stands at 7.1billion people
today (United Nations Population Fund, 2018), and implies that the internet as a technology
continues to be one of the most important innovations of this century, demisting communication
and information exchange among communities and individuals all over the world. Of the
3.2billion digitally active people, around 89milllion are in developing countries in Africa, Asia
and the generally the Global South.

According to Xu (2015) internet subscription using telecommunication networks can be

subdivided into two major platforms or categories, that is, fixed line and mobile access points
(mobile broad band). Fixed line interfaces provide internet via dedicated service dial-up lines
while mobile service provided ubiquitous access to a wider range of subscribers. The advantage

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with fixed line has consistently been predictable service quality and network reliability, while the
advantage of mobile access points (mobile broadband) is connectivity to a wider spectrum of
clients and flexibility with use. With the growth of the internet and mobile networks, more
people are connected to mobile internet than fixed lines, and it is not surprising that consumers
consistently behave differently on these two different networks (Ghose, Goldfarb and Han 2013).
Mobile Broadband users who are connected to MNOs and buy internet bundles on a regular basis
in the developing world represented 21% of all people connected to the internet in 2017 (ITU,
2017). These mobile users enjoy the freedom and flexibility of using their phones to access the
internet without the need of a dedicated cable line, at the comfort of their changing locations and
at affordable rates

Mobile broadband internet provides more service offers and choice to clients who select the
amount of data they ca. n consume in a given period of time (which is typically in minutes,
hours, days or even months). With the proliferation of social media applications on smart phones
and i-phones, mobile internet and unlimited bundles, for example providing connectivity to
WhatsApp, Twitter, Snapchat, Instagram, & Facebook (WTSIF) have been introduced. These
internet bundle plans ranging from as little as 20MB up to 8GB) can also be bought for only
these applications, thus providing more access and ease to users. Companies like MTN Uganda
and Roke Telecom have also partnered with institutions like Universities and Social Clubs to
provide mobile internet hotspots (MTN Pulse and Rokespot) for young people in Africa.

Users adoption and usage of these mobile internet systems is dependent on a number of factors
including technical ones, like network reliability, network coverage, possession of internet
enabled handsets, speed of connectivity, network robustness at peak times, bandwidth provided
(Uganda Communication Commission, 2018; Xu, 2015), user-related demographics like age
(younger users are more likely to adopt them), gender (women and men use internet services
differently), education level, where more educated subscribers are more likely to use them
(Bednarowska and Jędruszek, 2012); economic factors like income levels, cost of service,
service quality, service levels, customer help provided, prices of competitors, number of service
providers, product ranges provided by a particular MNO (Chen, 2015); political, policy, and
regularity factors like government policy towards MNOs, taxation of mobile internet platforms
(Greenstein and Mazzeo 2006), among other factors.

3.8.3 The trend of Mobile Commerce in Africa

Africa is described as the world’s fastest-growing mobile phone market.
The exponential growth of mobile and other wireless technologies have propelled Africa
into the mobile revolution. With over 140 million mobile subscribers across the African
continent, and 1 in 10 Africans being a mobile phone subscriber, according to the International
Telecommunication Union’s (ITU) data, it is easier for the continent to move in the direction of
m-commerce.According to United Nations, Africa accounts for 14.2% of the global population,
but only 4.7% of all Internet users. Contrast this with mobile service on the continent. The major
services began around 2000. Today, the continent can boost of over 120 million mobile users,
according to ITU. This faster pace of mobile subscription will definitely boost the spread of m-
commerce in Africa.

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 Compared to other businesses, the entry or start-up cost into m-commerce is low. For example,
through mobile banking, a loan can be made available to a person interested in becoming an m-
commerce player.
No wonder, Vodafone and Safaricom, two mobile phone companies operating in Kenya have
been successful with their m-commerce payment service aimed at those at the base of the
pyramid, the unbanked. Over 1 million customers have signed up on to their M-PESA service.
Another advantage is that m-commerce does not need the Internet as a medium, but it does
require mobile data. It is therefore a cost-effective way of becoming connected to the knowledge
society.

 It is generally acknowledged that users of computers tend to be more literate than mobile
phone users. This means users of m-commerce do not need the high skills needed by users of e-
commerce. For example, there is no need for one to learn how to use the computer when engaged
in m-commerce.In spite of the widespread use of mobile phones on the continent, m-commerce
is still in its infancy in Africa. Fact is, it takes more than mere phone ownership and availability
to move in the direction of m-commerce.

There are a number of challenges that need to be addressed before Africa can be a world
player in m-commerce.
 Teledensity, the number of telephone lines per some unit of the population (often per 100
people); is below expectation. The ITU notes that mobile cellular subscribers in 10 of the 53
countries in Africa are more than 70% of total telephone subscribers. They note further that
32 countries have more prepaid mobile cellular subscribers than fixed line subscribers.
There is the need for the ratio to be improved for an effective m-commerce take off.
 Mobile phone operators need to move in the direction of providing value-added products
and services that will facilitate the use of m-commerce. For example, more prepaid services
on the phone will facilitate the use of m-commerce.
 Also, mobile marketing is increasingly being used by corporations to market their products.
While this may be regarded as mobile spam, sometimes, it provides valuable information.
Currently, the area of mobile marketing is a very grey area.
 The movement from 3G to 4G and beyond networks will help facilitate m-commerce. 3G
networks, for example, will support high speed applications, allow subscribers to access
new services, and expand the capacity of the network. Use of m-commerce requires
collaboration among various players, mobile service providers, financial institutions,
product developers, etc. This is not easy to achieve.

M-commerce will certainly change the way Africa does business, due to its numerous
business opportunities on the continent. Africa needs to take measures to address the
challenges to enable its widespread application.

The Ugandan Case

The Uganda Communications Commission (2017) estimated the number of mobile phone users
(subscribers) to be around 23million people. There are 7 MNOs registered in Uganda, including
MTN Uganda, Airtel Uganda (and now partnering with K2 Uganda), Africel, Uganda Telecom,
Roke Telecom, Smile Telecom, and Sure Telecom. By 2015, MTN Uganda had the largest
market share of around 10,050,782 subscribers, representing 51.3% followed by Airtel Uganda.

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Among these subscribers, a considerable number buys mobile and other forms of internet
bundles from MNOs. The UCC (2017) indicates that the number of internet subscribers and
users increased by 68.4% and 10.1% respectively, representing a 45.4% internet penetration for
Uganda as of June 2017. Mobile data bundles and internet communication has continued to
present the new frontier for competition and market leadership in the country.
3.9 Terminologies Used
Mobile Operators are telephone companies that provide telecommunications services. They
may or may not have their own network infrastructure.
GSM. GSM stands for Global System for Mobiles. This is a word-wide standard for digital
cellular telephony, or as most people know them Digital Mobile Telephones. GSM is a published
standard by ETSI(European Telecommunications Standards Institute).
SMS. SMS stands for Short Message Service. It is the ability to send and receive "Short
Messages" to and from GSM handsets. A "Short Message" can contain up to 160 characters in
one message, which is quite allot when you think about it, most messages are simply a call me
back, or pick up the parcel from here. The biggest problem with SMS is getting a screen big
enough on the mobile phone to be able to read them easily.
GPRS. GPRS (General Packet Radio Service) is a packet switched wireless protocol that offers
instant access to data networks. It will permit burst transmission speeds of up to 115 Kbit/s (or
theoretically even 171 Kbit/s) when it is completely rolled out. The real advantage of GPRS is
that it provides an “always on” connection (i.e. instant IP connectivity) between the mobile
terminal and the network but the actual capacity would be consumed only when data is actually
transmitted.
WAP . WAP (Wireless Application Protocol) is an open, global standard for mobile solutions,
including connecting mobile terminals to the Internet. WAP based technology permits the design
of interactive, real-time mobile services for smart-phones or communicators. WAP is
compatible with GSM 900, GSM 1800 and GSM 1900, CDMA and TDMA (Time Division
Multiple Access) wireless standards as well as the proposed 3G communication systems.
Location-Based Services: These include GPS Services and location-based notification services.
These services are mostly subscription based.

Mobile Ads: Mobile Ads is a fast growing business trend and includes targeting based on profile
preferences and geographic location of the user. Mobile campaign is becoming increasingly
popular for certain market segments, especially the segments related to entertainment.

3.10 Conclusion
With the growth of the mobile devices market and the rapid and sustained advancement in
mobile device technology, the demand for multimedia services along with multimedia content
has drastically increased. Most forms of multimedia, for example, games, videos, music and
other content are being ported to and/or designed for mobile devices. For all m-commerce
transactions carried out by using mobile devices, multiple issues related to copyrights,
distribution, etc. can arise and have to be addressed.

References

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Important Linkshttps://www.bizcommunity.com/Article/196/822/179724.html
http://www.ghanaiantimes.com.gh/trends-in-mobile-commerce-m-commerce-in-africa/
https://www.ucc.co.ug/files/downloadshttp://ictau.ug/
http://www.Statistica.Com/Statistics/
https://www.ubos.org/.../ubos/statistical_abstracts/

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