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4/9/2010
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www.centris.com
Mobile Commerce from the Consumer’s Perspective
Evidence from the United States
Aniruddha Banerjee, CENTRIS
Paul Rappoport, Temple University
The Macroeconomics of Mobile Money
Conference Organized by
Columbia University April 2, 2010
Mobile Platform for Financial Transactions
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Facts and Trends
276+ million mobile phone subscribers in the US in mid-2009
(89% penetration rate) (1)
Nearly half of the phones have the ability to surf the net (2)
Nearly 10 million users of mobile banking in 2008, up from 1.1
million in 2007 (3)
Remote mobile payment market in North America was $5.8 billion
in 2008, expected to grow 10-fold by 2013 (4)
Globally, 600 million users of electronic wallet expected in 2010 (5)
Alternative payments, such as PayPal today accounting for 9% of
global and 15% of e-commerce transactions, growing rapidly (6)
1 CTIA Semi-Annual Wireless Industry Survey, 2009
2 Future of Wireless, Centris, 2009
3 TowerGroup, Mobile Banking, 2009
4 Juniper Research, 2009
5 Outlook for Mobile Wallets & Mobile Financial Services, Edgar, Dunn & Company, 2008
6 PayPal.com, 2008
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Use of the mobile phone (or other
capable wireless device) to make
or participate in financial and
commercial transactions
Use of the Internet (“going online”)
to make or participate in financial
and commercial transactions
E-Commerce M-Commerce
Definition of Key Terms
Financial/Commercial Transactions
Making purchases and shopping
Making bill (and other forms of) payments
Accessing and managing bank and other
financial accounts
Transferring funds
Managing investments
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4
Use survey data
Key questions
Use of mobile phones for m-commerce
Risks of using mobile phones for
m-commerce
Draw analogies from e-commerce
Evaluate m-commerce attitudes by
demographics
Identify consumer profiles of most and
least likely m-commerce adopters
Determine prospects for m-commerce
(use of mobile phones instead of
credit and debit cards, cash, or other
methods of payment for financial
transactions)
Willingness to engage in m-commerce
Readiness to engage in m-commerce
Perceived risks with m-commerce
Most likely target group for
m-commerce
Goals Investigative Strategy
Goals and Investigative Strategy of Study
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Centris Wireless Survey
2009 Internet panel
4,743 total respondents; 2,584 unique households
Questions on:
Household structure
Household inventory of mobile phone service plans, providers, and
equipment
Usage and satisfaction/switching behavior for mobile phone services
Inventory and usage of wireline, Internet, TV, and other
communications/entertainment services
Consumer preferences for advanced and prospective mobile phone
services
Mobile and electronic commerce
Survey Approach
Mobile Commerce: Setting the Stage
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Preferred payment methods
Online transactions
Potential for electronic wallet
Types of mobile phones in use
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Preferred Methods of Payment
18%
22%
30%
1%
11%
12%6%
Cash Credit card Debit card Gift/prepaid card
Paper check Online payment None/No transaction
More than half of
consumers prefer
to use debit or
credit cards for
making payments
Cash is preferred
by about one in
five consumersChecks and
online payments
are each favored
by just over one
in ten consumers
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Frequency of Online Payments and Fund Transfers
E-commerce
experience may
help to predict
potential for
m-commerce
43%
28%
29%
Routine or regular Occasional or infrequent Never
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Mobile Commerce: Findings (1)
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Preferences for m-commerce applications
Risks of m-commerce
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Potential Use of Electronic Wallet in Mobile Phone
Electronic Wallet is software (containing credit and debit card numbers) that enables use of the mobile
phone to make purchases and bill payments. Types of accounts that can be loaded may be restricted.
49%
11% 18%
15%7%
22%
Consumers likely to
have electronic wallet
signal willingness to
engage in m-commerce
Mobile phone use for m-commerce shows promise with up to 22% of consumers in favor
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Ownership of Smartphones
Converged platform-based competition19%
68%
13%
Smartphone/PDA Neither Don't know/Unavailable
Over a fifth of
mobile phone
users have
Smartphones and
PDAs and are
ready for
m-commerce
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Preferences for M-Commerce Applications (Very/Somewhat Likely to Use)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Manage personal finances
Bill payment Purchases, no cash
Purchases, no credit
cards
Browse merchants
online
Transfer/wire money
Send M2M gifts
Manage investments
All respondents Respondents preferring cards and online payments Smartphone users with electronic wallet
Although under 10% of consumers,
Smartphone users with electronic wallets
have a very high likelihood of participating
in most m-commerce applications
Most LeastDesirability of m-commerce application
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0%
10%
20%
30%
40%
50%
60%
70%
Card number stolen
Unprotected financial
information
Accidental charges
Insecure cell phone
Improperly charged cell
phone
Lose cell phone often
All respondents Respondents preferring cards and online payments Smartphone users with electronic wallet
Top three perceived risks
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Risks of Using Mobile Phones for M-Commerce (Very/Somewhat Likely to Experience)
Smartphone users with electronic
wallets perceive greater risks with
m-commerce, particularly with
making charges accidentally
Mobile Commerce: Findings (2)
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Effects of geo-demographics on
Potential uses of m-commerce
Risks of m-commerce
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Use of Mobile Phones for M-Commerce: Effect of Gender
Male
Female
Purchases, not using cards Purchases, not using cash
Transfer/wire money Manage investments
Men are more inclined
than women to use
mobile phones for
purchases, in place of
cash or cards
Larger circles signify higher probabilities; not drawn to scale
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Use of Mobile Phones for M-Commerce: Effect of Age
19-30
31-50
13-18
51+
19-30
13-18
31-50
51+
19-30
31-50
13-18
51+
Bill payment Manage personal financesPurchases, not using cards
Purchases, not using cash
Browse merchants online
Send M2M gifts
Transfer/wire money
Manage investments
The elderly are the least inclined to try m-commerce,
followed by teenagers (who have less of a need to pay
bills or manage personal finances)
Larger circles signify higher probabilities; not drawn to scale
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Use of Mobile Phones for M-Commerce: Effect of Household Status
Head
Member
Bill payments Manage personal finances
Household heads
favor paying bills
and managing their
money by mobile
phone more than
other household
members
Larger circles signify higher probabilities; not drawn to scale
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Use of Mobile Phones for M-Commerce: Effect of Race/Ethnicity
AfAm
Hisp
Asian
White
Hisp
Asian
AfAm
White
Hisp
AfAm
Asian
White
Bill payment
Transfer/wire money
Manage investments
Purchases, not using cards
Purchases, not using cash
Browse merchants
Manage finances
AfAm
Asian
Hisp
White
Send M2M gift
Ethnic consumers embrace
m-commerce more than White consumers
Larger circles signify higher probabilities; not drawn to scale
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Use of Mobile Phones for M-Commerce: Effect of Smartphone/PDA
Smartphone/ PDA
Neither
Bill payment Browse merchants online
Purchases, not using cards Purchases, not using cash
Transfer/wire money Send M2M gifts
Manage personal finances Manage investments
Owners of
Smartphones or PDAs
are more inclined to
embrace all forms of
m-commerce
Larger circles signify higher probabilities; not drawn to scale
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Risks with Mobile Phones for M-Commerce: Effect of Gender
Female
Male
Accidental charges Card number stolen from mobile phone
Unprotected financial information Mobile phone improperly charged
Women perceive
greater risks with
using mobile phones
for m-commerce than
men
Larger circles signify higher probabilities; not drawn to scale
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Risks with Mobile Phones for M-Commerce: Effect of Age
13-18
19-30
31-50
51+
19-30
13-18
31-50
51+
19-30
31-50
13-18
51+
Mobile phone improperly charged Accidental charges
Card number stolen from mobile phone
Unprotected financial information
Lose mobile phone often
Insecure mobile phone
Fewer older consumers see risk in using mobile phones
for m-commerce, perhaps because they are more
careful or engage relatively less in m-commerce
Larger circles signify higher probabilities; not drawn to scale
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Risks with Mobile Phones for M-Commerce: Effect of Household Status
Member
Head
Lose mobile phone often Mobile phone improperly charged
Members of
households are more
likely than heads of
households to lose
their mobile phones
or fail to charge
them
Larger circles signify higher probabilities; not drawn to scale
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Risks with Mobile Phones for M-Commerce: Effect of Race/Ethnicity
Asian
Afr-Amer
Hispanic
White
Accidental charges
Asian
Hispanic
Afr-Amer
White
Lose mobile phone often
Mobile phone improperly charged
Asians see more of
certain risks with
using mobile
phones for
m-commerce than
Whites and African-
Americans
Larger circles signify higher probabilities; not drawn to scale
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Risks with Mobile Phones for M-Commerce: Effect of Smartphone/PDA
Smartphone/PDA
Neither
Accidental charges Card number stolen from mobile phone
Smartphone/PDA
users may be most
inclined to try
m-commerce but
they also
acknowledge risks
of careless use of
mobile phones
Larger circles signify higher probabilities; not drawn to scale
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Mobile Commerce: Findings (3)
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Predicted probabilities by consumer profile for
Potential uses of m-commerce
Risks of m-commerce
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Female
White
Age 51+
Member of household
Income $25,000-$50,000
Region East
Does not use Smartphone/PDA
Predicted probability = 7%
Male
Hispanic
Age 19-30
Head of household
Income $100,000-$200,000
Region West
Uses Smartphone/PDA
Predicted probability = 56%
Highest Lowest
Predicted Probability of Using Mobile Phone for M-Commerce (Example)
Purchases, No Cash
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Female
White
Age 51+
Member of household
Income $0-$25,000
Region East
Does not use Smartphone/PDA
Predicted probability = 25%
Female
Hispanic
Age 19-30
Member of household
Income $50,000-$100,000
Region East
Uses Smartphone/PDA
Predicted probability = 68%
Highest Lowest
Predicted Probability of Risk Experience with Mobile Phone for M-Commerce (Example)
Accidental charges
Conclusions
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Just under a quarter of respondents are ready to use an “electronic wallet”
About one-fifth of respondents have Smartphones/PDAs capable of m-commerce
However, between only 11% and 27% of respondents are ready to make use of mobile
phones for any specific form of m-commerce (most popular are paying bills, managing
personal finances, and making purchases without using cards/cash)
Conclusion: A key group of well-equipped and willing consumers already exists for
m-commerce targeting
Willingness to engage in m-commerce increases in certain target groups
between 12% and 34% for credit and debit card users and online payers (62% of all)
between 48% and 85% for Smartphone users ready for electronic wallet (6% of all)
Conclusion: Highest or earliest likely m-commerce adoption group is presently at least
5% of consumers
Willingness to use mobile phones for m-commerce varies strongly by
age (most for 19-30 group, followed by 31-50 group)
gender (men more than women) and household status (household heads more than household
members) for certain forms of m-commerce
race (non-Whites more than Whites)
type of phone (Smartphones/PDAs more than phones that are neither)
Conclusion: Most viable demographic for m-commerce targeting is: young male,
non-White, household head, Smartphone/PDA user (this contrasts with e-commerce)
Conclusions: Using Mobile Phones for M-Commerce
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About half of respondents find using mobile phones for m-commerce risky in various ways
(less for losing mobile phone and failing to keep mobile phone properly charged)
Greatest concern is with card number being stolen from mobile phone, followed by mobile
phone itself being stolen
Conclusion: As with e-commerce, there are significant risks, even potential barriers to
acceptance, of using mobile phones for m-commerce
Risks associated with using mobile phones for m-commerce are actually higher for
Smartphone/PDA users that are willing to adopt the electronic wallet
Conclusion: Despite admitting higher risks with m-commerce, Smartphone/PDA users
with the electronic wallet appear to be leading adopters of m-commerce
Risks associated with using mobile phones for m-commerce vary by
age (most for 19-30 group, followed by 31-50 group)
gender (women more than men) and household status (household members more than household
heads) for certain types of risk
race (Asians more than others), especially charging accidentally or losing mobile phone
type of phone (Smartphones/PDAs more than phones that are neither)
Conclusion: younger Asian women users of Smartphones/PDAs may experience
greater risk, but like their male counterparts may still be in favor of m-commerce
Conclusions: Risks of M-Commerce
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Some parallels exist between the e-commerce experience and the potential
adoption of m-commerce
12% of respondents prefer online payments and 40% make online payments routinely
11% to 27% of respondents are willing to engage in some form of m-commerce
However, there are also some important differences
While e-commerce is most favored by older and affluent White consumers, younger
and less affluent ethnic consumers view m-commerce most favorably, perhaps
because the Smartphone is the affordable broadband alternative to wireline high-
speed Internet access for the latter group of consumers
While online payers are uniformly more likely than credit and debit card users to
engage in e-commerce, it is more of a mixed bag with m-commerce (online payers
more likely to engage in m-commerce only to pay bills and manage personal finances,
but not for purchases, money transfers, managing investments, or gifting)
Conclusions: M-Commerce vs. E-Commerce