4/9/2010 Mobile Commerce from the Consumer’s Perspective Evidence from the United States Aniruddha Banerjee, CENTRIS Paul Rappoport, Temple University The Macroeconomics of Mobile Money www.centris.com Conference Organized by Columbia University April 2, 2010 Mobile Platform for Financial Transactions 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 2 1
4/9/2010 Definition of Key Terms E-Commerce M-Commerce Use of the mobile phone (or other Use of the Internet (“going online”) capable wireless device) to make to make or participate in financial or participate in financial and and commercial transactions commercial transactions 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 3 Goals and Investigative Strategy of Study Goals Investigative Strategy Use survey data Determine prospects for m-commerce Key questions (use of mobile phones instead of Use of mobile phones for m-commerce credit and debit cards, cash, or other Risks of using mobile phones for methods of payment for financial m-commerce transactions) Draw analogies from e-commerce Willingness to engage in m-commerce Evaluate m-commerce attitudes by Readiness to engage in m-commerce demographics Perceived risks with m-commerce Identify consumer profiles of most and Most likely target group for m-commerce least likely m-commerce adopters 4 2
4/9/2010 Centris Wireless Survey Survey Approach 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 5 Mobile Commerce: Setting the Stage Preferred payment methods Online transactions Potential for electronic wallet Types of mobile phones in use 6 3
4/9/2010 Preferred Methods of Payment Cash is preferred by about one in Checks and five consumers online payments 6% 18% are each favored 12% by just over one in ten consumers 11% 22% 1% More than half of 30% consumers prefer to use debit or credit cards for making payments Cash Credit card Debit card Gift/prepaid card Paper check Online payment None/No transaction 7 Frequency of Online Payments and Fund Transfers 29% E-commerce 43% experience may help to predict potential for m-commerce 28% Routine or regular Occasional or infrequent Never 8 4
4/9/2010 Mobile Commerce: Findings (1) Preferences for m-commerce applications Risks of m-commerce 9 Potential Use of Electronic Wallet in Mobile Phone Consumers likely to have electronic wallet Mobile phone use signal willingness to for m-commerce engage in m-commerce shows promise with up to 22% of consumers in favor 11% 18% 7% 22% 15% 49% 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. 10 5
4/9/2010 Ownership of Smartphones Over a fifth of mobile phone users have Smartphones and PDAs and are ready for 13% 19% m-commerce Converged platform-based competition 68% Smartphone/PDA Neither Don't know/Unavailable 11 Preferences for M-Commerce Applications (Very/Somewhat Likely to Use) Although under 10% of consumers, Smartphone users with electronic wallets have a very high likelihood of participating 90% in most m-commerce applications 80% 70% 60% 50% 40% 30% 20% 10% 0% Manage Bill payment Purchases, Purchases, Browse Transfer/wire Send M2M Manage personal no cash no credit merchants money gifts investments finances cards online All respondents Respondents preferring cards and online payments Smartphone users with electronic wallet Most Desirability of m-commerce application Least 12 6
4/9/2010 Risks of Using Mobile Phones for M-Commerce (Very/Somewhat Likely to Experience) Smartphone users with electronic wallets perceive greater risks with 70% m-commerce, particularly with making charges accidentally 60% 50% 40% 30% 20% 10% 0% Card number Unprotected Accidental Insecure cell Improperly Lose cell stolen financial charges phone charged cell phone often information phone Top three perceived risks All respondents Respondents preferring cards and online payments Smartphone users with electronic wallet 13 Mobile Commerce: Findings (2) Effects of geo-demographics on Potential uses of m-commerce Risks of m-commerce 14 7
4/9/2010 Use of Mobile Phones for M-Commerce: Effect of Gender Male Men are more inclined than women to use mobile phones for purchases, in place of Female cash or cards Purchases, not using cards Purchases, not using cash Transfer/wire money Manage investments Larger circles signify higher probabilities; not drawn to scale 15 Use of Mobile Phones for M-Commerce: Effect of Age 19-30 19-30 19-30 13-18 31-50 31-50 31-50 13-18 13-18 51+ 51+ 51+ Purchases, not using cards Bill payment Manage personal finances Purchases, not using cash Browse merchants online The elderly are the least inclined to try m-commerce, Send M2M gifts followed by teenagers (who have less of a need to pay Transfer/wire money bills or manage personal finances) Manage investments Larger circles signify higher probabilities; not drawn to scale 16 8
4/9/2010 Use of Mobile Phones for M-Commerce: Effect of Household Status Head Household heads favor paying bills and managing their money by mobile Member phone more than other household members Bill payments Manage personal finances Larger circles signify higher probabilities; not drawn to scale 17 Use of Mobile Phones for M-Commerce: Effect of Race/Ethnicity Ethnic consumers embrace m-commerce more than White consumers AfAm Hisp Hisp AfAm Hisp Asian AfAm Asian Asian AfAm Asian Hisp White White White White Bill payment Purchases, not using cards Browse merchants Send M2M gift Transfer/wire money Purchases, not using cash Manage finances Manage investments Larger circles signify higher probabilities; not drawn to scale 18 9
4/9/2010 Use of Mobile Phones for M-Commerce: Effect of Smartphone/PDA Smartphone/ PDA Owners of Smartphones or PDAs are more inclined to Neither embrace all forms of m-commerce Bill payment Browse merchants online Purchases, not using cards Purchases, not using cash Transfer/wire money Send M2M gifts Manage personal finances Manage investments Larger circles signify higher probabilities; not drawn to scale 19 Risks with Mobile Phones for M-Commerce: Effect of Gender Female Women perceive greater risks with using mobile phones Male for m-commerce than men Accidental charges Card number stolen from mobile phone Unprotected financial information Mobile phone improperly charged Larger circles signify higher probabilities; not drawn to scale 20 10
4/9/2010 Risks with Mobile Phones for M-Commerce: Effect of Age 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 13-18 19-30 19-30 19-30 31-50 13-18 31-50 31-50 51+ 13-18 51+ 51+ Mobile phone improperly charged Lose mobile phone often Accidental charges Insecure mobile phone Card number stolen from mobile phone Unprotected financial information Larger circles signify higher probabilities; not drawn to scale 21 Risks with Mobile Phones for M-Commerce: Effect of Household Status Member Members of households are more likely than heads of households to lose their mobile phones Head or fail to charge them Lose mobile phone often Mobile phone improperly charged Larger circles signify higher probabilities; not drawn to scale 22 11
4/9/2010 Risks with Mobile Phones for M-Commerce: Effect of Race/Ethnicity Asian Asian Asians see more of certain risks with Hispanic using mobile phones for Afr-Amer m-commerce than Hispanic Afr-Amer Whites and African- White White Americans Accidental charges Lose mobile phone often Mobile phone improperly charged Larger circles signify higher probabilities; not drawn to scale 23 Risks with Mobile Phones for M-Commerce: Effect of Smartphone/PDA Smartphone/PDA Smartphone/ PDA users may be most inclined to try m-commerce but they also acknowledge risks Neither of careless use of mobile phones Accidental charges Card number stolen from mobile phone Larger circles signify higher probabilities; not drawn to scale 24 12
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