January 13, 2022
Everyone has heard of e-commerce, but what is m-commerce? The “m” stands for mobile and the term refers to all monetary transactions that take place using a mobile device. While the term mobile commerce or m-commerce has not yet become part of the daily vernacular, using mobile commerce is something that most people do multiple times a day without even thinking about it. Every time someone uses their phone to make a purchase on Amazon or transfers funds from one bank account to another on a tablet - that is mobile commerce.
Mobile commerce includes activities like product purchases, online transactions, bill payments and online banking services when completed using a mobile device (as opposed to visiting a brick and mortar location or even using a desktop computer). In 2020, 61% of visits to online stores began on a mobile device, but only 45% of transactions were completed on mobile. That is likely because it can be more difficult to complete purchases on a mobile device, both due to the small screen size and security concerns.
Change is in the air, however, and mobile commerce is becoming more secure, more user friendly and ever more popular. Any online business would be remiss in not providing a strong mobile payment option for their customers.
Anytime a mobile device is used for any sort of monetary transaction, that is mobile commerce. There are three main types of mobile transactions:
There are many different types of mobile commerce payment methods that consumers can use, and it’s generally up to the merchant to determine which options are open.
The most common types of mobile payment methods include:
When using a mobile device to make a purchase, convenience is the name of the game. A mobile wallet is essentially a digital version of an actual wallet, allowing a customer to complete a purchase on a mobile device without swiping an actual card. Apple Pay and Google Pay are both examples of mobile wallets, allowing for the storage of credit card details and shipping addresses so that information does not have to be re-entered at every check out.
Once a customer is already using a mobile wallet and has already stored their information, they can then use that information to make a payment in a brick and mortar store. By simply placing the phone on a supported terminal, the details are validated and a mobile payment is made.
In a closed loop mobile payment, the customer’s details also only have to be input once and then are stored for future transactions. Different from a mobile wallet, a closed loop payment is valid only for a particular brand’s mobile app. On the Starbucks app, for example, customers can pre-load money to their account and then use that to make purchases in any Starbucks.
Mobile money transfers can happen using a mobile banking app or via other peer-to-peer apps like Cash App, Paypal or Venmo. Whichever platform is chosen, money can change hands securely at the touch of a button on a mobile device.
A smartphone or tablet can operate as a mobile point-of-sale (POS), filling the role of a cash register by wirelessly processing sales transactions. This is a good solution most often used by small retail merchants who don’t want to invest in expensive equipment.
Some mobile carriers offer a mobile commerce solution in which customers can make purchases and the payment amount is included in the monthly bill from the carrier. This is a popular option in developing countries in particular because it does not require a bank account.
From the consumer perspective, there are a number of different options that they might want to use in order to make mobile payments. As mentioned, each merchant can decide for themselves what payment options they will accept, but following are several of the most common that most consumers would expect to see as an option:
Whether on an e-commerce site or in a physical store, Apple Pay is a convenient way to make payments without having to swipe a card or enter payment details. Customers store their payment data one time and then can use Apple Pay’s mobile app to pay with the click of a button. All of their personal details remain on their own device rather than being transferred to the merchant, making Apple Pay a secure option in addition to convenient.
Google Pay offers the same service as Apple Pay, just for Android users as opposed to those with iPhones. Google Pay easily integrates with Google’s other services so it’s easy to make payments directly via Gmail, Android messages or Google Home. It also has security features in place to make sure that personal and financial data is protected during transactions.
PayPal is one of the most popular mobile commerce players and has been working hard in recent years to close the payment gap between mobile and other devices. PayPal allows users to make payments to individuals or businesses after storing their payment details one time in the mobile app. Users can even register their device with a permanent login and then use PayPal to check out with one click on any e-commerce site that accepts this payment method.
Klarna provides an extra convenience to shoppers by letting them shop at a multitude of e-commerce sites directly from the Klarna mobile app. Consumers love the streamlined experience of being able to go to one site and make an assortment of purchases all without inputting payment details over and over again.
E-commerce is a more general term that encompasses all sales and commercial transactions that take place online - think Amazon and other online stores, all of those are e-commerce sites. Mobile commerce, or M-commerce as it’s becoming more commonly known as, is an offshoot of e-commerce and refers specifically to transactions that are completed using a mobile device.
It’s important for merchants to consider how their shopping experience plays out on a mobile device because such devices are quickly becoming the main way that customers shop. Today’s consumers have high expectations when it comes to user experience, and if their mobile commerce experience is sub-standard, they will look elsewhere.
The biggest benefit of mobile commerce is for consumers, giving them a seamless and frictionless shopping experience. When it comes to business owners, there are also significant benefits of mobile commerce, including:
85% of Americans own a smartphone. This number will continue to grow as will the amount of time that people spend on their phones and the types of activities they will complete using mobile apps. In order to remain competitive, merchants must make sure they offer a seamless and user-friendly experience for their customers who are using their mobile phones or tablets to shop.
It’s not enough to make sure that a website is optimized for mobile, but rather it’s important to ensure that the checkout process is optimized as well. It’s safe to assume that the majority of shoppers will be accessing e-commerce sites via their cell phone - the better the experience that merchants can offer, the higher conversion rates will be.
Retailers - whether online or IRL (that’s “in real life” for those who aren’t in the know!) - must always be on top of the newest shift in retail trends. The recent trend is m-commerce and anyone who doesn’t jump on that bandwagon is going to be left behind.
When choosing a payment infrastructure, it’s important for online merchants to keep in mind the fact that many shoppers will be using their mobile devices for purchases. Pay.com is an expert in ensuring that merchants can provide their customers with the most seamless and frictionless check-out experience possible.
Pay.com can help any new merchant that is just getting started or an existing merchant looking to upgrade the payment experience offered on their site.