• Merchants and billers
• Consumer usage
• Telco service charges
• Infrastructure support

If the Internet allowed people to buy things while they were at home, then the cellphone frees them from their PCs, enabling them to buy tickets or pay for a can of Coke literally 24/7.

The prospects have always been clear, whether this is through the use of a terminal, say an NFC (near-field communications) capable one that reads off a mobile phone wallet, or through remote payments, that is, with a phone that hooks up to a payment system over the air.

Over the years, as electronic commerce on PCs flourished, so have the technologies of mobile commerce. Thus today, there are common NFC standards, as well as mobile Internet devices, such as the Apple iPhone or Google Android, that can give a user a good experience when transacting on the small screen.

Indeed, as more people turn to data services on their large-screen smartphones, it is not difficult to see the trend towards transactions on the mobile phone.

A report from Mercator Advisory Group in December 2008 predicts that smartphone-based remote payment transactions would top 2 billion in 2014, up from just 77 million in 2008.

Over the same period, the dollar value of these transactions would rise from US$76 million to US$8.6 billion, according to the report.

In the past, the earliest forms of transactions were simple micropayments, say, in phone-related items like ringtones and SMS jokes. As phones become smarter and easier to use, and consumers more confident of buying things on the go, larger purchases may become a norm as well.

Yet, even with the signs growing promising, success in mobile commerce world hinges on an ecosystem that makes things tick. Consider the following four crucial factors.

1) Merchants and billers
As with rolling out any payment service, there must be compelling content for people to buy or transact on their phone.

The first lesson for the payment industry is that, no matter how cool a network technology or gadget is, there has to be a compelling reason for people to adopt it.

Early 3G phones are the best example: without compelling applications and services to complement them, the initial reaction from non-techies was one of indifference.

In the same way, any mobile commerce requires the content besides the technology, in particular, merchants to put up their catalogs and items for sale.

Which types of merchants and billers would be right? Like with the early days of the Internet, there are no cut and dry answers (who would have thought Amazon, a seller of books, would be the Internet's giant retailer?).

However, some types of merchants come to mind instantly. Think cinemas, for example. Instead of standing in line for last-minute tickets, users can log on, either over a mobile website or a pre-downloaded application on their phones, to buy the tickets.

If the phone is equipped with an NFC chip, the user can even wave it at a reader at the theatre entrance as proof of purchase.

In the US, merchants that have turned to mobile commerce are many and varied, ranging from pizza shop Papa Johns to retail chain Walmart.

In the case of Papa Johns, the mobile effort started in mid-2008 had generated US$1 million in orders via its WAP-based, SMS-enabled program by December 2008, according to the Mercator Advisory Group.

The report also highlighted Walmart's efforts with a version of its website customised for the iPhone. With this, a user can browse through products and find a store nearby. Better yet, he could store his own shopping list on the phone.

2) Consumer usage
Ease of use, obviously, is the first criteria to success. It's the first reason why a user would pick up his phone to make a transaction.

This does not mean creating an application or mobile Internet site that caters to the lower common denominator. While it is crucial to get the masses onboard, often it is more important to get those who are willing to transact on the go.

This means catering to users who have a) the means b) the willingness to transact on the go. This could mean catering to specific groups of smartphone users, say iPhone or Android users, who are more likely to engage in mobile commerce.

The content is more important than having everything under the sun. To access something that is compelling, users would gladly download different applications, say, one from a cinema, and another from a supermarket chain. A great success story is Apple's AppStore - it doesn't sell all and sundry, it only does downloadable applications to iPhone users over the air.

For companies considering a mobile channel, the good news is that the user is now closer to reach with devices that are becoming much easier to user.

The oft-cited example is the iPhone, with a large 3.5-inch screen that could accommodate websites set up either for retail or other transactions. Similarly, upcoming phones running on Microsoft's Windows Mobile 6.5 are also expected to display websites, including Net banking ones, correctly.

Companies can choose to develop a downloadable application, say to run on Apple, Google, Windows or Nokia phones, so that the experience is rich, structured and closely integrated.

Alternatively, they could create a single mobile Internet site that detects the major smartphone models and renders the right content to fit the small screen. Such solutions, requiring less testing, should be quicker to deploy.

3) Telco service charges
The next important factor is telco service charges. First, telco charges to consumers. This is falling fast, with use-all-you-can data plans becoming the norm, as competition heats up among telcos to sign up users.

In Singapore, StarHub charges a maximum of about S$37 a month for customers who sign up for a S$5-a-month data subscription plan. This gives a user the freedom to surf to websites and even make transactions because he knows exactly how much he would have to pay at the end of the month.

The other telco charge that is likely to drop is the rate collected from application developers and merchants. In the first years after WAP-based phones arrived on scene around the year 2000, telcos collected as much as 70 per cent of revenue earned from their mobile channels.

Today, as the mobile Internet becomes more open with - Google and Yahoo being the main online destinations instead of a telco's walled garden homepage - telcos have been known to drop such rates to around 40 per cent, when coupled with some joint marketing efforts.

This opens up opportunities for third-party firms to work more closely with telcos. Alternatively, if they are confident of going it alone, they could also set up their own mobile channels and market these along with their existing activities in other channels.

4) Infrastructure support
Finally, a crucial factor that all parties need is front-end and back-end processing. In the same way that brick-and-mortar shops require POS terminals to handle transactions, payment operators are a major link in mobile commerce.

NETS, for example, has been handling payments not just on POS machines - but the Internet and mobile channels - with the same security that is demanded over the years.

This takes the trouble of processing payments from merchants and billers, whose core competencies are in the industries they are in, and can be more nimble by outsourcingg the mobile commerce settlement to third parties.

Considering all the factors here, it is clear stringing together so many ecosystem partners is not an easy thing, especially when attempting to do so on a single platform. Thus, the barriers to entry are rather high.

Internet a threat?
Besides the four factors, a related issue often asked is whether the Internet - the one accessed on Wi-Fi and Netbooks (low-powered, portable notebooks) - will become more important than the mobile Internet.

After all, with a Netbook in the handbag, a user can go about her online shopping and banking wherever she heads to a shopping centre or anywhere with a Wi-Fi link. In Wi-Fi-blanketed Singapore, for example, even a wet market in Tampines offers users Wi-Fi access.

This is a trend that has only started playing out last year, as the first Netbooks rolled into service. Nevertheless, it is one that mobile commerce players should watch closely.

For now, the usage of Netbooks is still not high, compared to the number of mobile phone users, who are also fast upgrading to more powerful devices that can download content faster and run more applications at once.

The good news too, is that, it is increasingly easy to make Internet content accessible on either a large-screen phone or Netbook, so that may be one way to ensure that all relevant users are catered to.

Security versus convenience
Finally, a last issue that mobile commerce players must consider is that of security versus convenience.

Tip the scale too much either way, and a mobile commerce effort will end up with problems. Sacrifice convenience and users will be turned off; compromise security and users could end up without ample protection from fraud.

NETS, for example, has come up with a downloadable Java application that attempts to give a good balance of the two.

The application, once downloaded directly onto a phone, enables a user to pay for purchases like cinema tickets by simply keying in a credit card number.

Besides purchases, a user can also link the application to his bank accounts and do direct fund transfers using his phone. This saves him a trip to the nearest ATM or turning on his computer.

The security is end-to-end, and protected by a password. Even in the worse case scenario that a phone is lost, the user can call NETS and deactivate the account. This is possible because the intelligence is still stored in the backend, with the phone being a conduit for transactions.

Conclusion
Despite being touted as the next big thing for years, mobile commerce is still something that many companies struggle to take advantage of.

This is, however, changing fast, with more users becoming comfortable with logging on to mobile Internet services on the go. Transactions in the form or payment, bookings and funds transfers may not be far off from mass adoption.

Though there are still many obstacles to its success, mobile commerce has moved on extremely fast of late, thanks in a big part to the maturing of technologies such as mobile devices.

The next step is for the ecosystem - made up of players from different industries - to work together and generate faster growth. If they can resolve some of the issues discussed here, such as user takeup and security versus convenience, there is no reason why mobile commerce cannot emerge as the long-prophesised "next big thing", just as Internet commerce has done.