Technology and Consumer Acceptance Finally Moving Mobile Commerce

Since the beginning of the decade experts have been trying to predict when mobile commerce would take hold. Initial estimates, by firms such as IDC, predicted that 29 million U.S. consumers would be making purchases via mobile technology by 2004.

In actuality, current reports estimate just over nine million consumers have shopped using mobile devices in Q1 2008, a total of 3.6 percent of U.S. mobile subscribers, according to The Nielsen Company in a recent report.

Technology limitations and security concerns are among the top reasons why consumers have been slow to adopt the use of mobile technology. Traditional mobile phones just don’t produce adequate visual presentation for most. But, as more consumers become educated and invest in smart phones and upgraded units, they are more likely to give mobile commerce a try.


Up to six out of 10 U.S. mobile device users have noted security as a top reason they would hesitate to make purchases via mobile technology, according to a survey published by Harris Interactive in December of 2007. The Nielsen report found that 41 percent of mobile users are not making purchases with their devices because of security concerns.

Some of the other key findings in the Nielsen report include:

•    More men than women are likely to use their cell phone for commerce. A total of 4.9 million (4.5 percent) of men and 4.3 million (3.0 percent) of women say they have made a purchase using their phone.

•    Adults ages 25 to 34 are the most likely to have made a purchase using their phone. Approximately three million (5.4 percent) of adults ages 25 to 34 have made a purchase, compared to 3.6 percent of all mobile subscribers.

•    Almost half of all mobile data users (those subscribers who have used more than one data feature on their phone, such as text messaging or the mobile Internet in a recent 30-day time period) say that it is likely they will conduct mobile commerce in the future.

Text messaging jumpstarts adoption
Many marketers are using text messaging to introduce the mobile commerce experience to their customers. Nielsen reports that 6.5 million U.S. mobile consumers have used text messaging to make a purchase.

But retailers should be cautious not to over-use their text messaging ability, which could backfire and annoy consumers. Wal-mart, for example, tried an opt-in text messaging promotion program in December of 2007 and met with limited success. The retail giant went the route of sending a lot of information in a limited number of messages to participating consumers in an effort to limit the annoyance. The jury is out on whether limiting the annoyance is a successful marketing tactic.

A step-by-step process
Some vendors are conducting hand-holding of sorts with consumers, trying to slowly ease them into using mobile commerce. “It definitely takes time for consumers to become accustomed to using a payment device that sits outside the traditional wallet,” says Ginger Sayor, vice president for product and business development at First Data Corporation. Right now First Data is focused on mobile commerce in the form of contactless payment as a “bridge” to eventual complete migration of the wallet into the mobile communications device.

To that end, First Data recently introduced its GO-Tag™ solution that consists of either a key fob, sticker or wristband with a prepaid amount loaded to facilitate contactless payments. An early adopter of this technology, Kroenke Sports and Entertainment has launched a payment and loyalty program with its Colorado Rapids soccer team that will run on First Data’s loyalty platform. Program members have access to special lines and queues at games to receive faster service at concession stands. As loyalty points build up, members will be able to redeem the points for items and discounts.
“Eventually our vision for this program is to move to a place where someone can show up at a game with their phone, and that will be all they need for ticketing to enter the stadium, to pay for items and receive loyalty promotions,” notes Matt Withey, director of prepaid product development at First Data.

Is the future finally here?

There is no question that mobile commerce has almost unlimited potential – to expedite everyday shopping, to promote loyalty programs, to facilitate the purchase of tickets for travel, sporting events and other entertainment, to deliver immediate content including ring tones, games and music, to provide information and location-based services and much more. The question that remains today is: When is mobile commerce finally going to move past limited acceptance and become the widespread commerce choice as experts have been predicting for almost 10 years?

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