Shopping via mobile devices has exploded in recent years on a global scale, re-defining consumer behaviour. Mobile commerce (alternatively called mCommerce) refers to a convenient and flexible sales channel that brings the entire shopping experience to the palms of consumers' hands, signalling a gradual migration to more mobile devices.
mCommerce is not only known as “the next big thing” for shopping and purchasing, but it is equally viewed as the natural progression of eCommerce, and the latest statistics cannot stress this enough. To illustrate that, research by Statista uncovers that mCommerce represented nearly 7 in 10 (66%) of total retail eCommerce sales worldwide in 2022.
In this article, we take a deep dive into everything you need to know about mCommerce, how it works, its different uses and trends, and its main differences from eCommerce, among others. Without further ado, let’s get into it.
What is mobile commerce and how does it work?
mCommerce involves the buying and selling of products and services through wireless handheld devices, such as smartphones and tablets. Essentially, mCommerce allows users to access online shopping platforms without having to use their desktop or laptop. While mCommerce is commonly associated with online shopping, it’s also prominent in several other industries including:
- Online subscription-based services – for example, Amazon, Netflix, and more.
- Marketing services such as location-based services (e.g., push notifications for mCommerce app, loyalty cards and coupons).
mCommerce operates through user-friendly mobile applications or optimised mobile websites. Many digital businesses provide consumers with mobile platforms where they effortlessly search for goods and services, read reviews, compare prices, and make purchases with just a few taps on their screens.
Different uses and trends of mobile commerce
In this section, we explore how consumers are expecting that their transactions are equally becoming more hassle-free, falling under the following uses and trends:
Mobile shopping and social commerce
mCommerce has revolutionised traditional retail, allowing customers to explore an extensive range of products, place orders, and have them delivered to their doorstep. Food ordering is one of the common uses of mCommerce these days, as users can browse menus, customise and pay for their orders, as well as track deliveries in real-time. Travel planning is another instance that mCommerce has simplified not just in terms of booking flights or accommodation, but also for purchasing tickets.
Moreover, mobile shopping includes mobile-first web shops and mobile shopping apps (e.g., ASOS), while it also caters to social media platforms. In fact, social media channels such as Instagram and Facebook among many have launched “buy buttons”, thereby tapping into the social commerce trend.
It should be noted that social commerce recorded an impressive global revenue of US$913 billion as of February 2023, according to Statista. APAC holds the reins in social commerce penetration rate. emerchantpay’s latest whitepaper, ‘The Global Payments Outlook 2023’, reveals that Thailand (86%), India (86%), and China (84%) registered the largest consumer base of this type of shopping in 2022. Part of the success of this trend is the feature of one-click checkouts that enables shoppers to make purchases without having to exit the platform.
Mobile payments
Mobile payments are digital transactions that are exclusively conducted with a mobile device (more of this below). Whether it’s for your online or offline business, you can gain a competitive edge by successfully integrating, localising and personalising mobile payments into your payments infrastructure. There are many diverse mobile payment options which we've covered fully in this article. The UK is no stranger to the increasing demand and acceptance of mobile payments. Impressively, the number of mobile payment users in the nation amounted to 10 million as of Q2 2022. At the same time, research by Statista shows that over a third (35%) of Brits want to pay with their smartphone all the time, 17% of which pay by mobile for everyday purchases – for example, food.
As a business owner looking to optimise their mCommerce website, shifting your focus to offering the best mobile shopping and payments experience for your customers will be key to sustainable business growth.
Voice commerce and voice payments
Voice assistants and smart speakers, such as Amazon’s Alexa, have been around for a while. At first, people asked these devices weather-focused questions or location directions. However, voice search has now seeped into the mCommerce space. According to survey published at Shopify, most (51%) shoppers leverage voice search during the research phase, while over a third (36%) use it to add products to their shopping list.
Voice commerce is a functionality that enables consumers to make purchases through voice commands on portable devices, with voice payments referring to transactions completed through one’s voice. Research by Statista notes that the amount of voice assistants used worldwide is projected to double by 2024 to 8.4 billion units versus 4.2 billion as of 2021. (If you want to find out more about the voice commerce and voice payments, read our article).
mCommerce vs eCommerce – what’s the difference?
mCommerce and eCommerce are two distinct yet closely linked concepts that involve conducting transactions and business via digital means. While they have commonalities, there are two core differences between them:
Definition and scope
mCommerce encompasses shopping and payments performed by handheld mobile devices, and it’s a subset of eCommerce. In effect, mCommerce focuses on transactions made with mobile applications and/or mobile-optimised websites.
On the other hand, eCommerce describes sales made over the internet and, more broadly, it includes a wide range of online transactions – from business-to-consumer (B2C) and business-to-business (B2B) to consumer-to-consumer (C2C).
Accessibility and user experience
mCommerce ensures portability and convenience. In fact, buyers can shop or make payments on the go wherever they are, which can be advantageous for time-sensitive purchases or location-specific services. This form of shopping looks to offer a smooth and streamlined user experience on mobile devices. Precisely, it makes good use of mobile-specific functionalities ranging from location-based services to push notifications to make the navigation on smaller screens easier.
eCommerce is accessible through mainly desktops and laptops that are internet-enabled, yet it can lack the flexibility of mobility. At the same time, however, eCommerce typically provides a broader selection of features due to the larger screen size and comprehensive use of channels. Moreover, unlike mCommerce, eCommerce can sometimes facilitate a more detailed product displaying and extensive browsing, while it can enable advanced website navigation.
How popular is mobile commerce?
It’s fair to argue that eCommerce businesses should keep an eye out for mCommerce trends – better yet, invest in mobile-first experiences or shopping apps to ensure integrated experiences across different devices. Consumers are creatures of habit and convenience and because of mobile device portability, mCommerce holds strong growth potential in the years to come.
Demographics can act as a definitive factor to gauge the growing traction of mCommerce. As a survey by PYMNTS in Q4 2022 reveals, the mobile-centric mindset is being geared by younger generations. This is indicated by most (71%) consumers from the Gen Z age category and 68% of Millennials tapping into smartphones mainly for payments in the 30 days prior to being surveyed. Whereas Baby Boomers exhibited a preference for desktop, the majority (53%) had relied on a smartphone to send or receive money from family and friends during the same period.
Moreover, our The Global Payments Outlook 2023 research identifies that mobile phones are the preferred device for online shopping on an international level. Latin Americans and Asians account for the highest use of mobile devices in 2023 when purchasing from eCommerce brands. In terms of LATAM, Brazil and Mexico lead the way with an astounding 84% and 71%, respectively. At the same time, Thailand (93%), India (78%) and China are the APAC countries where smartphones are used the most for online sales. The trend of buying online using mobile phones is growing in Europe, mainly driven by the UK (69%), Germany (66%), Finland (67%), Austria (62%), and the Netherlands (59%).
As mCommerce is rising in popularity and adopted by global consumers, it can help maximise the profitability and sales volumes of digital businesses targeting mobile shoppers.
Advantages and disadvantages of mobile commerce
As for any other aspect of a business, there are both advantages and disadvantages to mCommerce. When business owners are fully aware of the pros and cons, the advantages could potentially outweigh any pitfalls.
Advantages of mCommerce
Provides the best shopping experience for your customers
eCommerce has provided customers throughout the globe with convenience and flexibility to shop whenever they want, without having to line up in long queues at physical stores. mCommerce taps into that and gives shoppers the comfort of shopping whenever and wherever; during their morning commute or on their lunch break – the occasions and opportunities for merchants are endless. mCommerce software innovators amplify the customer experience even more by leveraging the latest tech. For instance, IKEA allows users to see how their furniture of choice would fit in their house with Augmented Reality (AR).
Convenience and maximised efficiency
With mCommerce, buyers can shop anytime and anywhere, which eliminates the need to visit physical stores or be bound by traditional business hours. In addition to this, this form of shopping facilitates the buying process, reducing the time and effort required to complete transactions. Not to mention, mobile devices are becoming ubiquitous, which can help businesses engage a wider audience and enter new markets.
Personalisation to the maximum
Mobile traffic gives us great insight into individual preferences and shopping patterns. Users’ geo-location, interests, items viewed or added to cart, social media activity can all be tracked and used to provide tailored content that gives more value to your customer. On top of that, if you’re offering a mobile shopping app, push notifications with alerts for discounts, offers, new products and rewards connect you directly with your customers.
Disadvantages of mCommerce
Need for constant tests and optimisation
There is no silver bullet with eCommerce, and mCommerce is no exception. Mobile shoppers are easily repelled by tiny fonts, unresponsive pages, and unfriendly experiences on their mobile. You will need to stay ahead of the game for advancements in technology and constantly test mobile optimisation to offer the best possible experience to your customers.
Different payment methods across territories
There's no point in offering a payment method that's not popular in the market you're striving to access. This necessitates studying your target audience and offering the local payment method preferred in the territory your customers are situated in. For instance, whereas German consumers prefer Giropay, the Nordics choose to pay with Trustly. Your payment service provider should be able to advise on local payment methods and adoption across territories, so make sure to consult with them first for optimal results.
Compliance with different regulations
Compliance is a challenge for both eCommerce and mCommerce. Many online retailers have addressed the issue of complying with various tax laws by only selling and shipping to certain territories. Mobile commerce involves various transactions where sensitive payment data are transmitted, which makes it subject to different regulatory frameworks depending on the region and the nature of the transactions.
There are several regulations that merchants in mCommerce need to take into account, some of which include:
- PCI compliance - PCI DSS is a global standard and security measure designed to safeguard cardholder data during transaction processing, such as encryption and regular security testing, among others. Businesses involved in mobile commerce that accepts credit card payments must comply with PCI DSS requirements (Find out more about PCI compliance in our article and video).
- Local and international regulations – mCommerce merchants operating in multiple countries must be aware of and comply with international regulations. These may include specific regulations related to cross-border transactions, consumer protection, and electronic signatures in each country or region. Furthermore, when shipping physical goods across international borders, businesses operating in the mCommerce space must comply with customs regulations of both the exporting and importing countries. Some countries may even require merchants to obtain specific import or export licences or permits for certain products. Moreover, businesses engaged in mCommerce may need a Value Added Tax (VAT) registration in the regions where they operate or ship physical products. Non-compliance with the above can result in shipment delays, financial penalties and reputational damage among other consequences.
- General Data Protection Regulation (GDPR) – GDPR is a regulation in the European Union (EU) that aims to protect the personal data and privacy of EU citizens. It applies to businesses, including those in mobile commerce, that collect, process, or store personal data of EU residents. Compliance requires obtaining explicit consent from users for data processing, providing clear privacy policies, ensuring data security, and allowing users to access, correct, or delete their personal information.
Ensuring that you comply with these regulations is key to establishing trust with customers, safeguarding sensitive data, and maintaining a positive reputation within the mobile commerce sector. Businesses should regularly review and update their compliance practices to stay current with evolving regulations and best practices in the mobile commerce ecosystem.
mCommerce and security
As with any other type of online transactions, ensuring you have the right fraud prevention tools and measures in place is key to secure mCommerce payments. Consumers share their sensitive card details with you when shopping online, and merchants must go out of their way to make sure they're well protected when they pass through your payment gateway.
Ideally, you will be working with a payment service provider with sophisticated fraud screening tools and customer authentication tools, such as 3D Secure 2 (3DS2). Aiming to streamline the European online and mobile payments market, the revised Payment Services Directive (PSD2) puts consumer protection at the centre stage. Strong Customer Authentication (SCA) is an authentication process and an integral component of PSD2. It ensures whether the use of payment instruments during online payments between EU issued cards and the operator's payment provider located in the EU is authorised.
For optimal consumer protection and fraud management, merchants should be fully equipped to function in an integrated PSD2 compliant set up. Some other key security measures that mCommerce merchants can implement for their platforms, are the following:
- Data encryption – Protecting your customer’s stored payment and personal data through encryption algorithms is paramount, as it ensures that even if unathorised access occurs, such information remains indecipherable.
- Two-Factor Authentication (2FA) – Applying 2FA for user logins and certain transactions, will require users to give a second form of verification after they log in or try to make a payment (e.g., one-time password sent to their mobile device or identification through their banking app). Essentially, 2FA offers an additional layer of security for your customer’s accounts.
- Secure payment gateways – Integrating with trustworthy and safe payment gateways that abide by industry standards, such as PCI DSS, can ensure that transactions are processed in a secure manner. Using a hosted payment page is a good way to mitigate the transmission and storage of sensitive payment data to the payment service provider, so you can be sure that your customers’ details are in good hands and none of this data passes through or remains on your servers.
- User data protection – mCommerce businesses should clearly communicate the privacy and data use policies to their users. It is equally important to acquire explicit consent before collecting and processing sensitive customer data and enable users to manage their privacy settings.
Key features any mCommerce site should have
Best practices to make the most out of your mobile site to provide a convenient and smooth buying journey for maximised profitability. As more eCommerce merchants leverage mobile sites, it’s equally crucial to identify consumer needs and expectations.
So, what do mobile shoppers want? A user-friendly, secure, and personalised mobile experience. There are certain features that successful mCommerce apps should have to increase sales and conversion rates. If you have a mobile shopping app, you need to ensure these features are present within your app.
Loading time
Page speed is one of the most important factors for successful mCommerce businesses. Google started using a mobile-first index and has been encouraging web developers to optimise their websites for mobile. If your web shop page speed is optimised for mobile, chances are that it will show up higher in search results.
Mobile-first design
A mobile-first design means that you or your website and app developers start prototyping the smallest screen first for your online shop and then optimise for larger devices. Essentially, it’s about delivering the best user experience to the right device. From this mobile version, you can create or adapt existing codes and content to tablets and desktop devices. The most important aspect of mobile-first websites is to make the user interface (UI) simple and intuitive. Pop-ups, small fonts, hard-to-read colours have no place in mCommerce mobile-first websites.
Mobile payment options
New payment methods emerge every day, and mobile commerce is your chance to shine by offering a variety of payment methods. Adding mobile wallets can help you stand out from the competition and help you increase customer satisfaction. Mobile wallets make it easy for online shoppers to securely store their credit card details, shipping address, and other useful information.
As our Global Payments Outlook 2023 report notes, APAC is the region where mobile wallets are steadily expanding their footprint as preferred payment solutions and favoured by locals. This includes Vietnam at 54%, followed by Thailand (41%), Hong Kong (39%), and Singapore (29%). Moreover, just as the smartphone penetration rate in the UK is accelerating and standing on a whopping 93% as of 2023, so is the number of digital wallets used, representing a market share of 58% in the same year.
As more and more global consumers are leaning on digital wallets, the mobile commerce ecosystem is poised for exponential growth and widespread adoption.
How emerchantpay can help
Mobile commerce has reshaped the way we shop and engage in business. Its convenient nature, personalised experiences, and endless possibilities have made it an integral part of everyone’s daily lives. However, it is crucial for businesses and users to be aware of the potential risks and limitations explored in this article.
emerchantpay is a leading global payments service provider in online, mobile and point of sale (POS) payments tailored to local payment preferences. We’re a PCI Level 1 certified full-service payment solutions provider for eCommerce and mCommerce. Our team of payments experts can help you integrate many popular digital wallets, such as PayPal and Apple Pay among other payment solutions, for more frictionless and secure transactions throughout the customer journey.
Curious to know how you can boost your online sales and boost your mobile conversions? Contact our payment experts today and find out how.