ABI: If Data Breach Worries Don't Kill M-Commerce, Speed Very Well Might

Although it's one of the fastest growing segments—which is easy to do when your initial marketshare is practically zilch—M-Commerce is facing some significant hurdles before it can achieve widespread acceptance, with data breach fears and insufficient speed near the top, according to a new report from ABI Research.

Surveys show the public's lack of enthusiasm for mobile device-based shopping held steady between late 2007 and late 2008. "Consistent from year to year, a little over one-half of all respondents are not interested in using their mobile phones to make purchases," ABI Senior Analyst Jeff Orr said. "Transaction security was cited by 71 percent of mobile phone users as a major concern preventing wider uptake."

However, even if retailers, mobile carriers and payment processors somehow manage to convince mobile users that their personal information is in good hands, M-Commerce will not suddenly skyrocket, the report said. There will still be consumer frustration over speed.

"As consumers become more comfortable with transaction security by establishing trust with transaction vendors, more emphasis will be placed on the speed of the transaction," Orr predicted.

Someday, perhaps, consumers will have no problem buying big-ticket items with their mobile phones. When that day arrives, the purveyors of pricey goods should give a nod to the products that opened the door: lowly micro-purchases of games and ringtones. More than half the people who participated in the ABI Research surveys said they bought at least one ringtone, "suggesting that low-value transactions are less threatening to consumers." The respondents also expressed "some willingness" to have their mobile purchases added to their wireless phone bills.

Despite the widespread use of text messages, ABI Research found that consumers continue to hold disdain for text marketing messages. The only softness found by the researchers in this area was that some of those surveyed "indicated that they were open to inducements such as free content aimed at converting a message to a sale."

The growing popularity of smartphones, with their larger screens, full-fledged Web-browsing capabilities and sleek interfaces is expected to help M-Commerce gain ground. "As smartphone penetration increases, more merchants will introduce mobile shopping, spurring growth," said ABI Research Senior Analyst Mark Beccue. "Smart merchants will focus on the advantages of mobile, such as impulse shopping and real-time auctions."

Beccue's prediction parallels those made in December by the Mercator Advisory Group, which forecast that smartphone-based remote mobile payments will reach $389 million in 2009, $1.7 billion in 2011 and $8.6 billion in 2014.