Asia must manage risks from mobile commerce boom: Experts

Asia must manage risks from mobile commerce boom: Experts

SINGAPORE (AFP): The Asia-Pacific region has greater potential for business via mobile phones than any other market but there must be safeguards against non-payment and other risks, experts said here on Tuesday.

Telecom operators and wireless technology developers attending the CommunicAsia trade fair said cellular phones would boost mobile commerce (m-commerce) and encourage consumers to do business the wireless way.

Dirk Leopold, head of mobile commerce for the Asia-Pacific region of Brokat Asia Pte. Ltd., a German company, said m- commerce has more potential than electronic commerce using computers.

This is because hand phones are more widely available and more secure, as well as portable.

By 2004 there will be more mobile phones than television households in the region, he said.

"We believe in general that mobile commerce is going to be successful because it overcomes all the obstacles that are inherent in Internet transactions," he told a forum.

Craig Will, director for Asia-Pacific and Japan of Palm Inc., which popularized personal digital assistants (PDAs), said "one thing we find quite unique is that the Asia-Pacific has a unique wireless infrastructure emerging."

But Hoong Ngee Khoon, regional director for the global consultancy firm Cap Gemini Ernst and Young, cautioned against inherent business risks.

With the volume of business done through the mobile phone seen to boom, it is important to determine whether consumers, telecom operators, merchants or financial institutions will bear the risks, he said.

"Quite a few years ago in the Philippines when mobile phones had just taken off, mobile phone companies were busy going out there to acquire subscribers so they did not look into the credit risks. A couple of mobile companies went bankrupt because subscribers cannot pay," he said.

"In those scenarios the mobile operators actually bear the risks. So in a mobile economy, this issue has to be addressed especially if we are using the mobile phone to make purchases," he told AFP.

In buying a can of Coke using a mobile phone for example, the amount can be charged to the buyer's telephone bill, putting the risk on the carrier.

But in purchases involving bigger amounts, there is a question of who will bear the risk, he said, noting that telecom operators are not equipped to manage financial risks.

"This leaves room for who will bear the credit risk. And there's a lot of discussions around this area," Hoong said.

"We have been working with operators and financial institutions to see how we can come out with a hybrid model for financial services."

One model is issuing pre-paid mobile phone cards, but this would limit the amount of transactions. A post-paid scheme would lay the risk solely on the consumers and the merchants, he said.

"We believe that there will be a shift from the merchants to operators and to financial services and consumers. Right now, merchants manage the risks but over time, there will be a spread because of competition," he said.