Smartphones, which are used by the vast majority of people in Japan, are not just for making phone calls and sending texts; they’re for watching videos, shopping, searching the web, making payments, and many other activities. The devices have become an indispensable part of daily life as people navigate an increasingly digital society.

In recent years, cashless payments—which include payments by smartphone—have become widespread both in Japan and around the world, making shopping much more convenient and diverse. People can now enjoy shopping more easily on their smartphones and other mobile devices. It has also become common for shopping sites, such as ecommerce malls, to be developed with mobile users in mind, encouraging mobile device use. Consequently, online shopping via apps continues to gain momentum.

Transactions that take place on mobile devices are called “mobile commerce,” or “m-commerce.” There are several kinds of transactions beyond shopping that fall under this umbrella. In this article, we’ll explain the fundamentals of mobile commerce, including the different types, its advantages, points to note, and Japan’s mobile commerce market size.

What’s in this article?

• What is mobile commerce or m-commerce?
  
• The mobile commerce market size in Japan
  
• Types of mobile commerce
  
• Advantages of mobile commerce
  
• Points to note about mobile commerce
  
• How Stripe Payments can help
  

What is mobile commerce or m-commerce?

As explained above, mobile commerce—also called m-commerce—refers to commercial transactions that are completed on mobile devices, such as smartphones and tablets. For example, when a shopper purchases goods through an app on their phone, completing payment via the business’s online payment system, that transaction is a form of mobile commerce. Recently, mobile commerce payment methods have expanded beyond credit cards to include multiple smartphone payment options (e.g., QR code, ID, and carrier payments). This has further simplified the purchasing environment for customers.

We’ll discuss the types of mobile commerce in more detail below, but one thing to note here is that it encompasses more than just online shopping. Mobile commerce is also the following kinds of transactions:

• Subscriptions and pay-as-you-go services for digital content
  
• Location-based services (i.e., a mechanism that enables customers to purchase products and services by using information specific to the area they’re currently located in)
  
• Mobile banking
  
• Money transfers on mobile devices
  
• Mobile payments
  

The difference between ecommerce and mobile commerce

The difference between ecommerce and mobile commerce might be confusing at first. Ecommerce encompasses all commercial transactions that are conducted over the internet. On the other hand, mobile commerce refers to ecommerce that is specifically tailored to mobile devices, meaning commercial transactions that are made using apps and mobile sites. This means transactions that are made using smartphones fall under the definition of mobile commerce, but ecommerce transactions that are made using computers and through ecommerce sites do not. Therefore, mobile commerce is a part of the broader definition of ecommerce.

The mobile commerce market size in Japan

Japan’s mobile commerce market is expanding every year. According to a market size survey conducted by the Mobile Content Forum (MCF), the mobile commerce market size in 2023 reached just shy of 9.6 trillion yen, representing a 12% increase from the previous year.

The growth of the mobile commerce market can be attributed to the rapid spread of smartphones, which has significantly improved internet connectivity and further diversified customer purchasing behavior. Various measures put in place by ecommerce sites to respond to the increased demand for online shopping during the COVID-19 pandemic also contributed to market growth. These included:

• Adaptation of systems for mobile devices on ecommerce sites
  
• Optimization of payment environments
  
• Improved app convenience
  

Types of mobile commerce

Mobile commerce can be broadly divided into three types: mobile shopping, mobile banking, and mobile payments. Let’s take a look at these types one by one.

Mobile shopping

As its name suggests, mobile shopping is online shopping on a mobile device. The biggest advantage of mobile shopping is its convenience; customers can do it from anywhere, at any time. For example, let’s say an individual is interested in a certain product but is too busy at work to visit a physical store during the day. They can purchase it from an online shop during their break instead. Or, let’s say someone wants to reserve bullet train seats (i.e., Shinkansen) or concert tickets the moment they go on sale. Mobile shopping allows them to easily reserve and purchase them via a mobile site or app without having to visit a physical store.

Mobile banking

Similarly to mobile shopping, mobile banking allows customers to perform transactions—such as transfers and balance inquiries—anytime, anywhere over the internet using their smartphones. There’s no need to bring a physical bank book to a teller or visit an automatic teller machine (ATM). The customer can take care of various banking transactions through a smartphone app, and when they have an inquiry, they can speak with a chatbot or dedicated chat operator.

Mobile payments

It could be argued that the most important type of mobile commerce is mobile payments. With a huge number of people now owning smartphones, mobile payments have gained global attention among the available cashless payment methods. With mobile payments, the customer can complete transactions directly from their smartphone without needing cash or a credit card. This means that even if they forget their wallet when they go out, they can still make purchases from stores, vending machines, transportation services, and other businesses that offer mobile payment services.

Advantages of mobile commerce

Mobile commerce offers users multiple advantages. Let’s take a look at them.

Exceptional convenience

As you have probably already gathered, the greatest advantage of mobile commerce is its incredible convenience. With a mobile device, customers can shop whenever and wherever they want, and buy digital content such as videos and music for immediate enjoyment. This eliminates the hassles commonly associated with purchasing (e.g., having to wait in line for a product), boosting the customer’s willingness to complete a purchase.

Also, ecommerce sites and apps that are mobile-optimized have systems that are tailored for smartphones, allowing users to enjoy the same level of comfortable service from their smartphones as they would from a computer.

Comfortable and quick payments

The spread of mobile payments has made payment environments more convenient, enabling quick and easy transactions both in physical stores and on ecommerce sites.

More businesses have been introducing multiple payment methods—including mobile payments—with both Japanese customers and overseas customers in mind. For example, as a business owner, you might consider enabling global payment methods such as WeChat Pay, a widely used mobile payment method in China, on your ecommerce site and in your physical stores to attract overseas customers. This would be an effective strategy for both cross-border ecommerce and inbound tourism business.

Optimal service through enhanced personalization

Mobile commerce includes enhanced personalization, with personalized products and services suggested to users based on the location data from their mobile devices and purchase history data. Personalized suggestions allow users to easily find products and services that meet their needs.

Another advantage of mobile commerce’s enhanced personalization is that users can add out-of-stock items to their wish lists or set up notifications to receive real-time alerts via push notification or text when an item is back in stock.

One way to implement enhanced personalization is to use the omnichannel business strategy, which creates an environment in which users can more easily find what they’re looking for based on their locations. With omnichannel, you can provide inventory information for the physical store closest to the user based on where they’re currently located with their mobile device. You can also give recommendations based on the products the user is looking at.

This integration of online shopping and physical stores creates a new shopping experience that enhances customer satisfaction. It also tends to lead to increased sales for businesses across both ecommerce and physical stores.

Points to note about mobile commerce

While mobile commerce offers advantages, there are also several points about it that need to be considered.

There are display limitations due to small mobile screen size

Most mobile commerce is done on smartphones. Compared to a computer, the screen size is significantly smaller, so the scope of content that can be displayed on a smartphone is limited. Therefore, when a user wants to look up more detailed information, they might have to repeatedly tap on the screen or navigate to other pages, which can be inconvenient in some situations.

To resolve these issues, it is important for businesses to optimize their ecommerce sites and apps for mobile devices, building simple and easy-to-use designs and systems that make customers want to keep using the app.

The user’s internet connection could cause inconveniences

Since mobile commerce involves transactions done over the internet, an internet connection is key. An unstable internet connection can therefore cause issues that prevent smooth shopping.

Maintaining a stable mobile network connection is an absolute must for using mobile commerce.

A high-quality payments infrastructure is important

A key point in mobile commerce is whether the payments infrastructure is sufficiently developed. Pay particular attention to the following two items.

Payment method options

If you offer few payment options, a customer might be unable to pay using their preferred method and could abandon their purchase, either at a physical store or on your ecommerce site. Further, if your store doesn’t offer cashless payment methods such as mobile payments, there is a risk that customers might go elsewhere. We therefore recommend considering what your customers want when introducing multiple payment options.

That said, blindly introducing multiple payment methods can confuse customers about which one to use. It is important to determine which payment methods to introduce based on an understanding of your target customer base.

Payment safety

Mobile payments are highly convenient, but some customers might hesitate to make payments from their smartphones due to security concerns. These concerns aren’t specific to mobile payments, but rather cashless payments in general. It is therefore important for businesses offering cashless payment methods to prioritize customer safety above all else. Every business must implement robust security measures within its own systems and introduce payment services that offer excellent security.

Also, customers must never share personal payment information such as passwords with others, and they should always exercise caution when handling valuables, including their smartphones. There are many types of mobile payment options available today, and a customer might feel unsure at times about which payment method to choose. We suggest that customers first determine whether it is safe and practical to make a purchase, and then select the option that is best for them when making the payment.

How Stripe Payments can help

Stripe Payments provides a unified, global payments solution that helps any business—from scaling startups to global enterprises—accept payments online, in person, and around the world.

Stripe Payments can help you:

• Optimize your checkout experience: Create a frictionless customer experience and save thousands of engineering hours with prebuilt payment UIs, access to over 125 payment methods, and Link, a wallet built by Stripe.
  
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• Unify payments in person and online: Build a unified commerce experience across online and in-person channels to personalize interactions, reward loyalty, and grow revenue.
  
• Improve payments performance: Increase revenue with a range of customizable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorization rates.
  
• Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% uptime and industry-leading reliability.
  

Learn more about how Stripe Payments can power your online and in-person payments, or get started today.