By Keng Siau and Zixing Shen

BUILDING CUSTOMER TRUST IN MOBILE COMMERCE

Gaining customer trust in m-commerce is a daunting process, extending from initial trust formation to continuous trust developmentbut it can be done.
While the Internet creates unprecedented opportunities for initiating customer relationships, trust is an essential ingredient for those relationships to bear fruit. Studies show nearly all customers refuse to provide personal information to a Web site at one time or another, a majority because they lack trust in the site [9]. Most customers are still not quite comfortable with the concept of Web-based business, and the electronic medium itself. They are skeptical e-commerce can satisfy customer needs unmet in the bricks-and-mortar business world, and they wonder whether e-commerce is technologically feasible and secure. From this uncertainty its a small step for customers to doubt the integrity of Internet vendors. Without social cues and personal interaction such as body language, the observation of other buyers, and the ability to feel, touch, and inspect products, customers can perceive online business as riskier in nature. Mobile commerce, the emerging subset of e-commerce also known as mobile e-commerce or m-commerce, faces the same problems troubling e-commerceplus a few of its own. Gaining customer trust in mobile commerce, which uses radio-based wireless devices to conduct business transactions over the Web-based e-commerce system [12], is a particularly daunting task because of its unique features. Whereas mobile devices are terrifically convenient for anytime shopping, their small screens, low-resolution displays, and tiny multifunction keypads make developing userfriendly interfaces and graphical applications a challenge. Mobile handsets are also limited in computational power, memory, and battery life. Wireless networks have their problems too, including limitations in bandwidth, connection stability, and function predictability. Also, these networks have a relatively high operation cost, lack a standardized protocol, and data transmitted wirelessly is more vulnerable to eavesdropping. In this article we use a model we developed for customer trust building to explore means of initiating and sustaining customer trust in mobile commerce.
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The concept of trust has been studied in disciplines ranging from business to psychology to medicine, and perspectives on it differ, but it can be loosely defined as a state involving confident positive expectations about anothers motives with respect to oneself in situations entailing risk [2]. This definition highlights three characteristics of trust. First, a trust relationship involves two parties: the trustor and the trustee, reliant on each other for mutual benefit. Second, trust involves uncertainty and risk. No perfect guarantee ensures the trustee will live up to the trustors expectation. Third, the trustor has faith in the trustees honesty and benevolence, and believes the trustee will not
Initial Trust Formation

Information Gathering (No Trust)

1st Transaction based on reward attraction

Drop out due to distrust

Evaluation on satisfaction

lished (see Figure 1). The key to forming trust is getting customers to start transacting with the mobile vendor through reward attraction, or by demonstrating features such as convenience, cost efficiency, and personal necessity. Once they are convinced to buy, customers must also have positive, direct experiences of the vendor during their transactions for a trust relationship to begin to form. Such positive direct experiences are considered the strongest trust signal with the highest potential for reducing perceived risk [4]. Various factors may influence the complex process of engendering customer trust in Internet shopping. Buyer characteristics such as need, motivation, capacity, and willingness, along with seller characteristics such as ability, benevolence, and integrity, all play a role in Internet purchasing behavior [1]. Customer perception of security and privacy control, integrity, and competence, as well as third-party recognition and legal framework, are important antecedents of trust in Internet shopping [3]. Elements of corporate branding, such as personal experience, familiarity, affiliation and belonging, transparency, factual signals and heuristic cues, may also be used to engender trust in Internet business [5]. We will discuss several of these elements as we present our mobile commerce trust-building framework.

Framework for M-Commerce Trust Building Continuous Trust Development The reliability and security needed to cultivate online trust [6] are equally important for mobile commerce betray his/her risk-assuming behavior. technology, especially in the early stages, since disapFigure 1. The e-commerce Business relationships would be nonexpointing performances of the wireless communication trust development system will make customers suspicious of its ability to istent without trust, which is expressed life cycle. in various business contexts such as deliver on promises. As mobile technology evolves, laws, contracts, and regulations, as well focus will shift from engendering customer trust in as in company policy and personal reputations, and technology to engendering trust in vendors. Technollong-term relationships. Not surprisingly, studies show trust also plays an essential role in successful Internet retailing [1]. Customer Trust in Gaining customer trust involves consideration of its Mobile Technology Mobile Vendor Mobile Commerce three components: competence trust, which emerges from an economic foundation; predictability trust, which emerges from a familiarity foundation; and goodwill trust, which emerges from an empathy foundation [11]. From a customers perspective, compe- ogy trust and vendor trust are equally Figure 2. Two components of tence trust in e-commerce is built upon the Internet important in securing customer trust customer trust in vendors skills, expertise, and operational abilities. Pre- (see Figure 2). mobile commerce. Figure 3 portrays a framework for dictability trust is grounded in the Internet vendors consistent behaviors. Goodwill trust involves trust in building customer trust in mobile commerce. The y-axis shows the stages of the e-comthe Internet vendors honesty and benevolence. Cultivating customer trust in e-commerce is a merce trust development life cycle proposed by Fung dynamic and time-consuming process, one that, and Lee [7] and illustrated in Figure 2. The x-axis according to Fung and Lee [7], involves initial trust for- shows the two components of customer trust in mobile mation and repeated trials, until a firm loyalty is estab- commerce, which are illustrated in Figure 1. In essence,
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Firm customer loyalty formed

Repeat Transaction

our framework proposes that building customer trust in mobile commerce is a continuous process, which extends from initial trust formation to continuous trust development, and with mobile technology and vendors as essential framework elements. In order to enhance trust in mobile technology, technical hurdles must be surmounted. Design improvements are needed on current mobile devices that
Familiarity Reputation Mobile Vendor Information Quality Site Quality Competence Integrity

Third-Party Recognition Privacy Policy Attractive Rewards Security Controls Open Communication Community Building External Auditing Mobile Technology Feasibility Reliability Consistency Initial Trust Formation Continuous Trust Development

pany history, and suggests its past behavior. Extra emphasis should be placed on developing company reputation because of the novel nature of mobile commerce. A good reputation suggests certainty and less risk in conducting business, and thus helps foster customer trust. Deliver high-quality information. The quality of the information posted on the company Web site has a direct impact on potential customers perceptions of the company and its products. Similarly, the quality of information delivered to customers mobile devices will also affect trust. Accuracy, timeliness, and usefulness are primary indicators of information quality [7]. Elicit third-party recognition and certification. The independent nature of third-party certification helps customers feel more secure in doing business with Web sites. Provide attractive rewards. Rewards such as free trials or gift cards can help attract potential customers.

enhance usability, enabling customers to perform business activities easily and effectively at no sacrifice to mobility and flexibility. Also, security must be designed into the system. Encryption, digital certificates, and private and public keys are among the measures that will help meet future security requirements in the mobile environment. Compared to mobile technology trust building, building trust in mobile vendors is more elusive and challenging. To engender initial trust formation in an industry unfamiliar to most potential customers, this young industry must disseminate information, cultivate interest, and convince potential buyers their needs will be met by mobile commerce. Specific ways for companies to initiate customer trust in the mobile environment include: Enhance customer familiarity. People tend to trust the familiar, and familiarity obtained through frequent exposure has the potential to engender trust. Publicity and advertising are two effective ways to achieve the desired familiarity. Both approaches enable customers to familiarize themselves with the company and its business. Repeated exposure to a company name, logo, design, and services reminds customers of the company and its business, and leads to familiarity. Build vendor reputation. Reputation reflects comFigure 3. Framework for building customer trust in mobile commerce.

Continuous Trust Building Because trust is not only time-consuming to engender, but also fragile and easily destroyed, the process of continuous trust development deserves special attention. Many successful methods adopted by ecommerce companies to overcome trust barriers are also applicable to mobile commerce. For example, Amazon provides an unconditional guarantee of security and is willing to cover any losses due to credit card fraud. Travelocity posts a detailed explanation of its privacy policies on its Web site. eBay provides a forum for buyers and sellers to rate each other after transactions. Some suggestions for continuous trust development include: Improve site quality. As the interface between company and customer, a well-designed mobile Web site should give customers sufficient information for making purchase decisions, ease of navigation, smooth vendor interaction, and necessary links to other Web sites. According to McKnight and Chervany [10], Web-design competence helps convey the impression of general vendor competence. Sharpen business competence. In the context of mobile commerce, a companys competence refers to its skills, technical knowledge, and expertise in operating mobile commerce applications. Business competence cultivates customer trust in the company and its products. The viability of mobile commerce largely depends on its players professional expertise. Maintain company integrity. As mobile commerce is an innovative concept surrounded by considerable skepticism, a mobile vendors actions must be congruent with its promises, and it must conduct mobile transactions fairly and responsibly. FirstCOMMUNICATIONS OF THE ACM April 2003/Vol. 46, No. 4

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movers consistent and benevolent behavior will help build a good public image for this emerging industry, and reduce perceived risk. Mobile vendors that are consistently friendly, reliable, and dependable help build customer predictability trust. Post privacy policy. Like their e-commerce counterparts, mobile vendors should post their privacy policies on their Web sites to demonstrate they are not opportunistic with regard to personal and transaction information. Such a step will increase customers willingness to share their information. Here, privacy policy refers to the mobile vendors regulations to protect customers personal information collected in the course of mobile transactions, as well as confidential transaction contents, from unauthorized reading, copying, or disclosure. Strengthen security controls. Since data transmitted wirelessly is less secure than in the wired network, maximizing security is an urgent priority. Security controls, which provide technological and organizational support to mobile commerce, ensure timely and accurate completion of transactions, prevent fraud and manipulation, assure smooth transactions, and safeguard transaction authentication. Various methods such as digital signatures, encryption mechanisms, and authorization functionality can relieve customer security concerns regarding wireless communication, and enhance trust in wireless commerce. Foster a virtual community. Research suggests the sense of belonging to a community cultivates positive feelings, and positive evaluations from group members generate a communal sense of trust [5]. Some e-commerce companies such as Amazon and iVillage successfully host virtual communities in which members exchange experiences and develop relationships. Mobile vendors can replicate this model to personalize their companies and create a sense of affiliation and community loyalty. Encourage communication and increase accessibility. Synergy arising from the contribution of all participants engaged in reciprocal communication forms the foundation of a trusting relationship [8]. Mobile vendors should communicate clearly with customers, and make every effort to reduce information asymmetry. Goodwill shown in the communication process provides the necessary foundation for nonopportunistic behavior, makes customers feel they are in closer contact with the company, and enhances credibility and trustworthiness. Use external auditing to monitor operations. External auditing helps maintain customer trust in mobile commerce by disciplining the mobile vendor to behave fairly and legally, forestalling dishonesty
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and fraud, and demonstrating how mobile vendors are living up to their assertions.

Conclusion Customer trust is crucial for the growth and success of mobile commerce. However, building customer trust is a complex process that involves technology and business practices, as well as movement from initial trust formation to continuous trust development. c References
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Keng Siau (ksiau@unl.edu) is an associate professor in the Department of Management, University of Nebraska-Lincoln. Zixing Shen (zshen1@bigred.unl.edu) is a graduate student in the Department of Management, University of Nebraska-Lincoln.
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