To appear in Proceedings of IS 2000 Fukushima, Japan November 5-8, 2000, http://is2000.u-aizu.ac.jp/ Abstract-- Internet E-Commerce has been flourishing for the last few years, especially with the advent of world wide web. Mobile Electronic Commerce has started recently to appear in the scene by exploiting the advantages of internet, mobile computing and mobile communications in order to provide a large number of advanced services to mobile users. The potentials of mobile e-commerce are enormous while related technical, business and legal issues become more complicated. The goal of this paper is to present and discuss problems associated with the trading and billing of tangible and intangible goods in an environment, where mobile handheld devices are used to conduct transactions and to identify requirements for these. Index Terms-- Transaction Processing, Mobile Electronic Commerce, Mobile Computing, Wireless Application Protocol, Wireless Networks I. INTRODUCTION Electronic Commerce (E-Commerce, EC) concerns the digitization of markets and the emergence of a new industry to sustain these electronic markets. The last few years, with the advent of World Wide Web there has been a remarkable growth in the business to consumer E-commerce (B-to-C EC) which to a great extent is synonymous with electronic retailing. A large number of shopping opportunities all over the Internet appeared the last few years offering every kind of goods from digital audio and video (mp3, real-audio etc.) to physical books and CDs, and lately even to cars and houses (see e.g. Amazon's site [22]). Mobile Electronic Commerce (MEC) has started recently to appear in the scene as a result of the continuously increasing number of hand-held devices, which makes them an ideal channel for offering a large number of advanced services to mobile users by exploiting the advantages of Internet, mobile computing and mobile communications. As MEC we define any type of economic activity that is considered as electronic commerce by legislation of some country or by business community and that is performed using a mobile wireless terminal by at least one party. In most cases the mobile terminal is used by a customer (not UNIVERSITY OF JYVÄSKYLÄ, Department of Computer Science and Information Systems, Agora Building, PO Box 35, FIN-40351 Jyväskylä. E-mail: jari.veijalainen@jyu.fi, afrodite@jyu.fi by merchant or bank) and the wireless network used is a wireless telecommunications network, although any other wireless network, such as wireless IP network could be used, too. We are aware that the definition of MEC above is still vague and raises many questions. One reason is that the very concept of electronic commerce is currently not very precisely and uniquely laid down. Second, the concept of mobile computing is also still evolving; some people have coined the term ubiquitous computing to address the possibilities of anywhere, anytime computing. Mobility does not preclude mobile devices, but in our view the new possibilities and challenges for the EC are brought up via wireless portable terminals that are typically personal and hand-held. Our view is thus that MEC is a special case of EC, i.e. MEC has all the opportunities and problems that EC has, but it offers in addition some novel and very exciting possibilities - as well as new threats and challenges. Technical, business and legal issues become more complicated in MEC than in EC performed using stationary workstations and similar devices. A number of MEC-specific novel applications and services, especially localised and personalised services have started to appear. We consider the location-based services now emerging in 2G+ and 3G telecommunication networks to fall under MEC in this context. At the same time, applications and services already offered in Internet for PC level fixed terminals are becoming available for mobile users. Thus, users can now buy various things, order goods and services, etc. using their mobile hand-held terminals instead of PCs. Although there are still differences between the quality and variety of services for different terminal types, they are becoming smaller, even vanishing. The Wireless Application Protocol (WAP) [14] plays an important role in especially GSM-based MEC as it bridges the gap between the mobile world and the Internet world (TCP/IP networks) by optimizing standards for the unique constraints of the wireless environment. It also offers complicated enough security mechanisms and application platform for mobile electronic commerce applications to be developed. The goal of this paper is to present and discuss problems associated with the trading and billing of tangible and Prof. Jari Veijalainen i and Prof. Aphrodite Tsalgatidou ii Electronic Commerce Transactions in a Mobile Computing Environment