Ditch That Wallet!

By Samir Makwana | Published 01 Mar 2007 13:34 IST
Ditch That Wallet!
Ditch That Wallet!

You can now pay bills using a mobile phone in India- the wave of m-commerce is upon us

No one likes bills. Especially when there's a lot to be shelled out, and when you have to stand in a queue to pay them. To our relief, a number of bill payment options have sprung up in recent years: one can now pay by cheque, Internet banking, telebanking, bill collection, cash cards, or even using a mobile phone.

Exploring this untapped potential are a number of companies coming up with innovative payment solutions. Payments by mobile is one of these, part of the evolution from e-commerce to m-commerce-mobile commerce.

The use of credit cards in India is nowhere as much as it is in Western countries. But even though the Internet penetration is high in urban India, people don't seem to be willing to make purchases online. This is fuelled in part by credit card fraud and the press coverage it gets; many people would never reveal their card number online. Some are even wary of handing over a card to a restaurant waiter, for example!

No comprehensive statistics are available for individual credit card fraud cases, but it is more than clear that consumers want a more secure payment option.

With the boom in the telecom industry and with big players in the market, mobile commerce has passed the nascent stage. Payment via mobile phone, which has existed for a while in developed countries, is now possible here as well. Not too many merchants might be accepting mobile payments as of now, but the idea is catching on.

The Evolution Of PayMate
Every month, over four million users are added to the number of mobile phone subscribers in India. According to the Telecom Regulatory Authority of India (TRAI), more than 65 million mobile phone subscribers were added in the year 2006, and there is a total of nearly 190 million mobile users in the country. A mobile is part of almost every second home, and is now being looked at for purposes beyond communication and entertainment.

Ajay Adiseshann and Probir Roy, founders of Coruscant Tec, a mobile content developer and services provider, founded PayMate India Ltd in July 2006. PayMate is a mobile commerce solution provider. PayMate's payment solution works on the "single SMS" model, wherein a registered user can make payments to a PayMate accredited merchant via a single SMS.

"Today, the mobile phone is part of everybody's life as a device for communication and entertainment. People use VAS (Value Added Services) from the content providers and mobile operators.

"We foresaw the potential of mobile phones as a commercial tool for transactions and founded PayMate. Our mobile payment solution is simple to use, secured, and it's an absolutely hack-free model," says Adiseshann.

As of now, this payment solution is available for Citibank bank account holders, and can be used by credit card as well as debit card holders. In the near future, PayMate services will be available to customers of other major Indian banks.

"Mobile payment is a new payment option we have adopted along with credit cards, Net banking, cash on delivery, and cheque collection. We're using mobile payment for our e-commerce platform as it is simple to use, and more important, it offers security against disclosure of credit card details. We feel that this mode of payment would be adopted everywhere for shopping and other commercial transactions as well in the near future," says Manish Agarwal, Vice President, Marketing, Rediff.com.

Initially, PayMate tied up with leading online portals-Rediff.com, Naukri.com, Jeevansaathi.com, Travelmartindia.com, Indiatimes.com, Makemytrip.com, Cleartrip.com, and Fabmall.com. Gradually, their merchant base has expanded to over 2,500 merchants accredited with PayMate's mobile payment solution. PayMate's merchant base can be accessed at www.paymate.co.in.

The Working Model
PayMate's mobile payment solution requires just a basic mobile phone with SMS service. One can enter a transaction from anywhere. As of now, Airtel, BPL Mobile, Hutch, and Reliance customers can register with PayMate.

There's no SIM upgrade, GPRS connectivity, or installation of an application required for mobile payment using PayMate. Except for the registration process, all transactions happen via SMS. PayMate services are only available in English.

Citibank customers need to send an SMS "PAYMATE" to CITI (2484). The customer will receive a call back, and registration details would be sought.
Upon completion of registration, the customer will receive a four-digit PIN number as an SMS, which can be changed later, also via SMS. This PIN number is required for all future transactions. Merchants are registered with PayMate and the bank. For pursuing transactions, the merchants would need a mobile phone or a PC with Internet connectivity.

The merchant logs in to his account at the PayMate Web site, and feed in the phone number of the customer and the amount to be debited. Only the mobile number is required to be given to a merchant by the customer.

Within a minute or two, the person paying receives an SMS message seeking approval for the transaction with the amount to be paid to the merchant. "The initial waiting time has been set as three minutes, in order to compensate for possible delays in receipt of messages due to network congestion or any other errors," says Adiseshann. The SMS has to be replied with the command words "PAY [Alpha Code] PIN" within three minutes. The Alpha Code is a unique code that is auto-generated for each transaction. It is sent you with the payment request message. If the message is not replied to within three minutes, the transaction process has to be restarted.

The SMS of the payment to the PayMate-accredited merchant is received by the bank, which debits the account after the phone number is verified. For completion of the transaction, a confirmation SMS is sent to both customer and merchant.
The PayMate service is free, and no monthly or yearly charges are levied. Customers are charged only by the mobile service provider for the SMS. Currently, the ceiling for transactions has been set to Rs 5,000 per transaction and Rs 10,000 per day. A certain percentage of the transaction is paid to PayMate by the accredited merchant as a fee.

The solution is safe, since no credit card details
are disclosed throughout the transaction

Safety And Security
The payment model of PayMate has been prepared in accordance with the security recommendations by Ernst & Young, a firm involved in accounting and professional advisory services. An individual has to reveal his or her credit card details only once-while registering with PayMate. (For all payment transactions with merchants, only the mobile number is required-no confidential information needs to be disclosed.)

If the individual's phone is lost, the bank as well as PayMate are to be informed so as to disable any transactions through that mobile number. The solution is safe, since no credit card details are disclosed between either of the parties throughout the transaction. Even for a PIN number change, the details go to the bank's and PayMate's servers.

The Future Of Mobile Commerce
As per the Mobile Value Added Services report prepared by IAMAI (Internet and Mobile Association of India) and IMRB International, the Mobile Value Added Services Industry will worth about $1 bn (Rs 4,560 crore) in 2007.

 "At present, our services are at very nascent stage, and we look forward to develop this mobile commerce ecosystem. Shortly, we'll roll out more services and solutions based on our experiences and learning over time. Our next target is the retail industry, which is the next big thing. From our end, an EDC Machine will be given to the accredited merchants, where they can key in the mobile number and the amount, which prevents any disclosure of the credit card details of the customer. The device is almost ready and will be rolled out within a few weeks," informs Adiseshann.

Collaboration with merchants from different industry verticals and services from other banks to roll out PayMate's services will be possible in near future. At present PayMate wants to develop the ecosystem-expand to various sectors where a number of merchants can provide consumers with the PayMate payment model.

Other mobile payment solutions are available, too, like Itz cash card and JiGrahak. Intrex India offers the Itz cash card, by which anyone can make payments for online retail and offline merchants and even telecom service providers.  The card is pre-loaded with a certain cash amount, with an account number and a PIN. JiGrahak is a service for which software has to be downloaded to the phone; one can then feed bank account or card (debit/credit) details and then select a payment option for transactions with PayMate-accredited merchants.

In Conclusion
"Mobile payment solutions are in their infancy and a lot of companies are looking at different solutions to deliver safe and secure payment solutions on the mobile. As more and more players invest in technology and innovative solutions, this could be a good payment option for consumers in the near future," says Agarwal.

Some wonder about the point of using a mobile as a wallet: why not just use credit cards-the security standpoint apart? Well, what about when you've just got pizza delivered and you don't have cash… the delivery boy isn't carrying around a card-swiping machine with him, is he?

To buy movie tickets, shop at malls, pick up CDs, book air tickets, donate to a temple, or enter into any transaction at all for that matter, mobile payment is gradually being made available-a tangible sign of the state of m-commerce in the country.

Samir Makwana
Samir Makwana

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