It is not surprising that India has become a thriving center for m-commerce. The Telecom Regulatory Authority of India reports that the number of mobile subscribers has already reached 185 million, far surpassing the country’s 9 million online customers.

Ajay Adiseshann, managing director and founder of PayMate, says his country is leapfrogging the internet revolution and going straight to the mobile experience. “The first experience people will have of digital shopping, or e-shopping, will probably not be over the internet but rather on the mobile,” he says. “That is where the opportunity lies, and that is why businesses are now looking at the mobile phone as the next channel for providing their services to customers.”

PayMate launched its payment service last year, after spending two years developing an “ecosystem” that connects banks, retailers and customers using SMS. The service has been recognized both in India and abroad for its simplicity and ease of use. It works like this: You register for PayMate with your bank by calling or sending a text message. Once your phone number has been verified by the bank, you are given a unique personal identification number (PIN) that you use whenever you make a payment online, through your phone or over the counter.

PayMate’s ecosystem has more than 3000 retailers in various categories; to make a purchase, all you have to do is share your phone number. You then instantly receive an SMS from the retailer asking for authorization of payment, which you do with your PIN and by reentering a code sent in the SMS. Once you reply to the SMS, your bank confirms the details and debits the amount from your account, sending both you and the retailer an SMS confirming the purchase. The service works with any phone and is free of charge. The only cost is the SMS, which, in India, means an average of USD 0.05 (2 rupees).

Adiseshann says PayMate has woken people up to the reality of m-commerce. “People around the world have been talking about m-commerce for ages but it is only now since PayMate has entered the scene that they are starting to take it seriously and looking at implementing it at their end,” he says. “In a short time, we have had close to 85 percent penetration rate among m-commerce merchants in India, and we hope to do the same thing in offline scenarios too.”

People who sign up to PayMate usually use the service to buy items such as flowers and movie tickets, but Adiseshann hopes they will use it for a lot more in the future. “We are introducing the possibility for people to pay their utility bills with their phone, and we anticipate that this will be a key driver from a user-uptake perspective,” he says.

Another initiative that Adiseshann hopes will encourage people to use PayMate is the introduction of the mobile airline ticket, or m-ticket. With the “FlyBuySMS” service, launched in partnership with Kingfisher Airlines, all the customer has to do is send an SMS, and then the details of all Kingfisher Airlines flights for the dates specified will be sent to the mobile phone. To book a ticket, the customer replies to the SMS with the preferred flight option. “You use this m-ticket to check in at the airport,” Adiseshann says. “You don’t even have to go online.”

The next big thing for PayMate is to offer its service at restaurants, which means people can use their mobile phones to pay for meals. “You receive an SMS that you reply back to, the restaurant receives your payment, and you are free to leave,” Adiseshann says. “You will also be able to use this for home deliveries and even groceries, which means you don’t have to give out sensitive credit-card details over the phone.”

Adiseshann is positive about the future of m-commerce but says innovation and partnerships are needed to make it a viable payment option. “When you are changing consumer behavior, you have to make it as simple as possible. That’s what we have been working on and we are seeing the benefits of this now,” he says.

Torunn Hansen-Tangen