When Alexander Graham Bell invented the telephone back in 1876, he probably never envisaged the power of telephony. After providing voice, entertainment, information, data and video on the mobile phone, service providers are now looking at transforming the ubiquitous mobile into a “purse” of sorts. According to Celent Research, the mobile phone will become a prominent vehicle for low value payments on a global basis, with global mobile commerce revenues surpassing $55 billion by 2008.

The latest report from UKbased Juniper Research predicts that the global mobile commerce market — excluding entertainment purchases — will become a $40 billion industry by 2009, fuelled by growing volumes of micro payments such as payments for tickets. The Indian marketplace too is abuzz with m-commerce players and initiatives. And mobile services providers are now looking at offering services wherein the subscriber can pay specific bills via SMS.

Airtel has tied up with mobile payment company mChek, and now allows postpaid customers to pay their bills by sending a simple SMS. But customers need to have a valid Visa credit card issued by any Indian or MNC bank to avail of this facility. MChek is in the process of adding MasterCard also to its payment option. After which debit cards will become an acceptable payment option. Says Sanjay Swamy, CEO, mChek, “Instead of standing in queues or wasting time going to a particular place to debit the amount, people will prefer to make the payments from the comfort of their homes, by simply typing out an SMS. But these are still early days and there is a long way to go before it becomes a way of life for Indians.”

Growth Driver

Indians were introduced to m-commerce when they were given an option to buy their movie and/or flight tickets using their mobile. Ajay Adiseshan, founder of PayMate, which offers rail and air ticketing services, says ticketing will be the first to be adopted by customers. “But unless we can offer a bouquet of services, from ticketing, to shopping to utility bill payments, it will be difficult to keep the customer hooked. Once they are convinced of the security aspect, they will stick on,” he says.

Adds Arvind Rao, co-founder of OnMobile, “Ticketing will be the key driver. To be precise, impulse buys are facilitated by a mobile phone. For instance, if you suddenly feel like a movie, it’s easy to pick up your phone and make a booking. But a planned vacation for the family is not something you will manage using your phone.” Juniper’s study also shows that although the current m-commerce market is dominated by mobile entertainment services such as ringtones and games, the purchase of tickets — such as car parking and cinema tickets —using mobile phones will become a major application area by 2007 with revenues totalling $39 billion by 2009.

Roadblocks to Take-off

According to Zinnov Research’s Amit Aggarwal, there are many reasons why m-commerce is still at a nascent stage in India. “SMS can prove cumbersome in cases where you need multiple levels of information to make a decision. If you are looking for a movie ticket, first you need to decide which theatre, on which day, the different timings, the movies that are showing at that time etc. Voice hastens the decision making process,” he says.

Adds OnMobile’s Rao, “The service will have to be offered with different options like SMS/voice/WAP. Voice is generally the medium of choice for the masses. And if one were to go vernacular, the reach is terrific. The problem with SMS etc is that the user interfaces on phones are restrictive. We cannot give them a huge menu or drop down list. That proves cumbersome.” But PayMate’s Adiseshan disagrees. According to him SMS will be the medium of choice for transacting. “The problem with a voice-based service is that people have to be on the call till they get the necessary information, and these calls are normally charged at prohibitive prices of Rs 6 per minute,” he says.

Another issue is that a lot of times there are diction/accent issues. The system might not recognise a certain command given by you, since it’s not programmed to understand a particular word/dialect/twang. “The voicebased platform has still not been perfected,” says Adiseshan.

Advantage over PCs

But one thing looks certain — m-commerce will overshadow transactions over the internet with the help of a PC. The total wireless subscriber base in India touched 201.29 million at the end of August 2007, far higher than the PC base of about 23 million. So the potential base for m-commerce is correspondingly higher. Says Zinnov’s Aggarwal, “The PC as a medium of communication did not take off in India. Even e-commerce did not find too many takers, since people were not comfortable with giving out their account details to something impersonal like a computer. But in the case of a mobile, it has become a fulltime lifestyle companion. And people have begun to use it for minimal banking purposes like checking their account balance. So transacting over the mobile is simply the next step forward.”