Global Economics

E-Commerce for Indians, on Their Cell Phones


With ngpay, JiGrahak's mobile-commerce service, Indians are using their handsets to bank, buy movie tickets, and order food and flowers

A decade has passed since telecom operators and handset makers first tried to get Europeans excited about mobile-phone commerce by demonstrating it was possible to buy a Coke by sending a text message to a vending machine. The efforts have fizzled to date: Despite lots of nudging and the introduction of sophisticated devices like the Apple (AAPL) iPhone, the majority of people have never bought anything other than music and ring tones via their handsets.

Not so in India, where a growing number of consumers are using even the most basic cell phones to order food and flowers, do their banking, pay bills, make charitable donations, and buy airline, bus, rail, or movie tickets. Indians can even make advance bookings at temples via mobile phone to reserve the offering of pujahs, or prayers, during busy holiday periods.

More than 230,000 consumers in India have signed up to use such services since Bangalore-based JiGrahak Mobility Solutions first launched its "mobile mall" services last February, and the company expects to hit the 1 million mark within six to eight months. JiGrahak was one of the 34 companies named on Dec. 4 by the World Economic Forum as "tech pioneers" offering new technologies or business models that could advance the global economy and have a positive impact on peoples' lives.

Of course, 1 million customers is still only a tiny portion of India's overall population. And, notes John Strand, founder of Strand Consult, a mobile consultancy in Copenhagen, it would be a mistake to dismiss the potential for rival payment services provided directly by mobile operators. But in launching ngpay—the brand name for its free mobile commerce service—JiGrahak has achieved what few companies have managed to do anywhere in the world: provide an easy-to-use, one-stop shop service that resonates with consumers.

That's no small feat. "In Europe I don't know of anything that has been hugely successful," says Tom Byrd, a researcher for British mobile consultancy CCS Insight. "The services have always been very niche, and the actual execution has always been poor and only attracted small numbers of people."

Services for the Underserved

At the same time, JiGrahak is offering the first practical way for the average consumer in India to use e-commerce. And, it is helping to bring such services to underserved rural areas. Some 70% of ngpay's users are outside of major Indian cities.

There are only about 30 million PC users in India, but more than 300 million people have mobile handsets and 65 million of those are connected wirelessly to the Internet. Mobile commerce didn't take off right away because consumers had to memorize access numbers and codes for each merchant, or download several applications before they could begin shopping, says Sourabh Jain, JiGrahak's 31-year-old chief executive. A computer scientist by training, Jain worked for Lucent, now part of Alcatel-Lucent (ALU). It was there he says he recognized that mobile could be a game-changer for India, so he set out to build a consumer brand.

To use ngpay, customers send a text message to JiGrahak, which replies by downloading a small application onto their handsets. That provides immediate access to 250 mobile services from more than 65 partners across 10 commercial sectors. The service runs on 500 different phone models from a variety of handset manufacturers.

The service also works across both GSM and CDMA mobile networks, uses very little memory or bandwidth, and works on even the lowest-cost devices. Consumers see a full suite of electronic commerce, banking, or other services in a unified menu on their phone. Each service is validated by financial institutions, banks, and security auditing firms. Users can pay for transactions in one click, choosing from a range of payment methods including credit cards, bank accounts, debit cards, and cash cards.

Ngpay is already the largest mobile channel for Indian Railways, HDFC Bank (HDB), and movie ticketing. The service does not require a phone company partner, but Jain says he is currently in discussions with some of the largest operators in India, which are interested in adding the service to their repertoire.

Schenker is a BusinessWeek correspondent in Paris.

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