Now, pay shopping, credit card bills via mobile

You can soon pay your shopping, restaurant, credit card, and electricity bills, and even send money to someone through your mobile phone! PayMate is here with a mobile payment solution, which offers convenience and flexibility of making payments by simply sending an SMS.

Realising the huge potential of mobile proliferation in India, Probir Roy and Ajay Adiseshann joined hands to launch a mobile payment company, PayMate.

"We realised that mobile operators will have to offer something more in terms of content which Indians always love: be it entertainment, sports or news. So we started providing content to them. Since a mobile phone takes care of your communication, information and entertainment needs, we realised that it should evolve into payment device as well," says Probir Roy, co-founder and director, PayMate.

"Currently, PayMate's payment system is only for Citibank customers. There has been a fair amount of interest in our service. But it's still early days as this kind of a service takes time. . . we have to build on the mobile payment category. It will be a long and hard route because it's about changing people's attitude and mindset," Roy explains.

Roy talks about his transition from a professional to an entrepreneur, how the whole concept of mobile payment evolved and how it's going to make a difference in India.

Roy spoke to Manu A B at the Indian School of Business during TiE-ISB Connect 2006.

How did you start on this project?

We started a company called Coruscant Tec in 2003-04. We started work in the mobile WAP (wireless application protocol) space, and started offering content to all mobile operators and major online portals. We realised that the mobile commerce was just emerging and we should not come out very fast.

So we incubated the mobile payment system for two-and-a-half years and used revenues from Coruscant to sustain the mobile payment business. During this time, we developed an ecosystem on how mobile payment can work in the Indian financial system.

It took us over two years to talk to banks, electronic payment infrastructure providers, and merchants to see how best we could activate this service. We launched the service in July this year.

Citibank has spent two years to put this system through their due diligence and global infotech systems. So it takes a long time. We were fortunate to be EBIDTA positive from the first year.

How does the mobile payment system work?

Currently, the payment system is only for Citibank customers. A customer needs to register with the bank for this service. Once registered, you will receive an SMS with a MPIN. You can change the PIN to any number you can easily remember.

You can shop from merchants and avail of goods and services without entering your credit card number or bank account number. All you need to do is choose mobile payment as an option and follow the instructions. You have to send an SMS with the amount of purchase and your MPIN once for the transaction.

It's that simple. And safe too since you have a unique PIN to transact and you don't have to give out your card numbers.

On the launch day, we had about eight merchants now we have about 15 merchants. Our key merchants include Rediff.com, Cleartrip, Futurebazaar, Gili, JeevanSathi, 99acres, Naukri.com, Telebrands, Dish TV, OnMobile, VSNL, Fun Republic, Inox, PVR, Fame Adlabs and Travelmartindia.

Will Indians accept a mobile payment system?

In India many prepaid top-ups are done through SMS. There are banks -- like Citibank -- that provide this service and there are half-a-million people who have registered as prepaid top-up users through SMS. Half of this group consists of Citibank customers. So our prepaid service will be an adjunct to the existing service.

How many people were involved in the whole project?

We had about 35 people. Now, we have split into two companies. PayMate has about 12 people. We will be hiring about 40 more people for Mumbai and Chennai where we have a small development centre.

How do you like being an entrepreneur?

I am not a natural entrepreneur. I have spent about 15 years working with the United Nations, the Government of India and various MNCs (multinational companies). The common thing about all these jobs is that I was in touch with technology and emerging media.

I wanted to do something on my own and the dot-com bust had just happened during that time. I was on the board of a Web company and we were trying to turn it around. We succeeded, but we realised that mobile penetration was growing at a faster pace than the Internet.

We realised that mobile operators will have to offer something more in terms of content which Indians always love: be it entertainment, sports or news. So we started providing content to mobile operators. A mobile phone takes care of your communication, information and entertainment needs. The next stage was to build it into a payment device.

How has the transition from a professional to an entrepreneur been?

I had to change my whole outlook. When you work for a big company, you get used to a certain structure and pattern of work. Here you have to think on the spot, you have to be open to ideas and have to change your way of thinking.

You don't have so much time and resources to apply all your learning and analytical skills. You have to be really fast. But it is fun and I'm enjoying it.

How difficult was the process of building the company?

It took a whole lot of time -- convincing people, testing the product, prototyping it, security testing, etc. I compare this to building a supercar that can run at 200 miles per hour. . . after building a super car we realised that there was no road on which it could run, so we had to build a highway.

So it took time and all this while we bootstrapped ourselves, we didn't go for any kind of funding initially. We received our first funding after we went live. We talked to two top VCs (venture capitalists) in the world -- Ram Shriram's Sherpalo Ventures, and Kleiner Perkins Caufield & Byers.

We were very comfortable with them. They shared our vision, had the domain expertise, and had a good track record of building companies in the e-space. We received a funding of $5 million.

How many people have registered for the services?

There has been a fair amount of interest in our service. But it's still early days as this kind of a service takes time. We have to build on the mobile payment category. It will be a long and hard route because it's about changing people's attitude and mindset. Television sets, washing machines, ATMs and credit cards have taken years to pick up. So we need to think from a long-term perspective.

For our service we need to build a customer base with the help

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We need to reach out to a large customer base through the banks to offer people a convenient way to satisfy their daily needs. It's all about hassle-free living.

What do you think about upcoming entrepreneurs? Have the quality of ideas improved over the years?

There has been a huge change in Indian entrepreneurs in the last 10 years. From 1999-2000, there has been a sea change in quality of ideas, funding methods and approach of funding. Earlier, when people had an idea they used to first look out for fund, now they build on the product and look for funding to scale the business further.

Venture capitalists are more confident to fund someone who has got a proof concept. Large technology corporates are also looking at ideas to build on now. It's ultimately survival of the fittest!

There has been a huge change in the entrepreneurial mindset of Indian entrepreneurs. Out of the 400 students at ISB (Indian School of Business-Hyderabad), 200 have registered for the entrepreneurship development programme. I'm told that 5 per cent of the batch will become entrepreneurs at some point.

At ISB, there are students who have already started their companies. Indians by nature are more service-oriented. . . the fact that many B-school students are looking forward to nurture their ideas and build their own companies is a positive sign.

This is an inflection point in our economic mindset. Being an entrepreneur, you can't be scared of failure, but in India failure does not go well with the society. However, now there is less stigma attached if an entrepreneur fails. Also, the entrepreneur is well prepared to take on the challenges to work harder and succeed. There is no doubt that this is a good time for entrepreneurs in India.

I would not say it's easier, but there is a momentum now. There are people who are willing to fund you. But they will be stringent about funding because they have also gone through the boom and bust period. Many of them have the experience of starting companies so they are very knowledgeable.

Many students coming after higher learning want to become entrepreneurs and people after basic education also want to make it big on their own. And the system supports them.

In India, many family-owned businesses have not considered education as a prerequisite for becoming a successful entrepreneur. But in today's world good education is a good complement to becoming a successful entrepreneur.

I have come across many people without good education but with good business acumen and they have succeeded. So business acumen with no education is as good as great education with less business acumen. But VCs tend to prefer people with good educational background.

It helps a lot. Being a good professional and having had the privilege to work with some to the finest institutions helps in meeting with people, it broadens your outlook, and it helps you build good equity amongst a group because people know who you are.

I would be all at sea without the experience. If you work for many years, you will be able to leverage the experience and contacts to build business.

During the period you are making a company, no one knows what you are doing or who you are. You don't have the safety of a good corporate. It is a risk and a burden. But at the end of the day it's a great learning experience.

In the last few years, I have learnt a lot not only about myself but also about the business. Adaptation is very important for a successful entrepreneur.

There is a huge interest in India now. US investors are keen on partnering with Indian entrepreneurs to cater to the Indian market. Both our companies are based on the Indian telecom market. Though we have aspirations for a global level, right now our focus will just be the Indian market -- to provide some differentiated value-added service to discerning Indian customers.

Coruscant Tec was selected among the top 100 companies by Red Herring in August. PayMate was selected among the top 10 cool companies by Business Today.

Will technology-oriented companies continue to rule as compared to other sectors?

Now the VCs are neutral to technology. . . they are not just looking at technology, BPO or ITeS. They have expressed interest in non-conventional areas like retail, biotech, life sciences, pharma, nanotechnology, manufacturing and even media.

Do you think the IT sector will continue to drive the economy or will other sectors emerge as big as IT?

Other sectors will come up in a big way in the next five years. The other sectors put together affect the lives of a billion-odd people, so it would be great to see other sectors booming.

IT has been a success story all these years and it will continue to be a core driver. But other sectors will also get need new ideas and more growth.

India has remained a service-oriented country? Is this a good trend or should there be more focus on product development?

Product development is very important, but we have no track record in creating successful products. We are not a product-making country. We are very good in services, it's a part of our culture. We were under the British rule so we are more service-oriented; we want to work for people.

The IT (information technology) and BPO (business process outsourcing) revolution has spawned from the cultural paradigm. We need to get into more original IPRs (intellectual property rights) and products for the Indian market.

We will have more products in biotech and genomics in future. In fact, our company's product is patented.

We are in close talks with the major Indian banks. We have plans to tie up with a dozen banks in the near future. We are also in talks with airlines, online travel portals, travel agencies with both offline and on line presence and retail chains to build a good customer base.

Now, pay shopping, credit card bills via mobile

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