The messages - mentioning the recipient's account number and the amount to be transferred -- are sent to the bank, which then does the needful.
Akodara in Sabarkantha district, just 90 km from Ahmedabad, is considered the country's first digital village - with 24-hour WiFi. But what has helped more is the pilot project from ICICI bank that was launched a year ago.
"If I have to buy any item worth even Rs 10, I just have to SMS to my bank with the grocery shop's account number. The money is debited from my account and is deposited it the grocery shop's account," said a resident, Piyush Patel.
Mr Patel, who runs a dairy, says even his own customers pay him the same way and the money is credited to his account.
The grocery shop owner says he isn't worried about the din raised by the currency ban. "These days there is a problem of currency, but not in this village. An SMS is triggered and our account is credited with the money and we sell the goods,'' grinned Pankil Patel.
The only ATM in the village has money, but no serpentine queues cane be seen outside.
Today, 1,200 of the 1,500-strong population of the village have bank accounts. "Every account holder has been provided with an online money transfer system. The village is completely WiFi. But considering that not many people would have smartphones, we introduced this form of money transfer through SMS,'' said an official of the bank.
Depending of the success and feasibility, the system can be replicated elsewhere, he said.
Before the digitization, retired teacher Mohanbhai had to travel to the nearby district headquarter to pick up his pension. Twice his pocket was picked. But now he doesn't worry about pickpockets.
The pension, he says is deposited in his account. And online payments take care of the rest.