Wednesday, September 11, 2019

This Amazon-backed startup makes digital payment possible without Internet - Economic Times

This Amazon-backed startup makes digital payment possible without Internet - Economic Times


This Amazon-backed startup makes digital payment possible without Internet - Economic Times

Posted: 08 Sep 2019 09:09 PM PDT

If you have ever got a toffee or a candy from shopkeeper instead of loose change, you should read on.

Almost everyone has remained oddly satisfied with the arrangement of candies instead of cash, but when Kumar Abhishek was quizzed by a colleague in Singapore, he realized there's a need for a better payment system in India, which was as easy as paying cash while being interoperable.

While many digital payment services have appeared over the years to remove the hassle of change money, they rely heavily on the Internet and smartphones, causing a big disadvantage to people using feature phones and those with poor data connectivity. This is what motivated Abhishek to rope in his pal Vivek Kumar Singh to form ToneTag in 2013. ToneTag's in-house software and devices enable one to pay through sound waves without using internet. Further, its application is not only limited to smartphones, but even those using feature phones.

Sound to pay
ToneTag's technology involves transmitting data encrypted from one device to another using sound waves. It doesn't require any particular hardware and can be done through smartphones, feature phones, PoS (Point of Sale) devices, EDC (Electronic Data Capture) devices and also by ToneTag's retail pod, among others. One has to simply program a device with ToneTag's software and the transactions are completed when the two devices are in close proximity to each other.

For smartphone users, they can use ToneTag's app and simply pay the amount. Those using feature phones will have to dial an IVR (Interactive Voice Response) invitation code and the audio signal from the call will initiate the payment operation. The customer will then enter the amount and the payment will be received.

For payments through PoS devices, the firm gives the merchant a sticker to paste on it which accepts the soundwave-based payments. The technology can easily be facilitated with digital wallets and payment apps and works on any operating system- Android, iOS, Windows, Linux, etc. The B2B firm provides its API (Application Programming Interface) to businesses such as banks, acquirers, issuers, technology providers, among others.

TONETAG
"Since the powerful medium of sound is used to provide contactless payments, it is globally the first technology to enable cashless, digital payments from cards and wallets from feature phones without internet. The payments from ToneTag are as easy as making a phone call," quipped Singh, 32.

Singh explained that the ToneTag software algorithm encodes data into sound waves, which is protected into 3-layers of encryption and tokenization. Customers can authenticate payment only by unlocking their phones.

Further, the applications of ToneTag's technology go beyond general vendor shopping. It can be used for person-to-person payments, toll plaza payments, parking and also to withdraw cash from an ATM without using the card. All that's needed is ToneTag's software-development-kit to be installed on the devices.

ToneTag's tendency of being independent of hardware proves to be beneficial for digital payments in remote areas of the country. "In remote areas, people with feature phones find it difficult to make quick and secure payments. Financial inclusion did not reach these areas where it was most necessary. All this poses a cumbersome and unsatisfying payment experience for customers. On the larger scale, the growth of an economy towards a digital landscape remains restricted. Since sound is our tool, this technology can work without connectivity or geographical boundaries, making it universally applicable," said Singh.

Singh further explained how ToneTag's technology helps in creating a healthy communication between consumers and offline retailers. As online sellers have access to customers' buying patterns, they can offer custom made offers and choices for the buyer. "However, this is not the case with the offline retail space which lacks customer identification. Retailers are unable to distinguish between a regular and new customer or have access to a customer's buying pattern. Therefore, they cannot communicate personalized offers or have any interaction," Singh said, adding without retailers having a digital presence, customer traction and customer loyalty reduces which can be overcome by ToneTag's smooth user-friendly technology.

The firm claims to have brought 83% customer stickiness for partners without any incentivisation.

Speaking on similar lines, Syed, a shop owner from Bangalore who has adopted ToneTag's technology, said, "This technology has helped me acquire new customers. I really like the experience that ToneTag gives. It's a hassle-free mode of payment and enables the customers to complete the transaction in a quick and easy way."

Nearly 52 million customers have been benefited from the startup's services and the number is expected to surpass 100 million by the end of the year. Further, over 3,20,00 merchants across the country have adopted the ToneTag technology.

"Since its inception in 2013, we have 13 filed patents and 45 claims," said Singh, adding that ToneTag is the first ever company in the world to enable contactless payment acceptance on EDC machine using sound.

The six-year-old startup earns revenue by charging a license fee for its product from payment instrument issuers. From merchants, it charges a fee on every transaction. The firm is currently at a pre-revenue stage.

In terms of funding, ToneTag has raised nearly $12 million so far and has been backed by corporate bigwigs such as Amazon, Amansa Capital, Mastercard, Reliance Capital to name a few.

Collaborating not competing
The digital payment market is seeing a boost in India with many fintechs such as PhonePe, Google Pay, Paytm making transactions faster and easier. When asked if ToneTag was competing with these firms, Singh denied it and instead talked about collaborating with them.

"As the mobile payment vertical in itself is very new, hence a lot of existing players look at us as competitors rather than enablers. ToneTag, being a software element, does not compete with device-specific payment instruments or any banking apps or mobile wallets. We are a product company and wish to work closely with existing service providers so that a large number of consumers be brought to cashless ecosystem," he said.

The firm is slowly foraying into the international market in geographies across Japan, Asia Pacific, Middle-East, Sri Lanka and South Africa. In May, ToneTag collaborated with GMO Payment Gateway, Inc. (GMO-PG) to enable Japan's payment ecosystem by promoting a sound-based ecosystem in Japan and APAC.

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