« Previously: The technology behind sound-based payments  

The first customer for ToneTag's sound-based contactless payment technology was a U.S.-based merchant acquirer that they wouldn't name just yet. That customer, I understand from CEO Kumar Abhishek, offers payment technology solutions. "In India, they have 250,000 terminals… One of [every] six terminals belongs to them," he said.

Launch plans

"In India, we have close to 1.3 million card swiping machines largely distributed between [sic] four major banks… and we have a few of them as our partners, which collectively covers 67% of the card swiping ecosystem in the country," he added. "We are launching soon. Suddenly, on every second machine you will be able to pay with your phone and ToneTag. But we don't stop there. We are also partnering with banks that have a lot merchants who don't have card swiping machines. The merchants will simply download the merchant-side application on their phone and start accepting digital payments."

In India, about 5% payments take place online. Out of the 95% offline payments, 7-8% are card payments and the rest are cash, according to Kumar. "With this technology, we will decrease the size of the offline payments while at the same time increasing the flow of payments through card swiping terminals." The latter is because, according to Kumar, merchants do not accept low-value—about Rs.200 or less--payments by card because the cost the merchants have to bear significantly cuts into their earnings. "With ToneTag, we can enable any transaction—even for Rs.1.

Opening new markets

At least one bank had started converting their card swiping machines to accept NFC payments, according to Kumar, only to run into a challenge. The bank's app could not use the NFC on the phone because the NFC hardware was locked by the mobile manufacturer—the Apples and the Samsungs.

"We want to cover 70% of the offline retail space in the country in the next 2 years. We want to help the government enable digital cashless payments in remote villages," added Kumar.

He said when the government launched the Jandhan Yojana, people were issued plastic cards that work with card swiping machines. "But we only have 1.3 million card swiping machines and under 200,000 ATMs. The local merchants in the villages don't have card swiping machines and many villages don't have ATMs to withdraw cash," he said. "But the farmer has a mobile phone and the local merchant has a mobile phone and ToneTag's direct debit doesn't require the Internet. The government can even control how and where it's subsidies are spent. For instance, they can control a fertiliser subsidy is spent on fertilisers," said Kumar.

With sights set high on a nationwide launch, Kumar was planning rollout announcements this month at the time of the interview.

 
« Previously: Using sound waves for contactless payments