Fintech start-up ToneTag takes sound wave payments tech to Japanese market

Fintech start-up ToneTag, which is backed by global majors like Amazon and Mastercard, is foraying into the Japanese market. The Bengaluru-based company has formed a strategic partnership with Japan’s GMO Payment Gateway (GMO PG) to provide its sound-based contactless payment technology. GMO PG is a core member of the GMO Internet Group, the largest Japanese internet conglomerate. ToneTag’s technology encrypts data and transmits it from one device to another using sound waves to make digital payments easy, fast and secure without depending on the internet. “We are the first firm that can enable sound wave-based payments through existing card machines, without any hardware changes,” said Kumar Abhishek, CEO and co-founder, ToneTag.

He said, the other companies have been able to use sound waves only to transfer data between two mobile phones.

The firm decided to foray into the Japanese market, after receiving a patent for its innovation in the country. It will mainly provide the technology for enabling digital transactions at places like physical stores and restaurants in Japan. The company looks at converting these locations into so-called 'sound zones' which would enable customers to order the products and make payment using their phones. 

"You don't have to go to the cashier and stand in the queue to make the payment. The bill would appear on your phone," said Abhishek. He said, even if a customer has a payment app or a credit or debit card, he or she still has to go to the cashier to make the payment, "while using ToneTag's technology, a customer can pay the bill anywhere in the store".

The company aims to facilitate almost one million transactions per month in Japan in two years. 

As far as digital payments is concerned, Abhishek said, Japan is very similar to India and also other Asian countries. Unlike regions like Europe and the US, there is a huge opportunity in the country to help people shift from cash to mobile payments. "The people in Japan want to adopt digital payments, but they also want the cultural aspect to remain intact, which means they like doing shopping offline (at stores)," added Abhishek whose company has filed 17 patents globally. 

After penetrating Japan, ToneTag plans to launch the solution in other Asian countries including India. In India, about 3.5 lakh merchants have already adopted ToneTag's sound wave-based payment technology. However, the company plans to create 'sound zones' at their stores later this year.

The digital payments space in India is expected to rise fivefold to reach $1 trillion by 2023, and it would be led by the growth in mobile payments, according to a report by financial services company Credit Suisse. ToneTag would mainly be competing with e-commerce giant Alibaba's Alipay as well as Google's mobile payments app Google Pay which have capabilities of using sound waves to enable person-to-person digital payments.