Sonar energises mobile payments

Payment start-ups opting for sound tech, finding it a far more reliable and cost-effective way to authenticate for both citizen and merchant entities

Financial technology start-ups are increasingly adopting sound for authenticating of mobile payments. Other technologies such as NFC and QR codes are either too expensive or have a high failure rate.

In the past year, several new payment start-ups have begun using sound for this purpose. Ultracash and ToneTag are examples. Both companies say they see much faster adoption than other digital payment methods, as their solution requires no extra hardware.

While internet connectivity is still lacking in the hinterland, the metropolitan cities such as Bengaluru, Mumbai and Delhi suffer from a patchy network and failed transactions. Building an offline authentication method has so far required expensive hardware or isn't as reliable as one would want.

"The first thing we had to answer was why a consumer would want to use the phone to make payments. The answer was if it was quick and as easy as a card or cash payment. The objective is that any consumer should be able to pay to any merchant at any location in less than five seconds, using their phone," said Abhishek Kumar, co-founder of ToneTag.

Backed by Reliance capital, ToneTag began its service in 2013 and has been experimenting with various technologies in the mobile payments space. They launched NFC stickers and ran an experiment in Pune but found this was not scalable. Distribution of the stickers was cumbersome. They tried an alternative using QR codes but the failure rate was 30 per cent. The QR codes were not getting scanned properly and also took much longer to make a payment when compared to one by credit or debit card. The company even tried magnetic waves but there was a hardware dependency in that.

Currently ToneTag is present in 18 million devices, mainly through partnerships with lenders (YES Bank is one). Their objective is to reach 300,000 acceptance points in the country by March 2017; it is currently 25,000. They claims to be adding five to eight million personal consumers every month; on the merchant side, adding 5,000 to 8,000 monthly, all through partnerships.

Similarly, Ultracash, another start-up that facilitates mobile payments using sound technology, has seen significant growth in the past year. The company says by using its app, one can pay directly from any registered bank account, credit and debit cards to the merchant account, using one's smartphone with just a tap. The user needs to register the cards and the bank accounts.

"The biggest advantage of sound technology is that one needs a device that has a microphone and a speaker; no other external hardware. A microphone and speaker are available in all phones, which makes it scalable and usable for large masses," said Vishal Lal, co-founder.

Ultracash has a little more than 300,000 merchants currently and around 350,000 transactions are done daily by 130,000 consumers in Bengaluru.

"Data connectivity is a huge issue even in metros, not only villages. Often, there are pockets in a city where connectivity is very low. An option which allows customers to pay in these pockets as well gives the confidence for more people to opt for cashless transactions, " Lal added.