Banks now experimenting with ultrasonic sound waves for payment transfer

HDFC Bank-Tonetag testing the new payment mechanism

HDFC Bank has tied up with mobile payments technology firm ToneTag and is testing a new mechanism that will allow transferring money from a phone to a point of sales (PoS) terminal without swiping a debit or credit card. Using this the PoS terminals can be paired with a mobile phone and once the transaction is authorised, money will be deducted from either the customer’s HDFC Bank mobile wallet Payzapp or via the mobile banking application.

Unlike the old way, where a card was needed to carry out a transaction on PoS, this technology will allow the customer to complete the transaction by just using the phone. In this, the data can be transferred in an encrypted manner, which will then ensure the money gets deducted either from the account or from the mobile wallet. For this, the customer needs to be in the proximity of 15 centimeters from the merchant terminal. With this feature, the lender is looking at opening a new category of proximity payments in the country.

HDFC Bank declined to comment on it. However, sources close to development said the bank is currently working on the pilot and going ahead, it is likely that ToneTag will also tie up with other banks to offer similar services.

Experts say considering that HDFC Bank is currently one of the leaders in PoS terminals, logistically, it will be easy for the lender to add this software to its existing terminals. According to the Reserve Bank of India (RBI) data, the bank is the leader in the PoS network with about 2,76,362 terminals in the month of November.

Bankers believe considering that a lot of consumers have taken to mobile banking and mobile wallets, this payment method may take off better than the contactless debit/ credit card. “Despite the fact that several banks had launched contact less debit and credit cards we haven’t seen these take off in a significant way as it is more cost intensive and requires changes in the terminal,” said a banker.

Such cards work on near-field communication (NFC) technology, which employs radio transmission to ascertain contact when the cards are tapped or waved near a terminal. These enable customers to make payments by waving or tapping the cards instead of swiping them.

Banks are experimenting more with alternate payment solutions after RBI last year allowed the lenders to process contactless transactions below Rs 2,000 without a personal identification number (PIN). Bankers believe about 60 per cent of the transactions at the PoS terminals are below this threshold, these payment solutions will take off.

This is also in line with HDFC Bank’s digital strategy wherein, the lender is focusing on reducing cash transactions and trying to add more consumers to use digital banking. According to the RBI data, in the month of November, the lender recorded transactions worth Rs 7666.34 crore via its mobile banking application.