One of Japan’s biggest credit card issuers is funding this music startup’s pivot to payments

Since its launch in 2011, Tokyo-based startup Beatrobo has evolved from an online service for sharing and discovering music to a hardware maker with hopes of replacing the CD. Founder and CEO Hiroshi Asaeda (above left) unveiled PlugAir last April, a customizable dongle that, when inserted into a smartphone’s audio jack, instantly downloads songs, music videos, and other relevant content from the cloud to your device.

Asaeda today announced Beatrobo will utilize PlugAir tech to enter the payments space. The pivot is being facilitated by Credit Saison, Japan’s third-largest credit card issuer, which also confirmed it will lead Beatrobo’s series B financing round. The firm declined to specify exactly how much it is contributing, but Asaeda says the round is expected to close in November to the tune of US$2.4 million.

“It’s actually not a pivot – we’re stepping up to a new level,” Asaeda tells Tech in Asia. “We realized PlugAir wasn’t just for music. It can be a physical key for anything in the smartphone age, replacing your IDs and passwords.”

Asaeda and Yoshiaki Miura (above right), Saison Ventures CEO, envision a future where a scaled-down PlugAir – perhaps hanging from a keychain or worn on a necklace – is inserted into your mobile device’s headphone jack to instantly authenticate and process ecommerce payments.

“Digital payments will change in the future,” Miura says. “Right now we have the plastic card with a 16-digit number. We know that’s going to change, but we’re not sure how. We want to get involved in these kinds of alternative [payment] opportunities, [like] PlugAir.”

Safer than plastic

Asaeda claims PlugAir is more secure than standard pin codes, passwords, and even credit cards. Its secret weapon? Inaudible sound waves.

“Four-digit pin codes and eight-character passwords are easily reused across multiple services, but if one is hacked all of the others are also going to be in danger,” Asaeda explains. “PlugAir generates a 256-digit, one-time passcode for each transaction, and sends it directly to your device via sound waves.”

A PlugAir for payments prototype.

PlugAir’s non-reliance on a Bluetooth or a wifi connection ensures its viability in places with slow or outdated mobile internet infrastructure, making it internationally scalable.

After its first insertion, the PlugAir dongle becomes locked to that device, further boosting security. Unlike a stolen credit card, a lost or stolen PlugAir would be rendered useless without the device it’s tethered to.

“PlugAir is a token – it doesn’t contain any actual information – with a serial number that’s locked to a specific device,” Asaeda says. “If stolen, it simply can’t be used. If you want to unlock it for use on a different device, you’d have to do so through your credit card company.”

Convenience and comfort

Credit Saison is looking for disruptors in the payments space both at home and abroad. The firm previously invested in Coin, a San Francisco-based all-in-one physical card startup; and Coiney, a Tokyo-based startup that makes mobile payment processing hardware.

Per-insert monetization