This Indian startup is everyman’s Apple Pay

Last year, Apple unveiled a product to unshackle payments from plastic cards with “outdated and vulnerable magnetic interface, exposed numbers, and insecure security codes” – Apple Pay. To use it at an offline store, you simply hold up your iPhone, iPad, or Apple Watch to the merchant’s wireless payment terminal to pay. You don’t need to wake up your device or launch Apple’s Passbook app. There’s no need to dig out your credit card, worry about phishing, or search for small change either.

But here’s the catch: Apple Pay only works with the latest Apple devices. Not everyone has them, nor can many afford them. And it’s not enough if you have one. Merchants must partner with Apple, install specific hardware, and only then can they accept Apple Pay, because it will not work on their existing point of sale terminals. In India, most small merchants haven’t even graduated from cash to card payments, let alone become compatible with Apple Pay. It’s far easier to ring in the ToneTag.

This software product uses sound waves to bring the same convenience of contactless payments to any mobile device, even old brick phones. It can integrate with any digital wallet, work on any operating system – Android, iOS, Windows, Linux, Blackberry – or point-of-sale terminal, and power any mobile payment application. “Our technology provides tools to all stakeholders – merchants, issuers, acquirers, and consumers – to realize frictionless in-store and in-app mobile payments,” says Kumar Abhishek, co-founder and CEO of the Bangalore-based startup.

“You can just download the ToneTag app and in five minutes, you are good to go,” he adds. His company yesterday announced its first round of institutional funding. Indian conglomerate Reliance Capital’s venture fund arm invested US$1 million in it.

Toward a cashless economy

In India, only the big stores, malls, and ecommerce sites accept credit and debit card payments. Less than five percent of the 12 to 15 million SMEs (small- and medium enterprises) are equipped to swipe a card. So, almost everyone is forced to carry cash. This leads to small irritants like not having the right amount to pay the bill or merchants not having the change to return the difference. It can also cause more serious problems – like theft or mugging, with the crime rate climbing northward. Tech startups are, therefore, tackling this from different angles.

For example, Changer Mints has an NFC-based product to instantly transfer small change. Near field communication (NFC) technology enables devices to establish radio communication with each other. Apple Pay uses the same technology. Changer Mints raised a whopping US$10 million in its first round of funding.

Mumbai-based startup Mswipe, on the other hand, has a hassle-free POS device which can work with any mobile phone. Even brick phones. Plug it into the phone’s audio jack, launch the application, and you have a card reader ready for swipes.

But most of these solutions come with catches. They are device-specific. They have a hardware dependency. And mobile wallets which power in-app payments are not inter-operable. “Where there is a hardware dependency, adoption becomes difficult. And more or less, the banks which were enabling digital payments are forced to partner with the hardware manufacturers to roll out products like Apple Pay or Android Pay,” Abhishek points out.

“ToneTag is the only such product, globally, which solves all these problems,” he claims.

Ditching Infosys to start up

Vivek Kumar Singh and Kumar Abhishek, co-founders of ToneTag

15 million merchants to convince