Sound Wave Technology is Poised to Democratize the Digital Payments Industry in India Sound Wave technology has the potential to truly disrupt, optimize, and democratize the digital payments ecosystem

By Kumar Abhishek

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In the last few years, India and its economy have been taken by storm by the prolific penetration of smartphones. It is expected that 300 to 400 million Indians will be using smartphones by the end of 2017, and 36% of all Indian mobile users are expected to own a smartphone by 2018. This and the consequent increase in internet access amongst Indians has been the backbone of the growing digital payments industry in India, which is leveraging India's smartphone boom and is expected to grow 10 times by 2020, and become a USD 500 billion market. However, there are challenges in the present that the current stage of technology has not yet addressed, particularly in terms of accessibility for those without the capacity to use the internet.

By 2022, it is expected that nearly 450 million Indians will own and operate smartphones, representing an increase of over 125% from the 2015 usage figures. As of 30th September 2017, TRAI data indicates that 1.183 billion Indians were already using cellphones by this time, with an overall teledensity of 91.56%. With only 300 million Indians having internet-enabled smartphones and regular internet access in the present, it is clear that the digital payments industry is still unable to serve over 50% of Indians, who are devoid of access to the multifarious benefits of transacting digitally. As things stand, internet penetration in India stands at only 31% and is not expected to cross the 50% threshold until 2021 - implying that the digital payments ecosystem will continue to remain inaccessible to nearly 600 million Indians till 2021.

For the digital payments ecosystem to function smoothly and help India transition into a complete digital economy, over 600 million Indians have to be supplied a mechanism by which to use digital payments without smartphones - and this is where Sound Wave technologies come in.

What is 'Sound Wave' technology?

Currently, the digital payments industry relies almost entirely on both the customer and the provider of a product or service having internet access for the transaction to be completed, as the internet is used as the principal medium of communication. Alternative means of communicating between devices - such as Near Field Communication (NFC) - exist, but are an expensive investment for retailers to adopt, and most cellphones operating in India today are not NFC enabled. However, all the cellphones being sold and used in India today are designed to be able to receive and generate sound. Sound Wave technology leverages this capacity of all cell phone devices to provide an alternative communication medium between the consumer and the product/service provider at the Point of Sale (POS).

In SoundWave technology, the merchant's payment device generates a sound wave containing secured and encrypted data, which the customer's phone can receive and translate into analogue signals, and can respond to authenticate and complete the transaction. What this means for consumers and retailers would be a nigh-instantaneous, convenient, and seamless transaction. Since the basic hardware required for sound-generation and reception already exists in cellphones, the conventional hardware barriers for adoption of technology do not exist.

How Sound Waves are the best solution

The entire transactional and digital payments ecosystem could be transformed into enabling access not just for those Indians with smartphones, but for the billion plus Indians who have cell phones. The adoption of Sound Wave technology would be a growth catalyst that shall enable much faster and more convenient digital payments penetration, creating a much larger and more inclusive ecosystem that will cater to more remote portions of the Indian economy with equal convenience. Further, the low or non-existent costs of adoption for merchants will create a perfect product-market fit for mass adoption in India - from vast, organized retail chains to small-scale, independent merchants - allowing for an equalization of opportunity at both the consumer and merchant end. For customers, it will provide a simpler and more convenient method to pay, finally achieving the promise of a digital payments system that provides the same convenience as cash along with the security of mobile wallets and banking apps.

The applications of Sound Wave technology

The positive policy framework in the immediate aftermath of demonetisation to facilitate digital payments created substantial technological systems such as the Unified Payments Interface (UPI) and the India Stack, which leveraged the deep penetration of the Aadhaar initiative. With the basic ubiquity of cellphones in India, Sound Wave technology could revolutionize how Indians transact amongst their peers or as consumers with merchants. Irrespective of the mode or medium through which the merchant and customer are communicating, proximity is the key - as long as the POS is equipped to receive Sound Wave-enabled payments, people will be able to transact conveniently. Whether you're buying products at a retailer or looking to send some money to a friend, Sound Waves would make this process seamless and convenient, while providing a reliable digital footprint and record, enabling better accounting and accessibility while retaining the convenience of cash as a medium of transacting.

Sound Wave technology offers a perfect amalgam of technology, accessibility, and convenience that provides the kind of customer-focused, problem-solving solution that can truly disrupt, optimize, and democratize the digital payments ecosystem. Companies such as ToneTag are revolutionizing this space, offering Sound Wave technology adoption for merchants and consumers alike at incredibly low costs, with massive benefits in terms of customer reach, convenience, and payment security. While digital payments are projected to contribute 15% to India's GDP by 2020 in the current scenario, ToneTag and Sound Wave technology are increasing the scope of this technology-driven marketplace and increasing its massive potential manifold.

Kumar Abhishek

Founder and CEO, ToneTag

Kumar Abhishek is the Founder and CEO of ToneTag, the first company to enable contactless payment acceptance on EDC machines using sound waves. Kumar helms the company’s strategy and its software development. Driven by his desire to find technological solutions to encourage financial inclusion and improve the digital payments space, Kumar was instrumental in the company’s development of a software-only product that offers the interoperability and frictionless transactional capacity of cash.

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