In the aftermath of demonetisation, the Indian government took several steps towards the promotion of digital payment methods. The introduction of easy to use payment methods such as BHIM UPI and Aadhaar-linked payments were created to help people from all sectors of the economy get on board with digital payments. Throughout the rapid growth of digital payment methods, the government kept a keen focus on financial inclusion as a means of economic growth. Currently, when it comes to financial inclusion, India lags behind several developing nations. Several sectors of the economy do not lie in the fold of basic banking services, let alone the digital payments landscape.
Currently, Indians collectively own 730.7 million mobile phones. Of these, just 239 million are smartphones. Further, only 19 million of these smartphones are NFC enabled. These numbers indicate that only a fraction of the mobile phone holders in India can access the internet or use technologies such as RFID, Infrared, Bluetooth and NFC. Since a major chunk of the digital payment methods available to Indians rely on one or more of the aforementioned technologies, numerous technologically challenged sectors of the society find themselves financially excluded in the current scenario.
Bridging the gap using soundwave technology
Up until now, cash has been the only universally accepted method of payment within India. The reason for cash being the indisputable leader in India’s financial landscape is its ease of use. There is no ground-level infrastructure required to use cash, and this makes it a quick, easy and attractive means of payment. Whereas digital payment methods require elaborate and often expensive infrastructural interventions on the part of those receiving payments and those making them. To avoid hassles, people, especially in Tier 2 and 3 cities, shy away from the bouquet of banking services that they can have access to.
Innovative startups are on their way to solve these problems through the power of soundwave technology. Soundwave technology has been gaining ground as a means of data transfer across the world on the back of its simplicity and convenience. The technology essentially merges the benefits of cash and digital payments to create a universally scalable and cost-effective means of making payments. The system does not require complex infrastructure in order to enable transactions. What makes this technology accessible is that payments can also be made on basic feature phones. Since the initial expenditure and cost of maintaining soundwave-based payment methods is significantly low, the method can be adopted by all sections of the society.
Enabling secure and accountable transactions
In December 2017, the RBI reported 10,200 cases of payment fraud through digital payment methods. Astonishingly, the value of online fraud reached Rs 11,185 lakh in December 2017 from Rs 1,547 lakh in November 2016, just before demonetisation. Unfortunately, as digital payment methods gain traction, the cases of fraud are bound to increase with it. Although security features such as 2-factor authentication are in place, cases of cyber fraud are on the rise. This is because all the modern technologies are based on open-source platforms that are vulnerable to malicious attacks and hacking.
Technology startups such as ToneTag are overcoming this challenge by offering a system that is secured by multiple levels of encryption and Blockchain technology. Consumers and business owners can, therefore, use soundwave technology as a payment method without worrying about losses and financial leakages.
With multi-level encryption, HCE, Tokenization, White box cryptography, TOTP and Blockchain, soundwave technology presents itself as a potential solution to all the pitfalls that plague the current digital payments ecosystem in India. It offers a seamless, convenient and easy to scale system that can be accepted across the country from large retail chains to small mom and pop stores.
Being highly inter-operable and scalable, sound- wave technology is poised to revolutionize the digital ecosystem with 668.3 million users projected to get on board by 2023. Offering a seamless and friction payment option, sound-wave technology will enhance financial inclusion in a major way. Once individuals and business owners are well versed with the effortlessness that characterizes soundwave-based payments, a major part of India will turn truly digital with dwindling reliance on cash.
Vivek Kumar Singh is the co-founder and CFO of ToneTag, which uses soundwaves to make payments easy and effortless.