TONETAG Investment Thesis

ToneTag is a payment solution company HQ in Bangalore, India. The company harness sound technology in mobile devices to process payments. This technology enables contactless payments and proximity customer engagement services, independent of existing infrastructure, so the technology can work without the internet, which can benefit unbanked community who don’t have smart devices.

According to a study by BCG and Google, India currently ranks number 2 in the world with over 1 billion mobile subscriptions. In addition to the high number of mobile subscriptions, the favorable regulatory environment also paves way for the breakthrough in payment system in India. KYC relaxation for small transactions and the advent of Aadhar as a national identity instrument has made the KYC process easy. The Unified Payments Interface (UPI) is expected to have multiple use cases including peer to peer payments, person to merchant payments and business to business payments. According to a study by Brookings India, around 47% of the population is unbanked in India. Therefore, it will be easier for new payment solution to penetrate the market.

Elevate invested in the Seed and Series A rounds of Tonetag participating alongside Mastercard and Amazon. Amazon views Tonetag as an important piece of its payment strategy in India. Tonetag’s solution is better than many other digital payments solutions because it does not require a hardware update to a POS terminal; it is also compatible with a whole range of mobile devices including feature phones (the old Nokia phones that everyone used to use!). the combination of these factors enable cashless, contactless payments anywhere – this is particularly helpful in emerging markets where banks do not provide merchant acquiring services for small businesses, particularly in remote geographies. 

In the past few years, ToneTag has made tremendous progress with rapid adoption and institutional support from financial institutions such as ICICI Bank, Axis Bank, and Amazon India. ToneTag today operates the world’s largest sound-based payment acceptance network with 52 million users and 314,000 merchants. ToneTag has a global expansion plan, including partnerships with major processors in the US being considered.