Soon, transfer money from mobile to PoS without using a card

HDFC Bank-ToneTag testing new payment mechanism that uses ultrasonic waves

HDFC Bank, the country’s second largest private sector lender, has tied up with mobile payments technology firm ToneTag and is testing a new mechanism that will allow transferring money from a phone to a point of sales terminal without swiping a debit or credit card.

Using this technology, the PoS terminals can be paired with a mobile phone and once the transaction is authorised, money will be deducted from either the customer’s HDFC Bank mobile wallet PayZapp or via the mobile banking application.

Unlike the old way, where a card was needed to carry out a transaction on PoS, this technology will allow the customer to complete the transaction by just using the phone.

In this, the data can be transferred in an encrypted manner, which will then ensure the money gets deducted either from the account or from the mobile wallet.

For this, the customer needs to be in the proximity of 15 cm from the merchant terminal.

With this feature, the lender is looking at opening a new category of proximity payments in the country.

HDFC Bank declined to comment on it.

However, sources close to development said the bank is currently working on the pilot and going ahead, it is likely that ToneTag will also tie up with other banks to offer similar services.

Experts say considering that HDFC Bank is currently one of the leaders in PoS terminals, logistically, it would be easy for the lender to add this software to its existing terminals.

According to Reserve Bank of India data till the month of November, the bank is the leader in the PoS network with about 276,362 terminals.

Bankers believe considering that a lot of consumers have taken to mobile banking and mobile wallets, this payment method may take off better than contactless debit/credit cards.

“Despite the fact that several banks had launched contactless debit and credit cards, we haven’t seen these take off in a significant way as it is more cost intensive and requires changes in the terminal,” said a banker.

Such cards work on near-field communication technology, which employs radio transmission to ascertain contact when a card is tapped or waved near a terminal.

These enable customers to make payments by waving or tapping the cards instead of swiping them.

Banks are experimenting more with alternate payment solutions after RBI last year allowed the lenders to process contactless transactions below Rs 2,000 without a personal identification number.

Bankers believe since about 60 per cent of the transactions at PoS terminals are below this threshold, these payment solutions will take off.

This is also in line with HDFC Bank’s digital strategy wherein the lender is focusing on reducing cash transactions and trying to add more consumers to use digital banking.

According to RBI data, in the month of November, the lender recorded transactions worth Rs 7,666.34 crore (Rs 76.66 billion) via its mobile banking application.