Bangalore-based Naffa Innovations Pvt. Ltd, which operates digital payments startup ToneTag, has raised $8-10 million from a clutch of marquee, strategic investors led by Amazon Inc. and Mastercard, reported LiveMint, citing three people directly aware of the development.
ToneTag’s existing investors include Manipal Global Education chairman Mohandas Pai, PremjiInvest’s chief investment officer T.K. Kurien and Facebook executive Anand Chandrasekaran. The start-up is also in talks with other strategic investors, said the people, requesting anonymity.
Founded in 2013 by Kumar Abhishek and Vivek Singh, ToneTag is a fintech and retail solutions company, which uses encrypted sound waves to make offline, proximity-based contact-less payments on any device. The company uses proprietary Software Development Kit that encodes data into sounds. These sounds are transmitted over air and can enable payments over the existing payments infrastructure.
The startup enables contact-less digital transactions on mobile phones, card swiping machines, automated teller machines and other payment-enabling devices.
The startup had earlier raised $1.3 million from Tropical Star Limited, in January this year. Prior to which, it had raised undisclosed amount from Arun Seth, a trustee of the NASSCOM foundation, Mohandas Pai, and Anand Chandrasekaran, a former Chief Product Officer of Snapdeal, among others, in November 2016.
In 2015, the startup raised $1 million from the venture capital arm of Reliance Capital Ltd., Reliance Venture Asset Management.
ToneTag has till date raised more than $2.3 Million from three rounds of investment.
The startup was part of iSpirt’s InTech50 2016 batch,
ToneTag, which already has an existing partnership with Mastercard, is in the process of integrating its technology, which uses sound waves to transfer data, with the Amazon platform.
The company facilitates on-delivery payments and peer-to-peer transactions, and works with over 300,000 merchants, including Fabindia and Shell petrol pumps, among others.
It has also forged alliances with a number of leading banks and digital wallets, including HDFC Bank Ltd, ICICI Bank Ltd, YES Bank, Freecharge and Airtel. The companies have integrated their digital applications with ToneTag’s software.
Amazon’s and Mastercard’s bet on ToneTag comes at a time when Google is aggressively pumping money into start-ups and technologies that support Google Assist.
Globally, experts tracking the payments space are expecting sound waves to emerge as the next big thing. California, US-based audio and speech recognition company SoundHound, which uses similar technology, had recently raised $100 million from strategic investors led by China’s Tencent Holdings and Hyundai.
The transaction marks Amazon’s third major venture investment in India in the past six months. It had also bet on online insurance start-up Acko and digital lending start-up Capital Float.
Amazon’s investment in ToneTag also comes at a time when the US based e-commerce giant is doubling down on its digital payments business globally, especially in strategically important countries such as India, where it has already committed to spend at least $5 billion.
Just two days back, Amazon has led a $12 million funding round in Acko Technologies, which is a Insurtech startup headquartered in Mumbai. Prior to this, in last month, Amazon had invested $22 million in Capital Float, a Bengaluru headquartered digital lending startup.
According to recent regulatory filings with the ministry of corporate affairs, Amazon India is preparing to increase its investment in its payments arm by at least five times. It has also increased its authorised capital for Amazon Pay India Pvt. Ltd to Rs2,000 crore ($305 million) from Rs400 crore.