Google launches app that uses non-NFC contactless POS technology
In Cash Mode, smartphones 'talk to each other' using ultrasonic sounds to send payments without exchanging personal information, including PIN
Account-to-account transfers via interbank infrastructure rails, rather than a mobile wallet
Source: Google India Blog
Point of View
Google has launched a mobile payments app in India called Tez, meaning 'fast' in Hindi. Tez payments can be made online and at the point-of-sale (POS), using Google's new contactless technology, AudioQR. As the name might suggest, the app initiates and receives payment messages using ultrasonic sounds. Customers can securely make payments to merchants using Cash Mode and, as with using physical cash, there is no exchange of personal information, such as PINs.
Tez leverages India's regulated interbank payments infrastructure, Unified Payments Interface (UPI). Provided an individual already has a UPI 'Virtual Payment Address' (e.g. a phone number, similar to PayID), signing up to Tez is a simple process. As it uses UPI infrastructure, Tez mobile payments are direct account-to-account transfers, in contrast to payments made from a mobile wallet (e.g. PayTM and Mobikwik), which use prepaid funds.
The payments landscapes in Australia and India are quite different. India remains a cash-based economy where NFC is not ubiquitous. Australians, however, already use NFC technology extensively, making around a third of all in-person payments using contactless cards.
As Tez can be used to accept payments without requiring additional hardware, unlike NFC, Indian merchants could more easily and cheaply adopt the technology. Removal of this barrier could see the use of cash in India decline going forward.
It seems unlikely that AudioQR POS technology would take off here in the traditional merchant space, given established merchant and consumer payments behaviour. Nonetheless, it could appeal to cash-only micromerchants or merchants preferring not to accept cards.
Takeup by customers would depend on the level of friction, including account setup. Given that NPP and UPI share similar features, such as account-to-account transfers and simple addressing, one would expect such a service to utilise NPP infrastructure. And so, provided an individual were to have a PayID, the process ought to be simple here too.
Could Google introduce a Tez-like service in Australia, possibly as an NPP overlay service? While the appetite for a B2C product might be limited here, perhaps a 'cash' P2P service using AudioQR technology might appeal to Australians. Either way, AudioQR technology will likely have myriad uses, in payments or otherwise.
Google is also offering Tez for Business where merchants get their own channel on the app to engage their customers to share offers and send payment reminders. Online businesses can also integrate the Payment Request API to securely accept UPI payments using Tez on their mobile websites.
More broadly, it is expected that electronic point-of-sale penetration will increase significantly in India, according to the Secretary at Ministry of Electronics and IT, Aurna Sundararajan, "We expect that by December, the number will actually go up to five million PoS, which means that the infrastructure for digital payments is going to grow three times in the short span of one year".