In a bid to increase its foray into the Indian market, Google unveiled Tez, a free mobile payment solution that allows users to hook their bank accounts to their phones for in-store and online payments.
Existing solutions such as Apple Pay and Android Pay utilize NFC to facilitate mobile payments. Samsung Pay goes even further by allowing both NFC and magnetic stripe payments. Tez bypasses those methods altogether and uses audio QR (AQR), Google's proprietary solution that uses ultrasonic audio for exchanging money.
Called the “Cash Mode option,” phones negotiate a connection using ultrasonic audio to identify each member of the transaction. It's called "Cash Mode" because the feature doesn't require the exchange of personal details like bank accounts and phone numbers. According to Google, Cash Mode works with any iOS or Android smartphone with a microphone and speaker and doesn’t require an NFC chip.
Tez also facilitates bank-to-bank payments and is protected by Tez Shield, a data security platform from Google that "uses multiple signals to help detect spam, fraud, prevent hacking, and to verify and protect the identity of every user". Multi-factor authentication methods such as your phone's passcode, biometric identification (ie. fingerprint), and a Google PIN code is also supported.
Google is integrating about 55 banks using the Unified Payments Interface (UPI), an Indian government backed payment standard that attempt to help consolidate banking services in a market that is very fragmented.
In an effort to encourage more small businesses to use Tez, Google is also launching Tez for Business in which small business can use Tez to accept payments directly into their savings or individual accounts. Businesses will also get their own channel within the Tez app so that users won't have to install multiple apps to interact with the business.
India is an ideal market for this type of app. Historically, India has been very cash-based with low credit card usage (perhaps we Americans could learn from that). However, with low credit usage comes low credit histories. If one wanted to buy a significantly large purchase such as a car or house, it may be harder to take out a loan without a healthy credit history. Furthermore, Google points out that cash is easy to lose and can be stolen easily. Something like Tez could make transitioning to digital purchases much more attainable given India's cultural persistence on using cash.
Tez is available now on the Google Play Store and the iOS App Store. Particularly, the Android version supports English, Hindi, Bengali, Gujarati, Kannada, Marathi, Tamil, and Telugu at launch. The service is free for users but there is a limit of ₹1,00,000 in one day across all UPI apps, and 20 transfers in one day.