Google is piloting its own ‘sound box’ in India for merchants to receive audio payment alerts • TechCrunch

Soundboxes – hardware used by merchants that play sounds each time a mobile payment is made – have taken off in India, where POS activity can be busy and voice alerts from the soundbox help alert shoppers traders and multitasking assistants of an ongoing transaction. Now, to continue growing its own payment business in the world’s second-largest internet market, Google is getting in on the act.

The internet giant, which is currently one of the leaders in mobile transactions in India with Google Pay, is piloting its own sounding board in the country to alert sellers of UPI payment confirmations – a mobile payment standard developed and now ubiquitous in India for instant payments and transfers between banks, or between two mobile users, or between a customer and a merchant. With UPI payments, providers generally take no discount on UPI transactions, so sounding boards have emerged not only as a convenience for merchants, but also as a monetization tool for payment providers.

Sources tell us that Google has started distributing its white-label speakers – branded Soundpod by Google Pay – in a few markets in northern India, including New Delhi, initially working with a limited group of merchants. Google’s sound boxes come with a QR code on the front – linked to the business owner’s bank-registered phone number – which can be used to make any UPI-based payment. These Soundpods are built by Amazon-backed ToneTag, TechCrunch has learned.

The hardware has a built-in speaker that announces payment confirmations in different languages. Like its competitors’ soundboxes, Google’s device also includes a small LCD screen that displays the payment amount, battery and network status, and manual controls. The soundbox comes with a merchant’s QR code linked to their Google Pay for business account. Users can use any UPI-based app to make payment by scanning the code. Generally, these soundboxes do not support NFC payment, as tap-and-pay is not a popular method for transactions in India. Also, many low-end smartphones don’t have built-in NFC hardware.

People familiar with the matter told TechCrunch that Google is distributing the speakers to select merchants at no additional cost. In some cases, Google Pay representatives gave merchants a few days to receive and install the speakers at their registered location.

Google’s move into this hardware is somewhat overdue.

The search giant has been dabbling in India’s congested payments landscape for some time now, and while a sounding board might sound new to people outside India, in the country, it quickly became table stakes in the mobile payments game. Google Pay competes directly with Paytm, Walmart-owned PhonePe, and Tiger Global-backed BharatPe, all of which have already launched their own soundboards with support for multiple languages.

The fact that Google hasn’t been on the sounding board front shows (no pun intended) how it’s struggled to build fast enough to keep up with rivals, and arguably to keep up with consumer demands in timely too.

Roadside vendors, small traders and hawkers have started using payment sounding boards to obtain audio confirmation of customer payments. And while the Google Pay for Business app already has an audio notification feature, Google also allows a business to add an agent number so the agent can receive confirmation on their phone; these features may not be useful for a store with multiple attendants and a noisy environment, or when the cashier is not using a smartphone or tablet to facilitate transactions. In this scenario, a device that “announces” payments out loud can be helpful.

Soundboxes also perform other roles to promote more and faster transactions for merchants. They usually support different languages ​​- essential for a multilingual country like India – offer multi-day battery life and a quick summary of daily transactions.

A Google spokesperson declined to comment for this story, but when we asked Sharath Bulusu, director of product management for Google Pay at Google, about the development on the sidelines of a Google India event in December, he didn’t. didn’t deny the effort and replied that the company piloted “all sorts of things.”

“If the person doesn’t have a smartphone and they run a small business, the chances [are] that they will actually pay for a speaker product,” he said. “You can look at the publicly available prices that Paytm used… I think the odds are low. So that’s not the way to solve it,” he said when asked if Google was targeting soundbox merchants who don’t have smartphones.

“But do we want to solve for this user? Yes,” he added.

Fintech startups charge a low upfront fee and monthly rental from merchants using their sounding board solutions. However, they also sometimes give away the device for free to many sellers to ship them. Paytm charges an average rental of $1.53 (125 Indian rupees) per month, while PhonePe charges $0.60 (49 Indian rupees) per month. The fees are relative to the size of the merchant and the promotional programs offered by the agents.

According to data from umbrella organization UPI National Payments Corporation of India (NPCI), UPI transactions have seen significant growth, reaching 7.82 billion in December with a value of $157 billion. This represents an almost 100% increase in transaction volume and a 55% increase in transaction value compared to December 2021. But despite this growth, companies facilitating UPI payments do not have a direct way to monetize these transactions because they do not require merchants to pay. a merchant discount rate or a small transaction fee.

Fintech companies have advocated for the introduction of transaction fees to change this model. Last week, the government announced that it had spent $320 million to promote UPI transactions and its native RuPay cards. However, businesses still have no direct way to generate revenue from UPI transactions.

As UPI was until now a toll-free payment network, fintech players in this market offering compatible apps must rely on other sources of income, such as loans and speaker rentals. In 2021, Google Pay began monetizing its service through user data, nearly three and a half years after it launched in India.

Paytm was the first in the race to introduce sound boxes, which it did in 2020. This pioneering status has been to its advantage so far: it is now a leader in the sound box category. , with the company claiming to have distributed more than 5.8 million devices to date. Earlier this month, the Indian payments company claimed to have distributed 1 million sound boxes each in its last two quarters.

Last September, Paytm said its soundbox devices processed 5 billion transactions in fiscal year 2022. A note from brokerage firm CSLA released last November said soundbox accounted for 38% of paytm’s net payment revenue. ‘business.

Walmart-owned PhonePe and BharatPe launched their soundboards last year. Last November, PhonePe said it had deployed 1 million payment speakers across the country.

In addition to sound boxes, companies such as Google and Paytm provide businesses with QR code stickers and banners to facilitate UPI payments. However, there has been intense competition in the UPI market as companies aim to reach the masses for low cost transactions even without direct revenue generation. Indeed, the large user base can then be converted into customers for other products and services.

According to the National Payments Corporation of India, PhonePe and Google Pay control almost 85% of the total UPI market in terms of transactions and hold over 81% of the total UPI transaction volume. The government had planned to limit their market dominance and give other participants the opportunity to gain a share by setting a threshold of 30% of total UPI transactions per month. However, this rule was recently postponed to 2025.

Many marketers are eager to adopt sound boxes once they understand their features, but some opt to return them once companies start charging rental fees. It also raises the issue of transparency and whether providers are clear with customers about how fees are charged.

“I don’t want it once I figured out that the device is charging me over a hundred rupees a month just to talk about payment updates,” said a pharmacy owner using a Paytm sounding board until last month.

Companies such as PhonePe have started charging cancellation fees in response to this behavior. Google’s model for how it will differentiate gaming to retain merchants has yet to be revealed.