The cash crunch in India – because of low caps on withdrawals from ATMs and banks – keeps tripping me up. The other day at a kebab joint, my digital wallet payment failed because of either a network or server problem. The restaurant had no card swipe machine either, and I had too little cash.
Others have had more serious problems than going without kebabs. But it turns out there’s a tech solution for all these situations. Wallets could use radio signals from smartphones to transmit payments even when mobile and internet networks are unavailable.
A new startup, Klozest, based in the Bay Area and Bangalore, is in talks with leading wallets in India to integrate its SDK (software development kit) into their apps to enable such payments. It requires no internet, or bluetooth, or the NFC (near-field communication) chips used by Apple Pay.
These transactions require no cellular data connection, and can be reconciled with the wallet’s backend server once the user enters a wifi zone. As such, it can bring digital payments to hundreds of millions in India who can’t afford internet connectivity and mobile data charges even if they have budget smartphones.
The technology is similar to that of a local wireless mesh network using radio nodes to connect phones in their vicinity. Social networking app FireChat, for example, works even without an internet connection or cellular phone coverage. It can be used in an aircraft or even a disaster zone where networks are down.
Whereas a mesh network relays signals from node to node, the Klozest Pay system turns a phone into an access point, like a wifi hotspot. A merchant can toggle a button in his wallet app to broadcast himself as a recipient of payments. A wallet user within a radius of 40-50 feet can open her app to choose from a list of those accepting payments in the vicinity. The transaction is one-to-one.
The user doesn’t need a phone number or QR code or the virtual address used for apps based on India’s new unified payments interface. Inputting phone numbers or clicking pictures of QR codes or relying on internet connectivity are challenges in many scenarios in India. Klozest offers a one-click option that does away with the need for all that.
Bridging two generations
The two co-founders of Klozest are both from one of India’s top engineering colleges, BITS Pilani. But they have a generation gap.
Ashish Mukherji graduated from college 35 years ago and rose to senior positions in global companies like AT&T, Infosys, and HCL in India and abroad. He’s now a Bay Area entrepreneur.
His co-founder, Arjun Venkatachalam, graduated from BITS Pilani five years ago, worked as a software engineer for a couple years, and launched a startup called Komma for intelligent and contextual mobile notifications. This morphed into Klozest after he ran into Ashish, 30 years his senior.
Sitting opposite me in a Chinese restaurant in Bangalore, eagerly showing me how Klozest works, the generation gap evaporated. Only a shared enthusiasm for their days at BITS Pilani and all the possibilities of Klozest remained.
What wallets want
They had been working on the product for more than a year. Now, Ashish had come down from the US to meet potential clients of Klozest Pay.
There were misgivings about how robust it would be in the typically crowded environments of Indian bazaars. What if 20-30 merchants are broadcasting themselves at the same time on the payments app? How cumbersome would it be to find the right one? Conversely, what if multiple users were trying to pay one merchant at the same time?
Klozest also has potential uses in mobile utility and gaming apps.
Klozest Pay has some hacks for these. It limits transactions in parallel to around five to eliminate any clogging. And it prioritizes merchants signaling their availability by their distance from the user.
The other big preoccupation with digital payments apps, especially now with the exponential rise in their usage in India, is security. But Arjun points out to me that Klozest Pay is probably more secure than using a QR code or phone number which could send the money to a wrong account.
Firstly, it’s a dynamic network being created between phones in a small area. And the network can only be accessed by those using the same Klozest-embedded app. The transaction is encrypted, so no phone numbers or any other user details are exchanged. Arjun has filed for a patent on this “smart contract” between a customer and a merchant.
Payments is only the first use case for this product, driven by the huge digital wave sweeping India after demonetization. Klozest also has potential uses in mobile utility and gaming apps. For example, you could look up who is available to play a game with you inside an aircraft with no internet. Or you could establish connections with people closest to you at a crowded networking event.
This post No internet? No problem. Your mobile wallet can still make payments. appeared first on Tech in Asia.