Sound-based system promises chipless NFC now

IDG News Service - While NFC (near-field communication) gradually emerges to turn mobile phones into payment devices, Silicon Valley startup Naratte is introducing a system it claims can do roughly the same thing without adding a chip to the handset.

On Monday, Naratte introduced Zoosh, a technology that lets phones exchange transaction information via inaudible sound waves. As with NFC, the phone user would just put the phone near to a point-of-sale terminal to redeem a coupon or make a purchase.

Naratte's approach might allow for faster deployment, but some observers raised questions about its technical and market potential.

NFC provides short-range radio communication between phones and point-of-sale devices so users can just tap or point their phones at the device to make a purchase. Advocates say the technology will speed up shop lines and make buying things more convenient for consumers who carry their phones more often than their credit cards.

NFC uses specialized chips, which are already built into a few phones such as the Google Nexus S sold by Sprint Nextel, and are expected in more handsets in the future.

Zoosh involves software that utilizes the speaker and microphone in a handset to send and receive audio signals with another device, similar to the way early modems exchange data by sending tones through the handsets of desk phones cradled in coupler devices. The company has posted a video that shows how it works.

With Zoosh, the tones would be exchanged over short distances and would be in frequencies that typically are inaudible to humans, around 20,000Hz, according to Chad Seguin, Naratte's vice president of engineering. A typical consumer audio device or phone that plays digital music has a range of 20Hz to 20,000Hz.

A phone could exchange these tones directly with a conventional PC that a retailer uses to ring up sales. For specialized terminals without audio capability, an adapter with a microphone and speaker can be added, according to Naratte. In most cases, the adapter would be implemented by the company that sells and services a retailer's point-of-sale equipment.

Zoosh could also be used for transactions between two handsets, including social transactions such as becoming connected on a social-networking service or exchanging contact information, said Naratte CEO Brett Paulson. In addition, coupons or codes for a purchase could be sent to a phone as an audio file, via MMS (multimedia messaging service), says Naratte.

The latter capability expands the technology's reach beyond smartphones to less expensive feature phones, the company said. To redeem the code, the user would just have to play back the audio file at the point of purchase.

Naratte is promoting Zoosh not as a replacement for NFC but as a system that could be implemented in the interim before NFC chips are widely available in handsets. Because it would not require additional hardware in some cases, implementing it could be as simple as writing a mobile-phone app or integrating Zoosh into existing software. Virtually any phone designed to play MP3 audio files could use Zoosh in some way, Paulson said. Naratte is making its technology available to developers now.

"It's going to be years and years and years before NFC is fully deployed for the average purchase transaction," said Russ Jones, a partner at Glenbrook Partners, a payments strategy consulting firm. Zoosh could be a third alternative for mobile payments, in addition to NFC and digital barcodes displayed on phone displays, he said. In the hands of mobile developers, its possibilities may extend far beyond payments, Jones said.

Others raised caution about the idea. The kinds of audio technology built into mobile phones may not be able to transmit and receive high-frequency signals with good enough quality to reliably carry out transactions, said analyst Jack Gold of J.Gold Associates. Background noise also might interfere, he said. Naratte said it had tested the technology successfully in noisy environments such as cafes.

The biggest challenge for all entrants to in-person mobile payments is building an ecosystem, said analyst Avi Greengart of Current Analysis.

"You could have the world's best NFC technology, but you need to get this embedded in handsets, and retailers have to be able to process it, and consumers have to be given a reason to use it," Greengart said.

Naratte has at least one customer so far: SparkBase, a Cleveland-based startup, is using Zoosh as the basis of its PayCloud mobile wallet application for loyalty and gift cards, which was announced last month.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is stephen_lawson@idg.com