Digital Payments Startup ToneTag Bags $78 Mn To Expand Its Solutions

Digital payments startup ToneTag has raised Series B2 funding of INR 674 Cr ($77.5 Mn) in a mix of primary and secondary deal co-led by ValueQuest Scale Fund and Iron Pillar. 

The round also saw  participation from existing investor Elevate Capital.

Kumar Abhishek, founder and CEO of ToneTag, said, “This funding round is a testament to the trust our investors have in our vision and technology prowess. With their support, we are ready to take the next big leap of bringing awe-inspiring experiences in the hands of consumers and expanding our solutions globally.”

The Bengaluru-based company plans to deploy the fresh proceeds to scale up its operations and expand into global markets, besides bolstering its customer payment experiences, advancing research and development (R&D), onboarding top talent and strengthening marketing initiatives.

Founded in 2013 by Vivek Singh and Kumar Abhishek, ToneTag offers audio-based authentication and proximity payment solutions for online and offline commerce. It also develops integrable software to deploy voice-based digital payment systems. 

The startup has raised over $10 Mn in total funding till date and counts Amazon, Mastercard and Elevate Innovation Partners among its investors.

ToneTag also provides inventory management solutions and powers NPCI’s UPI123 Pay for feature phones.

Handling over 30 Mn interactions daily, its patented soundwave technology is used by global giants like Google and Amazon, along with major Indian banks like SBI and ICICI.

Currently operating with a team of around 90 people, ToneTag is also eyeing expansion into Asia, South America, and the Middle East.

In October last year, it was reported that ToneTag was in discussions with Iron Pillar to raise at least $50 Mn in a mix of primary and secondary share sales.

According to a recent Reserve Bank of India (RBI) report, UPI dominated India’s digital payments landscape in 2024, accounting for over 85% of total transaction volume. Out of 20,787 Cr digital payments recorded during the year, 17,221 Cr transactions were routed through UPI.

Continuing its dominance in the UPI space, fintech major PhonePe processed 810.2 Cr transactions in January 2025, a 1.5% increase from 798.4 Cr transactions in December 2024. 

However, even as digital payments surge, the government has slashed budgetary support for UPI incentives. In the Union Budget for FY25, the Centre reduced the allocation for promoting digital payments by over 42% to INR 1,441 Cr from INR 2,485 Cr in FY24. This is also 44.5% lower than the INR 2,600 Cr allocated in FY23. Moreover, no dedicated funds for digital payment incentives were mentioned in the Budget 2024-25.

This reduction comes despite repeated calls from industry stakeholders for the introduction of a merchant discount rate (MDR) for UPI transactions to ensure a sustainable revenue model for payment service providers.