3one4 Capital Secures a Profitable Exit from ToneTag

Backing a Category Creator in Sound-Based Payments

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3one4 Capital is proud to announce a highly successful and profitable exit for Fund II from ToneTag, the global pioneer in soundwave-based digital payments, generating a high multiple exit on invested capital.

This milestone marks the culmination of an 8-year journey that began with our early-stage investment in 2017, where we led the company’s Pre-Series A round. Our conviction in ToneTag’s transformative potential, combined with deep operational involvement, has now translated into a full secondary exit at the same valuation as its $78M Series B2 primary round, delivering exceptional returns.

Throughout our investment, we worked closely with the ToneTag team to refine their monetisation model, scale enterprise partnerships, and support the company’s rapid evolution from a pre-revenue concept to a profitable market leader with:

• ⁠Exceptional unit economics and profitability metrics with ~65% EBITDA
• Healthy bottom-line performance with ~30% PAT
• 800,000+ merchants onboarded and $32B+ in annual TPV across - 1M+ installed network nodes
• 50,000+ new nodes deployed weekly
• Enterprise Validation: Trusted by major clients including Google, Amazon, Airtel, ICICI Bank, SBI, and Yes Bank

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The Birth of ToneTag: Sound as a Payment Medium

Founded a decade ago by Kumar Abhishek and Vivek Singh, ToneTag was built on the idea of merging "Tone" (sound) with "Tag" (identifiers like NFC and QR codes) to create a new dimension in the contactless payment experience. Recognising that the limitations of QR codes and NFC payments often lie in hardware and infrastructure requirements, ToneTag’s solution bypasses these hurdles by enabling payments over sound waves. This unique technology can work with existing devices, eliminating the need for extensive hardware investments and creating a universally accessible payment solution.

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ToneTag’s CUSP Network: Bridging the Future of Payments

The core of ToneTag's service is its Contextual Unified Secure Platform (CUSP), which offers a unique infrastructure to facilitate proximity payments, including central bank digital currencies (CBDCs), UPI, and tokenised debit or credit cards. CUSP consists of two key layers:

1. The Network Layer: While conventional soundboxes serve as simple audio-based transaction confirmation tools, ToneTag’s smart IoT nodes operate as much more advanced infrastructure. These devices don’t just play payment confirmation tones, they embed unique location intelligence, enable contactless data transfer, support proximity detection, and allow for voice-led conversational inputs at the point of sale. Each node functions as a live digital touchpoint across stores, restaurants, and fuel stations, enabling frictionless proximity payments, hyperlocal marketing, and real-time merchant insights, transforming payment acceptance into a dynamic, interactive platform.
2. The Payment Orchestration Layer: This layer provides a flexible switch between different payment options, allowing users to select UPI, Hello UPI, CBDCs, or contactless cards at checkout. This system, unlike conventional card networks, is tailored specifically for new digital payment methods, enhancing inclusivity and efficiency in financial transactions.

In addition to its core payments technology, ToneTag provides an inventory management system for merchants and collaborates with the National Payments Corporation of India (NPCI) to power UPI 123Pay, a payment solution designed for feature phones.

This approach is a shift from retrofitting new payment solutions onto existing card networks, marking ToneTag’s commitment to providing a fresh, adaptable solution for evolving payment needs.

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The Network Effect Moat

A critical element in ToneTag’s success story is its network effects, similar to those of established players like Mastercard or NPCI. By deploying its technology on both the consumer app side and merchant devices (pods), ToneTag creates a dual-sided network that grows in tandem with each partner and enterprise customer. This approach reinforces the ecosystem’s value and accelerates adoption as more merchants and consumers join the platform.

ToneTag’s mission to enhance digital payment accessibility has led it to form strategic partnerships, including those with the National Payments Corporation of India (NPCI) and major corporations like Google, Amazon, Airtel, and Indian banks like ICICI, SBI, and Yes Bank. These collaborations allow ToneTag to expand its presence, bring its technology to millions of users, and scale its platform through a dual-sided network model that benefits both merchants and consumers.

ToneTag’s platform processed over $32 billion in transaction volume in FY25, with FY26E TPV projected to exceed $54 billion, a reflection of its rapid growth, expanding network scale, and accelerating enterprise adoption.

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The Pay-by-Car Innovation: A Look into the Future

In partnership with industry leaders such as Bharat Petroleum Corporation Limited (BPCL) and MG Hector, ToneTag has launched a unique “pay-by-car” feature. This innovation leverages a car’s infotainment system to make payments at fuel stations without the driver needing to roll down a window or even bring out their phone. Instead, drivers select the fuel station on their car’s display, specify the amount, and proceed with payment using their UPI account connected through FASTag.

As soon as a driver selects a fuel station, the system sends a signal to a Soundbox at the station, notifying attendants of the car’s arrival and the amount to be refuelled. This allows the transaction to be processed automatically as the driver approaches the station, with payment confirmation either through voice commands or by entering a password on the infotainment screen. 

With sound-based technology, ToneTag has created a new paradigm in digital payments that is inclusive, versatile, and secure. The potential applications extend beyond fuel stations, with ToneTag eyeing use cases in grocery stores, drive-throughs, and other retail environments where time efficiency and contactless transactions are valuable.

With over 45 million retail merchants in India in need of digital payment solutions, ToneTag’s IoT node processes payments locally, bypassing constant server dependence that ensures 99% reliability at a fraction of conventional processing fees. 

ToneTag’s Soundbox goes beyond transactions, capturing data on transaction frequency, latency, and connection quality, offering merchants actionable insights to enhance their operations. When linked to billing systems, it collects SKU-level data for personalised offers and customer insights. Its location telematics feature enhances location-based marketing, boosting app engagement, while ONDC integration unlocks e-commerce opportunities at no extra cost. With proprietary hardware and software, ToneTag ensures fast product updates and regulatory compliance, positioning its Soundbox as a transformative and accessible solution for India's retail payment landscape.

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3one4 Capital’s Profitable Exit

We’re proud to have partnered with ToneTag from the very beginning, backing the team at the pre-revenue stage and witnessing their evolution into the world’s largest soundwave-based payments platform. This exit marks not just a strong return on investment for 3one4 Capital Fund II, but a milestone that validates the scale of ToneTag’s achievement and the strength of our long-term investment approach.

ToneTag’s trajectory reinforces our thesis: that durable, differentiated technology combined with disciplined execution creates category leaders with global relevance.

We remain excited about ToneTag's future as it continues to push the boundaries of payment technology, expand its user base, and bring advanced, user-friendly payment solutions to an even broader market. The team’s ability to transform sophisticated audio tech into seamless user experiences gives us great confidence in their continued leadership. 

To the ToneTag team - thank you for the partnership. We’re proud to have been part of your story!