While many high-tech companies are betting that smartphones soon will be able to carry out transactions at store-checkout counters, a Silicon Valley start-up says it is possible for current models to handle payments without a hardware upgrade.

Naratte Inc. on Monday is expected to announce a technology called Zoosh that uses speakers and microphones on existing smartphones to complete short-range transactions through inaudible, ultrasonic sound. All that is required on the shopper's end is a software download, the company says, compared to better-known approaches that require smartphones with additional wireless chips.
Google is one of the companies that recently unveiled a service allowing consumers to pay with their smartphones. Above, Google executive Osama Bedier speaks at an event in New York last month.
Naratte's software allows two handsets within inches of each other to exchange data, such as personal-contact information, said Brett Paulson, the company's chief executive. Smartphones could be used like mobile wallets, storing and transmitting digital versions of shopping coupons and loyalty cards—and eventually replacing debit and credit cards for payments, he said.
Such retail applications require changes to point-of-sale terminals that authorize card payments. Some stores have already upgraded their terminals to use NFC, or near-field communication, a technology backed by companies like Google Inc. that uses short-range radio signals to carry out transactions.
But few phones with NFC chips have reached the market, Mr. Paulson said. The upgrade costs for NFC range from $100 to $850 per terminal, compared with an add-on device to support Zoosh that will cost merchants about $30, Naratte estimates.
Naratte soon expects to announce mobile payments between individual handsets, Mr. Paulson said, while offerings that require cooperation with companies that process debit and credit card transactions expected to take longer.
One early Zoosh adopter is SparkBase, a Cleveland-based company that processes gift- and loyalty-card transactions for merchants. The company plans to use the technology for a service called Paycloud that stores and manages loyalty cards in the equivalent of an electronic wallet for smartphone users.
SparkBase plans to start trials of the service in July in the Cleveland and Chicago areas. Douglas Hardman, SparkBase's chief executive, estimates as many as 250,000 U.S. merchants could be using Paycloud by the end of next year.
Mr. Hardman expects to also work with NFC once it is widely available in smartphones, as well technology that uses a larger bar codes that can be scanned from smartphone screens. With Zoosh, however, “I can do what I wanted to do now,” he said.
The 12-employee Naratte, based in Sunnyvale, Calif., was founded in May 2009 by Mr. Paulson and Byron Alsberg, its chief development officer. Both are electrical engineers who previously worked at chip maker Texas Instruments Inc., which has long supplied technology used wireless communications.
Security is a key focus, the men said. Each Zoosh transmission is encrypted with a unique electronic key, Mr. Paulson said, so a hacker who could capture the ultrasonic sounds would have to try to decrypt each transaction individually—a huge code-breaking task.
Mr. Paulson estimates at least 100 million phones have been sold with speakers and microphones that are sophisticated enough to use Zoosh. Naratte expects to announce mobile payments between individual handsets, Mr. Paulson said, while offerings that require cooperation with companies that process debit and credit card transactions expected to take longer.
But SparkBase's Mr. Hardman is confident they will follow. “We are very, very close to agreements with large processors,” he said.
(Source: The Wall Street Journal)