From Bangalore Bounce to Skins in America?: Citi Keen To Launch M-Payment

U.S.-based Citigroup recently made a big deal out of the results of its large NFC trial held in Bangalore, India, last year, which showed transactions soared­–by as much as 329% among one subset of users.

But the results from a recently completed study on the six-month trial and Citi’s reaction to it say more about the enthusiasm the bank has for NFC and mobile payment than about how much Bangaloreans bonded with the technology.

In fact, Citi heavily incentivized the 3,100 trial participants to use the phones. If they tapped to pay at least 12 times, the phone would be free. Sure enough, transactions dropped off sharply after the 13th tap, with many users tapping one extra time to make sure they qualified for the Nokia 6212 NFC phone–though the study also showed users disliked what they considered a low-end handset. After the 17th transaction, fewer than 100 users kept tapping.

But let’s be honest, with only 250 merchants equipped with PayPass readers in all of Bangalore, it was probably hard for many users to find a place to pay with their phones. And the dowdy Nokia handset Citi was forced to use for the trial meant many participants kept carrying their own phones and just used the Nokia model for the trial.

The trial did show a significant increase in transactions, compared with the activity of Citibank credit cardholders in Bangalore who didn’t participate. That included increased use of cards by the trial participants–a sort of knock-on effect–or "Bangalore bounce", as I call it–showing NFC mobile phones encouraged less use of cash in general.

Citi hailed the results of the trial earlier this month, and as Satish Menon, Singapore-based executive vice president for Citi Growth Ventures, told me, consumers are “screaming” for banks and other players to “crack” the problem of the lack of infrastructure for mobile payments.

And it doesn’t matter where the trial was held, whether India, where use of cards is uncommon, or in the U.S. or Singapore, where Citi has also held NFC trials to rave reviews.

“The concept still remains that the customer loved it,” he said. “And the degree of adoption seems to say the universal attribute was that the customers found this was a really natural evolution, and they love it. That principal would universally work in any market.”

In other words, Citi is eager to launch mobile payment. And the bank will not wait for more stylish NFC phones to hit the market or for contactless microSD cards to be put through their paces. It is ready to introduce something this spring in the U.S.

As NFC Times reported last month, Citi is planning to issue a payment application in a chip embedded in mobile skins, probably supporting PayPass, perhaps fitting the iPhone, among other handsets. It might be a smaller contactless sticker, instead, but either passive stickers or skins are about the only thing ready for Citi’s planned launch of contactless-mobile payment next month.

In fact, while the skin or sticker chip won’t be able to directly communicate with the mobile phone or network as an NFC phone chip or contactless microSD card could, Citi could send transaction confirmations, alerts and other messages through the mobile network after the payments are processed. And Citi might have ideas for other value-added services connected with the service.

Though Menon declined to discuss any such m-payment launch, he also refused to put down contactless stickers.

“There are several advantages to stickers,” he said. “It’s lower cost. You’re able to satisfy the end-user, even though it doesn’t satisfy the technology purist.”

And Citi, he said, is “looking to be launching a scale solution.”

That is why the bank held one of the largest NFC trials to date involving bank payment in Bangalore. It wanted to see how m-payment would scale.

Now it remains to be seen how well the Bangalore bounce translates into more American consumers tapping their sticker-clad phones to pay at the point-of-sale.

Dan Balaban is editor of NFC Times.

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