Citigroup says it is to run an NFC trial in the Indian city of Bangalore, with the aim of developing a business case that it can present to carriers back in the US.
Citigroup has revealed it is pulling back on marketing its contactless cards in the US whilst it runs a trial of NFC-based mobile contactless payments in India. This, the financial services giant hopes, will provide it with the business case information it needs to renew its push towards contactless payments in its home market.
“The mobile phone really has emerged more recently as the big thing that’s going to take contactless over the edge,” Jeff Semenchuk, executive vice president at Citi Innovation, has told American Banker:
He said the goal of the Bangalore test, which could get under way as early as April, is to collect enough data on consumers’ use of mobile phones equipped with contactless payment chips to demonstrate to handset manufacturers and U.S. carriers that including the same chips in phones in this country would be worth the investment.
“It’s no longer a technology trial or anything like that. It’s literally a business model trial,” Mr. Semenchuk said.
He said Citi plans to collect data in India through the end of the year, and that if the test goes as expected it would be two to three years before mobile phones with contactless chips are widely available within the United States. But once the wireless industry is sold on the idea, the transition could come rapidly, Mr. Semenchuk said.
The idea of including payment features in phones is “where it used to be with camera phones,” he said.
Cameras in phones were initially dismissed as a gimmick, but caught on quickly and are now ubiquitous, he said. “It’s inevitable that contactless will be huge.”
Citi has deliberately pulled back its contactless marketing in the US, Semenchuk added, in order to devote more resources to the Bangalore trial. It plans to renew its advertising push once the Bangalore trial ends and Citi has the participation it anticipates from the US mobile phone industry.
“It really is the chicken-and-egg situation,” he explained, “and that’s why we’re so excited about that launch in Bangalore.”