Citibank (NYSE: C) announced that they will e expand in their “Tap and Pay” cell-phone based payment system in India.
The bank started a trial launch in Bangalore to determine if it could successfully use mobile phones with near-field communications (NFC) technology at retail outlets and other point-of-sale locations. Citibank branded the service as “Citi Tap and Pay.”
NFC is a limited-range wireless connectivity standard for communication between two electronic devices. Many believe that the standard will be used around the world for contactless transactions such as electronic payments and quick data transfers.
Perhaps what was most shocking about the trial launch was that consumers using the mobile-phone payments made about six times as many transactions as they would have with a credit card. Ramchandran said that this suggests that consumers were using contactless payments as a replacement to competitor’s credit cards and cash.
Citibank’s 6-month trial included 3,000 customers, 250 merchant locations and 50,000 purchases according to a white paper released this week by Edgar, Dunn & Company, a consultancy that works on global financial services and payments. Trial participants each had made use of a NFC-enabled Nokia 6212 mobile handset from Vodafone.
The company is now ready to expand the services to other major cities in India, but says that it will first have to get merchants to deploy NFC-enabled readers and to get more handset makers to offer cell-phones that offer support for the NFC standard.
The largest complaint among trial participants was that there were not enough merchants that had card-readers which supported mobile payments, Ramchandran said. Some users also had complaints about the quality of the hand-set.
