Citi has recently completed a successful mobile, NFC based, payments trial in Bangalore India. In the trial, over 3,000 participants were provided subsidies to purchase Nokia handsets with NFC chips that supported contactless payment functionality. Citi feels that the trial was successful, with participants actively using the service and the business case being validated for mobile payments. With this success, Citi will look to take the learnings from the trial and apply them to the market in the U.S.
A mobile payments business model Citigroup Inc. tested in India has proven a hit among all the key players, even wireless carriers.
Observers have often said that U.S. carriers, well known for maintaining strict control of their hardware and pricing, would be unwilling to support payments chips in their phones without a cut of the transaction revenue. But bankers are reluctant to share these fees, and the India test offers a viable alternative: subsidizing the cost of the phone.
Though Citi executives stressed that paying for phones is not part of their long-term strategy, analysts said the idea could give mobile payments enough of a short-term boost for the technology to gain critical mass among consumers. Citi has taken a similar approach in the past to persuade consumers to adopt new technology.
In its test in Bangalore last year, Citi offered participants up to $110 to purchase a Nokia Corp. handset and use it to make purchases.
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