Citigroup Inc. and the transaction processor Elan Financial Services are preparing tests of mobile payment systems.
Citi said Wednesday that it would test Obopay Inc.'s person-to-person payment system, which lets users send and receive payments through cell phone software and text messages then spend that money using an Obopay debit card.
Elan, a U.S. Bancorp unit, said it would offer software from Sapphire Mobile Systems Inc. of West Conshohocken, Pa., on handsets connected to Elan' clients' PayCard reloadable prepaid card accounts. The software allows person-to-person payments, card transfers, and balance inquiries over a mobile debit network.
Amy Radin, the chief innovation officer for Citi's global consumer group, said the pilot program would take place in two cities and run at least six months. Citi has not decided which cities, she said.
During the test, users would be able to fund their Obopay accounts with Citi credit and debit cards but would have to spend the money they receive through a separate Citi-branded card.
However, "the goal is to have an end-to-end Citi solution," Ms. Radin said. If Citi takes this past the pilot phase, users would be able to spend money from their existing Citi cards.
"There's an opportunity here," she said. "One of the things we're seeking to learn is all of the impacts to customer loyalty, one of them being usage but also recommendation" of Citi's products to friends.
Obopay, of Redwood City, Calif., designed its service to work with software that is downloaded to a mobile device, but it is also possible to use the service via text messaging. Cingular Wireless LLC, Amp'd Mobile Inc., and Helio LLC let users download Obopay's software, but other carriers do not.
The Sapphire system operates solely by text messaging.
Dominic Venturo, Elan's senior vice president for product innovation, said the Milwaukee company began a 90-day pilot on Tuesday that allows payments only among reloadable Elan cards. Users could not make payments to gift cards, for example, or to cards outside Elan's network. Mr. Venturo said he did not know yet whether the service would increase Elan card users' transaction volume.
These systems differ from other mobile banking pilot programs in focusing on payments instead of other online banking tasks. Citi, for example, in a project separate from the Obopay test, is using a software tool kit created by mFoundry Inc. of Sausalito, Calif. Citi's software is expected to include a search tool for users to find branches and automated teller machines.
Citi announced in February that it planned to work with the British wireless carriers Vodafone Group PLC on a trial of an international remittance service, initially to allow money transfers between mobile-device users in the United Kingdom and Kenya.
Gwenn Bezard, a research director at Aite Group LLC in Boston, said it is important for banking companies to support these mobile payment systems.
"The competition is very fierce in credit card and debit card issuing," Mr. Bezard said, and money is made "more and more through transaction fees, and not so much on loans."
He pointed to Citi's endorsement of Checkout last year when Google Inc.' rolled out the online payment system. The more the banking company puts its name behind these new outside systems, he said, the more likely its products will be used to fund transactions made over them.
"They are placing small bets to make sure that they are going to stay on top of the wallet," Mr. Bezard said.
