Citigroup Inc. is evaluating a new mobile service that monitors where people do their shopping, but has no actual banking functions.

Just by visiting certain retailers, people can earn "Karma Points," a type of reward points that are not tied to any financial activity and can be redeemed to make charitable donations, on Citi's dime.

For now, Citi said the main benefit is promoting its brand: users need not be Citi customers, it's free and the company's logo appears all over the screen.

Analysts said there are benefits from linking Citi's name to charitable giving, and the service shows how financial companies are looking for new ways to take advantage of mobile phones' location-aware capabilities.

However, they said the real benefits from the technology could come from incorporating the bank's own rewards program or adding payments features — services that could generate revenue, and which the banking company is already considering.

"This is a home run in terms of an early venture test," Jeff Semenchuk, a managing director and the head of Citi growth ventures, said in an interview. "As a marketing program, we've seen enough to say this is really impressive."

The app, Causeworld, went live at the end of December and was an immediate hit with consumers. At one point it was ranked among the top-10 most-popular downloads in two categories on Apple Inc.'s app store and it has already generated more than a quarter of a million dollars in charitable donations.

Causeworld is available for both Apple's iPhones and handsets that run on Google Inc.'s Android operating system.

This basic concept — awarding points to users based on specific activities — is comparable to many banks' rewards programs, including Citi's Thank You Points, and Semenchuk said these parallels have prompted Citi to look for additional mobile services that could springboard off the Causeworld app.

"Could we connect Thank You Points, and could Thank You Points be converted to Karma Points? Absolutely. That's something Citi could do that's unique to our customers," he said. Though there are no programs in the works now, "we'll explore what is relevant," Semenchuk said.

Causeworld was created by shopkick Inc. of Palo Alto, Calif. The software uses phones' built-in GPS capabilities to determine a user's location. When the app recognizes that someone is near a participating retailer, they are awarded Karma Points. People do not have to spend money at the store, and in many cases it's possible to score the points simply from being within walking distance of the store.

Banks and merchants have been talking about location-aware marketing for years, but most of the ideas floated to date have involved pushing coupons to consumers' phones. In one often-discussed model, a bank's merchant customers would be able to deliver offers to people through the bank's mobile banking software.

Semenchuk said this earlier idea makes the bank and the merchant the center of the equation, and might irritate consumers who could be inundated with unwanted offers.

But with Causeworld, consumers have to opt-in by downloading the software and by launching the app when they want to earn Karma Points. Participating merchants won't know when people are going to their stores to earn Karma Points, and Citi's presence is only in the branding. There are no explicit pitches for Citi products.

"This has to be open to the whole ecosystem of customers," Semenchuk said. "You sort of need to let the customers and consumers come to it."

George Tubin, a senior research director at TowerGroup Inc., a Needham, Mass., research firm, said that even if Citi cannot get direct revenue from Causeworld, the app may help with "the long-term goal of getting consumers comfortable with receiving marketing and messages and couponing on a mobile device."

Ultimately, Citi would have to add more direct business ties to the software, he said, and the data it's collecting from Causeworld users now is already giving it valuable insights into how the program can influence consumer spending. For example, if the Causeworld software indicates that a Citi customer is at a specific merchant, the bank could also examine their spending to see if a Citi-issued card was then used to buy something — and then offer a reward for the transaction.

"This is right in line with how mobile will develop going forward," Tubin said. "That approach of location marketing is something that institutions that are more advanced in the mobile space are looking at."

According to shopkick, in its first seven weeks Causeworld has allowed its users to support a wide variety of causes. In effect, Citi is acting as a corporate sponsor for the Causeworld program, along with shopkick's other partner Kraft Foods Inc.

To date Causeworld users have earned enough Karma Points to direct Citi's and Kraft's money to deliver 125,000 meals for U.S. families and a month of clean water for 75,000 people in Sudan, plant 32,000 trees in a rain forest, purchase 14,000 books for children, provide 32 netbook computers for a sixth-grade class in Chicago and route an unspecified amount of relief funds to Haiti. Users have also used Causeworld to offset 800,000 pounds of carbon.

Semenchuk said Citi could tie Causeworld to the bank's rewards program, allowing customers to buy extra Karma Points by tapping into their stash of Thank You Points. However, he said he would proceed with caution, as Causeworld is working fine as is — separating the charity aspect might remove part of the program's allure.

For example, Causeworld users can have the app automatically post their charitable contributions to their Facebook pages, a feature that has driven significant traffic to the Causeworld Web site from users' Facebook friends. Though people are proud to talk up their charity efforts, Semenchuk said that he was less certain that people would want to boast about using their reward points to buy a bicycle.

Cyriac Roeding, shopkick's co-founder and chief executive, said, "There are certainly some people who only care about the bicycle, but you'd be surprised how many people care about the rain forest … the notion of changing the world is actually very dear to a lot of people nowadays."

Nick Holland, a senior analyst at Aite Group LLC of Boston, agreed that there is value to the charity theme, but said he sees more solid business ties in the software's future.

Holland said the social network aspect of Causeworld might not be as compelling when tied to a bank's reward program. "Who would care, in fact, on Facebook if I've just saved up enough points for an iPod?" he said.

"The next step might be: you get points for actually visiting the retailer and spending," rather than just clicking an icon when your phone is in range, Holland said.