Citigroup Inc., which has been testing a system that lets customers send each other money through mobile phones, plans to connect the system to its checking accounts.
The New York company's tests involved prepaid debit card accounts, but starting in May the system will be linked to Citi customers' checking accounts. Several major banking companies already offer mobile services that let users move money between their own accounts, but Citi would be one of the first to support transfers between individuals through phones.
The project is an important endorsement for Obopay Inc. of Redwood City, Calif., which offers the person-to-person transfer system that Citi has been testing since August in Boston and Chicago.
Dion F. Lisle, a senior vice president in the growth ventures and innovation unit of Citi's global consumer group, said Wednesday that his company plans to begin offering the system initially to up to 20,000 to 30,000 customers. That program could extend into the fall, and Citi could introduce the mobile system to all its customers in the fourth quarter.
Mr. Lisle disclosed the plan last week during a presentation at the Bank Administration Institute's TransPay conference in Dallas.
The Chicago and Boston trials were aimed at gauging customers' interest in using mobile phones to transfer money, he said, and Citi initially expected to target college students and young people. Instead, it found that middle-aged people, especially families, were the most likely users. The findings echo those of Obopay, which developed its mobile system with students in mind but later found that it was popular with other types of users, including families and the underbanked.
Mr. Lisle was Obopay's vice president of business development before he joined Citi in November.
"It turns out I'm a better target for Obopay than my kids," he said during the presentation. "It's the 40-year-old with young kids, more than the 22-year-olds, who are going to adopt this technology."
As an example, he recounted a trip he took to the mall with his teenage daughter to exchange a gift. The item she wanted would have cost more than the balance on her prepaid Obopay MasterCard, so she sent a text message to him as he waited in the car reading; he funded the purchase by reply text.
Enrollment in the two tests was double what Citi had anticipated, Mr. Lisle said, but he would not provide actual numbers.
Obopay offers a transfer system that connects to prepaid card accounts, and Citi's initial test simply offered such transfers to its customers. Obopay has long said that its typical user would be college students who need to split a dinner check and would pay each other electronically instead of handing over cash, though many observers have said this type of use would be unlikely.
In the past year Obopay has discovered that many underbanked people are using its system to manage their monthly bills — for example, having paychecks deposited directly into an Obopay account and then using transfers to pay their share of household expenses to roommates. Families also are using Obopay, typically a parent sending money to a child at school or to pay an allowance. Funds stored in Obopay accounts can also be accessed with prepaid MasterCard Inc. debit cards.
The connections Citi is building now will enable direct, real-time access to customers' demand deposit accounts, he said, though "we do keep the prepaid card for underage or unbanked people."
In the rollout expected to begin in May, Citi will monitor customers' use to ensure that transactions post accurately, and that the system can handle the volume the company ultimately expects.
The P-to-P trials are part of Citi's effort to promote banking with mobile devices. The Citi Mobile service it unveiled in April uses a downloadable application compatible with a wide range of devices. In New York, Citi is testing contactless payments at the point of sale, using mobile devices equipped with contactless near-field communications chips. That test also is in conjunction with MasterCard.
Mr. Lisle said the P-to-P program has no direct tie-in with Citi Mobile, because the two efforts use distinct technologies, though "flash forward a year, you would expect us to merge these products under one mobile banking-mobile services umbrella."
