Citigroup Inc. says its test of mobile telephones for electronic commerce in Japan is a prelude to a global rollout of the technology.
Once Japanese consumers get accustomed to shopping through wireless phones, the banking giant expects to introduce the payments system service in the United States, which has more mobile phone users than Japan.
"We're trying to prove the technology and prove that people will do this," said Alan Young, vice president of access devices and distribution technologies for e-Citi, the bank's advanced technology unit.
The Japan test - which began last week and should conclude by yearend - is one of several wireless efforts Citi has initiated abroad, apparently to fulfill its promise to make wireless commerce a reality around the world. In this instance, Citi's role is to process payments and offer lines of credit to shoppers.
As evidence of its desire to make wireless commerce ubiquitous, Citi says it is developing the mobile payments system on an open platform, and is encouraging participation by other institutions. "We have to have applications designed to be agnostic of the network," Mr. Young said. "Our intention is to open this up."
Citi chose Japan as its test location for shopping because of its "enormous penetration of mobile phones," Mr. Young said. According to International Data Corp., an information technology research firm in Framingham, Mass., more than four million of the 49 million mobile phones registered in Japan are connected to the Internet, compared with500,000 of the 77 million cellular subscribers in the United States.
Citi is also taking advantage of its recent purchase of the Diners Club franchise in Japan. Pilot participants will need Diners Club cards to make purchases through their mobile phones.
Consumers will be able to order goods by punching eight-digit codes into their phones. Four digits will identify the merchant, and four will identify the product. "Merchants need to label a product with numbers, similar to a bar code, only shorter," Mr. Young said.
Consumers will then be presented with choices about, say, the color or size of the product, as well as shipping and payment options. After entering a personal identification number and getting authorization, customers will receive a message confirming their purchase.
In April, Citigroup said it was seeking to strike deals with telephone companies around the world to have them support Citi-branded financial services that would appear on the start-up screens of mobile communications devices everywhere. In addition to mobile shopping, Citi has articulated two other initiatives within its wireless effort, one that would alert wireless device users to changes in their financial information, and one that would supply on-demand banking and brokerage services.
Deryck C. Maughan, a Citigroup vice chairman, the chief executive officer of e-Citi, and chairman of Citigroup Japan, spoke to the press last week in Tokyo when the project was announced. "We shall learn from the pilot and apply that knowledge to the next phase of wireless living. This will be an open model with common technology standards."
The prototype for the Japan pilot was built at the bank's research and development center in Los Angeles with an investment of "millions of dollars," Mr. Young said. One of Citi's partners, Toronto-based 724 Solutions Inc., then modified the technology.
Other companies helping to develop the system are the Japanese electronics company Fujitsu and two Japanese telecommunications companies, DDI and J-Phone.
DDI is supplying "a relatively small number" of customers for the pilot, Mr. Young said. Final decisions about the number of customers and merchants involved will be made this week.