An ongoing test of Near Field Communication-enabled mobile payments in India shows that offering consumers incentives such as discounts "are key" to promoting use of the contactless technology, contends James Davlouros, vice president and business leader at MasterCard Worldwide.

In July, Citigroup Inc. formally announced the launch of the test, located in Bangalore.

Some 5,000 consumers with Nokia 6212 phones can make contactless purchases at approximately 400 merchants, Davlouros, who oversees the card network's mobile payment efforts in Europe, tells CardLine Global.

The phones support MasterCard's PayPass contactless-payment application. The test also involves the local Vodafone Group mobile operator in India and United States-based contactless vendor Vivotech Inc.

Consumers so far have enjoyed 20% discounts at booksellers, along with other loyalty incentives, Davlouros says. Another lesson from the trial is the power of marketing, he says.

The launch was a huge media event in India, boosted by billboard campaigns that started with teaser ads before the test kick-off, followed by messages that focused on NFC's speed and convenience. The experience with incentives and marketing will provide lessons for NFC efforts elsewhere, Davlouros says.

Still, the India experience cannot be fully translated to Europe and other regions. For instance, while hundreds of millions of Indian consumers have access to mobile phones, relatively few have experience using payment cards, and India's card infrastructure is relatively undeveloped. That means NFC in India faces less competition from other electronic payment "form factors" than will be the case in other regions, Davlouros says.

He expects the pilot in Bangalore to stretch into the first quarter of 2010 and hopes it leads to a formal rollout of the service in India. Issuers, merchants, card networks and transit agencies continue to test NFC around the world, but Davlouros says MasterCard is "not interested in more pilots unless the focus is eventual commercialization."

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