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Citigroup Inc. says an upcoming test of contactless-payments technology in India will be a key part of its efforts to boost demand in the United States, according to CardLine Global sister publication American Banker. Most efforts to promote contactless devices in the U.S. to date have focused on cards, but Citi in India is planning to test the technology in mobile phones, which the New York-based bank expects will be an important payments mechanism. "The mobile phone really has emerged more recently as the big thing that's going to take contactless over the edge," says Jeff Semenchuk, executive vice president at Citi Innovations. The goal of the Bangalore Near Field Communication test, which could get under way as early as April, is to collect enough data on consumers' use of mobile phones equipped with contactless payment chips to demonstrate to handset manufacturers and U.S. carriers that including the same chips in phones will be worth the investment, he says. "It's no longer a technology trial or anything like that. It's literally a business model trial," Semenchuk says. Though banks, mobile operators, transit agencies, retailers and card companies around the world have launched dozens of NFC trials, observers and NFC backers regularly have pushed back their estimates for when large rollouts would occur, in part, because of questions about how to split revenues and responsibilities among the various NFC participants. Citi plans to collect data in India for about a year. If the test goes as expected, it would be another two to three years before mobile phones with contactless chips become widely available in the U.S., Semenchuk says. But once the wireless industry is sold on the idea, the transition could come rapidly, he adds. The Bangalore test could involve up to 15,000 participants, making the test among the largest to date. The test would enable consumers to make retail purchases and possibly pay transit fares.
