The Reserve Bank of India-approved, PCI-compliant system will let merchants with an Android handset, dongle and app accept payments from the country's 320 million cardholders.

Several retailers, including Flipkart, Shoppers Stop, Bajaj Allianz, Vodafone and BookMyShowm have signed up to the technology, which Citi says can be simply integrated into their back-end systems and customised to meet specific needs.

In addition, says the bank, customers can use their phones from their own home to purchase goods and services, pay insurance premiums, mobile bills or buy movie and theatre tickets.

Muge Yuzuak, country head, cards and personal loans, Citibank India, says: "We believe that this payment and collection device has the potential to dramatically increase the penetration of card terminals from the current low level of 700,000 units in India."