Data collated from a six-month mobile phone payment pilot conducted by Citibank in India demonstrated clear market demand for the technology, but also highlighted some important challenges which will have to be resolved before any commercial roll outs can be undertaken.
Covering 250 merchant locations in Bengaluru, the six-month Tap and Pay project represented the largest mobile NFC proximity payment trial of its kind to date. Eligible Citibank customers wishing to sign up for the trial had to purchase their own Nokia 6212 NFC enabled mobile handset in order to participate.
Describing the programme as a "watershed event" in the history of mobile financial services, financial services consultancy Edgar Dunn and Company says the pilot successfully demonstrated clear demand for mobile proximity payments.
Over three thousand mobile phones were sold and there was a waiting list of people who wanted to participate in the project but were unable to buy the handset, even though most customers already owned and used more advanced smartphones.
More importantly, says EDC, the project provided proof of positive growth in transaction volumes. Customers who were solicited to take part in the offer and especially those who joined without being solicited transacted significantly more (post-launch compared to a similar pre-launch period) than eligible customers who did not subscribe to the new service.
In total, 43,257 tap and pay transactions were conducted during the trial, to a value of IR26.04 million $570,000).
However, a significant drawback to wider adoption lies in the limited availability of NFC-enabled mobile phones, says EDC. The Nokia devices used in the Citi project were generally perceived as clunky and outdated.
Notes the EDC report: "Most people, at least the early adopters, in markets where NFC can realistically be deployed have gone beyond basic mobile phones and are unlikely to carry a second handset just for making payments...Instead of enabling only a few handset types with NFC, there needs to be a concerted commitment from device providers to include NFC as a regular feature on all types of mobile phones."
The consultancy also calls for the creation of an industry forum "that actively engages all players to ensure that there is a cooperative and concerted effort to develop an interoperable open payments environment". Following on from this, says EDC, the eco-system must be expanded to incorporate multiple banks and service providers, thus giving customers more choice and enhancing service usage.