Citibank Says RFID Pilot Proves Strong Consumer Interest in Mobile-Phone Payments

Incentives were offered as well, to raise greater interest in the program. Phones cost 5,000 rupees ($110) apiece, which was a discount from the regular price (slightly more than twice that amount). Customers also received approximately 2,500 rupees ($55) in cash upon completing six NFC purchases. After six more purchases, the participants received the same amount once more. About 18 percent of those taking part in the pilot made exactly 12 payments to qualify for the cash payments. However, 68 percent were active beyond the initial 12 payments.

According to the report, users were most commonly young men between ages 26 and 35, with an annual income of 720,000 rupees ($15,720). These customers typically used credit cards for making purchases, but paid cash for groceries and fuel.

The pilot broke new ground, the study found, because of its size—the largest NFC contactless payment pilot in the world to date, according to Citibank. It was also noteworthy for the aggressive marketing campaign, and for the customer service provided from workers at the Nokia stores.

"We're seeing a very healthy trend," Menon says, which shows a strong interest in NFC technology, though he adds that in order to make contactless payment ubiquitous in India—or worldwide—the mobile phone vendors will need to meet the demand for NFC-enabled phones. "We would like to see it tomorrow morning, of course," he says. In the meantime, however, Citi would consider alternative solutions, such as NFC stickers or microSD cards. According to Menon, the company intends to embark on further pilots, though he declines to say where or when. "The whole world is our canvas in that sense."

The pilot in Bangalore, Zafar says, "shows that NFC technology can influence customer behavior positively and significantly with the right mix of smart marketing, attractive incentives and good execution." He adds that "NFC is the next wave—it's a matter of choice. One can get into the game early, learn and develop a strong position as the market develops, or sit on the sidelines and have a lot of catching up to do later."