Citibank is introducing mobile based credit card payments in India. It is an integrated solution that Citibank is piloting along with other vendors such as Nokia (Handset provider), Vodafone (Telecom service provider), VivoTech (Technology provider) and Mastercard (Credit Card & Secure Payments Authority) and with selected merchants in the city.
Using this technology, the customers will be able to make contactless payments in the Point-of-Sale locations.
The customer downloads the credit card into the mobile application and protects the same with a password. When the customer makes a purchase in a retail store, he taps the mobile against a special reader device which performs the transaction. As I understand, a Java application installed on the mobile phone communicates with the card reader using Near-Field communications technology (elder brother of Bluetooth?) and communicates with the reader.
The reader & the application are from the technology company Vivotech. From technology perspective, Vivotech empowers the Bank to provision the credit card information securely to the mobile phone over the network provided by the Telecom Vendor. Vivotech also empowers the merchants with contactless readers.
It looks more convinient than pure-play mobile payments, where the mobile application sends an SMS or instructions to the bank directly to make payments. Here the idea looks more of digitizing your wallet and carrying it along the way. And there are no additional costs involved in data services consumption for payments as there is no need to send an SMS or connect to Internet.
The interesting perspective is that Citibank believes that it is not just a technology trial. But, a business model trail. Just imagine, if the mobile application can accept information from the card reader device at the merchant location - the possiblities are many - individualized discounts, gift vouchers/coupons download, personalized marketing. And all of these will result in additional revenue to the companies!.
We will have to wait and see how the technology picks momentum in Bangalore!.
I would be willing to sign-up but the catch is that I need to have a specific NFC-enabled Nokia handset.