The results of Citi's recently completed near-field communication (NFC) mobile payment trial in India have been questioned by Gartner analyst Kristin Moyer who says that the study was less successful than claimed.
According to analysis conducted for Citi by Edgar Dunn and Company, the trial found "hidden demand" for electronic payments in India with the greatest challenge being most users' outmoded mobile phone technology. The consultancy described the programme as a "watershed event that demonstrated clear demand for mobile proximity payments".
Over 3,000 Citi customers participated in the six-month study. During the survey, participants spent Rs26.04 million ($570,000) in 43,527 tap-and-pay transactions at 250 participating Bangalore merchants.
"The Citi tap-and-pay pilot has more than validated expectations, with a clear consumer demand emerging for contactless mobile payments and services during the pilot," said Satish Menon, executive vice-president of Citi growth ventures, in a statement.
However, Moyer, who covers payment systems for the technology consultancy Gartner, has challenged Edgar Dunn's conclusions. "A total of 43,527 transactions were made over the six-month period," she said in a blog post. "Assuming this is approximately 180 days, that means somewhere around 240 mobile payments occurred per day. With 250 participating merchants, this comes out to <1 transaction per day per merchant."
"This is not yet a success story," she continued. "The estimates for the Citi trial in India and the Japanese market don't imply that adoption is insignificant, but they don't back up the success stories depicted."
Citi declined to comment on Moyer's comments.
Red Gillen, senior analyst at financial services consultancy Celent, has a more nuanced view of the study. "The study was positioned as a clean-cut backing of NFC as a business that banks should be in," he said. "That's immature. Citi should have positioned this as a proof-of-concept success."
Gillen, who has written reports on mobile NFC adoption and use in Asia and the US, said that even in Japan, where the technology has been available for multiple years, only one in eight people who have a payment-enabled mobile phone use it.
NFC mobile payments involve phones equipped with technology similar to the smart card's found on many public transport systems, for example Hong Kong's Octopus or Japan's Suica cards. Users can store value on their NFC-enabled phone and then pass it over a reader at a participating retailer to pay for goods.
The major challenge Edgar Dunn noted from the trial was availability of mobile phones with payment capabilities. The majority of existing handsets in India are not NFC equipped.