Bangalore: Move over credit cards, India is now preparing to use the mobile contactless payment method. Citibank has announced the launch of Citi Tap and Pay pilot service in Bangalore as an effort to make the mode of payment more convenient. Using the NFC or Near Field Communication technology, Citi along with Nokia, Vodafone, ViVOtech and MasterCard, is aiming to gain insight into a wide range of parameters including, assessing customer acceptance to making contactless transactions through mobile NFC. This technology allows the user to use the phone instead of a credit card to make purchases at the grocery store, bookstore or eating joint. If the technology becomes a success in India, it will be a big opportunity for other banks to tap into the market with Citi as pioneers in the field.

The technology has already been piloted across other parts of the world and may soon replace the traditional credit card system. In fact Visa launched the world's first commercial mobile payments service using NFC in Malaysia, in April this year. In Japan, the technology has already been employed by wireless carrier NTT DoCoMo which allows customers to use cell phones as mobile wallets. Now NFC is making inroads into India.

A recent study by ABI Research shows that globally, 450 million mobile phones will be NFC-enabled by 2011, which represents about 30 percent of handsets shipped worldwide in that year. Moreover, Strategy Analytics predict that mobile phone-based contactless payments will facilitate over $36 billion of worldwide consumer spending by 2011. Now, the banks are eying to cash in the Indian mobile subscriber base that stands at 415 million in May 2009 to promote the contactless payment. Jeff Semenchuk, EVP and Head of Growth Ventures, Citi Innovation said, "Citi believes contactless mobile payment services will be a key lifestyle driver for our highly mobile, international and increasingly urban customer base."

The mobile phone can be tapped on a contactless reader at the point of sale to pay for purchases eliminating the need for the traditional swipe of credit cards. With this, the need to send SMS or mobile data charges is also eliminated. One can avail of the service free of cost and all one has to do is register and have a Citibank account and MasterCard card. However the service will function only on NFC enabled Nokia 6212 phones which cost Rs 11, 560 but will be sold at an inaugural price of Rs 5000. The customer also needs to have a Vodafone connection and will be charged for the GPRS service to make contactless NFC mobile payment.

Michael Mullagh, CEO of ViVOtech, which will be providing the reader machines and the necessary software said, "This new technology promises to revolutionize the payment and shopping experience and bring enormous benefits to consumers and the payment, retail and mobile ecosystems."

Although there are already a few startups like mChek and Cashnxt that are planning to launch similar pilots in other parts of India, it is the first time that an initiative like this is being taken up in India. Out of the four lakh Citibank customers in Bangalore, the project is targeting around 5000 for the pilot which will be six months long..