Citi’s New York NFC Pilot First Open Test in U.S. Backed by Major Issuer

The latest U.S. trial of contactless payment involving mobile phones and near-field communication technology (NFC), set to begin Jan. 10 in New York City, will combine key elements of the two other U.S. pilots mounted so far, and represents the first in which users can access credit cards issued by a major bank in an open, urban environment. Citigroup Inc.'s Citibank unit says interest in the pilot from New York customers is already building. “We're starting to get people signing up online” to participate, says Jeff Semenchuk, executive vice president for Citigroup global consumer innovation. Citi, which is sponsoring the New York pilot along with MasterCard PayPass, Nokia, and Cingular Wireless, has set up a Web site (www.nyctrial.com) where holders of its credit cards can sign up for the three-to-six-month test. The bank expects to have “several hundred” participants, says Semenchuk, without being more specific. Those who opt in will be required to attend a kickoff event at the city's Bryant Park Jan. 10 and Jan. 11, where representatives from the bank, Nokia, MasterCard, and Cingular will hand out phones and help participants load their card accounts. Participants must be Cingular subscribers and also hold a Citi credit card. Like MasterCard's Dallas NFC pilot, announced last month, the one in New York will feature over-the-air personalization (OTA), a technology that allows users to download their account information, payment applications, and other data to their phones over the carrier network. In a separate pilot conducted between December and May in Atlanta by Visa USA, JPMorgan Chase Co., Nokia, and Cingular, phones were handed out with account data already loaded, a tactic that facilitated the pilot but is considered impractical for mass issuance. In New York, participants will be asked to bring their cards with them to the two-day event at Bryant Park and will perform the OTA there with help from the backers' representatives (participants need attend on only one of the days). “We want to make it quick and convenient,” says Semenchuk. Like the Atlanta pilot, the one in New York will feature so-called smart posters, or advertising signs with embedded NFC chips that will let users download digital content over the Cingular network. In New York, this will include movie trailers from Universal Studios and restaurant information from the Zagat guides. Semenchuk says some of these posters will be at the Bryant Park event. He refuses to say, however, how many such posters will ultimately be deployed during the trial, or where. Such media could be important to securing the involvement of mobile carriers like Cingular, since their networks don't play a role in point-of-sale contactless payment. MasterCard says smart posters will eventually feature in its Dallas pilot, as well (Digital Transactions News, Nov. 2). The New York trial will be the first in the U.S., however, in which participants will be able to use their phones in an open environment to pay for merchandise anywhere contactless payment is accepted, with credit card issuance by a major bank. That includes three subway stations in Manhattan that have started taking contactless cards for transit fares. Visa's Atlanta pilot included Chase card accounts but was confined to the closed environment of a sports stadium. The PayPass pilot in Dallas is open but involves prepaid accounts held by Peoples Bank of Paris, Texas, and processed by Bluko Information Group Inc.. MasterCard says 36,000 locations now accept PayPass, most of them in the U.S., but refuses to say how many of these stores are in the New York metropolitan area. Citi began issuing contactless key fobs and cards last year for both credit and debit card accounts. Semenchuk says early results of this program, which include somewhat higher usage of the fob compared to the card, may bode well for the NFC test. “We have some early indicators that form factor is very important to customers,” he says. Citi hopes the NFC pilot will reveal how consumers might change their payment behavior when using a handset rather than a card, says Semenchuk, who says the bank will be surveying participants looking for information on where they use their phones and what they pay for. The pilot will feature some consumer incentives, including credits for Cingular air time. With NFC, mobile devices embedded with an NFC chip can establish a two-way link with point-of-sale transceivers and act as contactless payment tokens. Transmission distance is extremely short range?typically no more than 4 centimeters. In the New York pilot, the chip will be embedded in the clamshell of the Nokia 613x, a new model. As in Dallas, MasterCard is relying on an OTA platform developed by Munich-based smart card maker Giesecke & Devrient, which the card company introduced this spring.