Interesting Pilots and Trials - NFC in India

There have been many pilots, case studies and trials in India to test NFC technology. Some of them are in transit applications, which is a good sign as those are high potential sectors for NFC wherein it can replace contactless cards and create a good business case to replace cash and queues.

*SBI partnered with Bangalore metro to launch co-branded NFC enabled debit cards/travel smart cards

*NFC technology is being tested by DMRC for ticketing services

*HID Global in association with Sony has jointly developed contactless smart card reader platform

*Yeldi Softcom has launched Ara eTap, an NFC sticker-based mobile payments service

*NXP announced plans to issue NFC enabled 'e-Shakti' cards for rural banking customers

Of course one of the biggest NFC trials in India so far has been done by Citibank. In 2009-2010, Citibank launched an extensive NFC payment system trial in Bangalore to gather customer insights. Results were quite favourable but small sample size and high adoption incentives might have skewed the picture.

Trial methodology:

  • Citi customers were incentivized to use Nokia phone pre-loaded with Citi Tap and pay application in the form of discounts and rebates
  • 3,141 customers took part in trial along with 250 merchants. Total 43,527 NFC transactions were made over 26 weeks totaling to $570,000
  • Demand outstripped the supply as 3,948 requests were made for 3,141slots

Citibank findings:

  • Customers recognized NFC payments as convenient and cool and a perfect substitution for cash and plastic cards
  • Time to transact was reduced greatly benefitting merchants
  • Citibank also took the learning of the pilot and used them globally

Major pain points

  • Citibank, in conjunction with its partners, has to provide a lot of incentive to consumers for adopting the system, Whether consumers will adopt the new system in the absence of incentives is a key question
  • Merchant staff has to be imparted training to ensure smooth NFC transaction
  • Installing the infrastructure at a greater scale than 250 merchants would be a greater challenge
  • Too small a sample size of customers to draw any conclusion about the acceptability of NFC payment technology

LTP view: The question is whether NFC payments can go beyond trials. Below is an analysis considering several factors