Citibank Hong Kong and wireless carrier 3 Hong Kong are jointly launching the 3 Citi Wallet, which was designed for Hong Kong, but establishes a technology Citi can export to other regions.
"The mobile wallet platform is typical of the things we do at Citi. We build once to industrial scale and replicate it when we are sure we have a model in place," says Gary Greenwald, managing director for digital money services at Citi Enterprise Payments.
The 3 Citi Wallet has fees of $18 Hong Kong ($2.32 US) per month, and this is waived for users of 3's Supersafe security and tracking service, which costs $28 ($3.61 US) a month. It can be used by subscribers of 3 Hong Kong Mobile who have designated Citi Visa credit cards.
The thinking of most wallet providers is they can't charge for the wallet, says Phil Philliou, a payments consultant. "If successful in Hong Kong, Citi's initiative may prove to be exportable to other parts of the world, including the U.S.," Philliou says. "A lot of people are going to be monitoring the 3 Citi Wallet rollout to see if the business model holds."
In Hong Kong, it is common to have a monthly fee for mobile wallets and similar services, Citi says. Whether Citi would export the fee model to other regions depends on the market situation and practices, it says.
When the mobile wallet is introduced to other markets, the bank will ensure the product is configured for the local market, Greenwald says.
"'Wallet' is a very evolving term that means many things, we look at this as a mobile commerce app," he says. The Citi 3 wallet app provides transaction histories, location-based special offers and a search function that directs consumers to deals in their local area. It uses Near Field Communication technology for contactless payments.
The wallet's location-based rewards are also fairly new, Philliou says. "That type of offering is in its early stages in the U.S.," he says.
The Citi 3 wallet supports both Android and iOS platforms, and is compatible with Samsung, Sony, HTC, LG and Apple phones. It works at more than 9,000 Visa PayWave readers across Hong Kong.
Because Apple does not support NFC on its iPhones, the iOS version uses an NFC sticker that attaches to the back of the phone, Greenwald said.
The wallet uses NFC for all payments because that model is already widely used in Hong Kong for contactless payments, Greenwald said, adding there are some merchants in Hong Kong that use QR codes to allow consumers to redeem special offers or coupons.
Hong Kong is the first market for a Citi co-branded mobile wallet. Citi was also the first supporter for Google Wallet in North America and offers mobile banking in a number of countries.
"We have not launched a Citi-branded wallet or a wallet with a telecom partner in the U.S. for a number of reasons, including the U.S. has a different dynamic," Greenwald says, noting the different technology approaches to mobile wallets in the U.S.
Hong Kong was an "almost perfect confluence" of existing conditions that are viable for mobile payments, he says.
"When you look at all that is going on in Hong Kong, it seems to have all of the factors in place to give this a good shot at being successful," Greenwald says. With the Octopus mass transit card, "they're already doing tap and pay for transit and small ticket purchase, so the notion of tapping and paying on a phone is not a new thing. It may be a new form factor, but the concept isn't new."
Citi's scale is also a factor. "We have a significant consumer and credit card business in Hong Kong," Greenwald says.
Under the partnership, Citi and 3 Hong Kong, the mobile operation of Hutchinson Telecommunications Hong Kong Holdings Ltd., have developed what Greenwald calls a mutually beneficial economic arrangement. This model is different than other mobile payment schemes that involve telecoms, in which the card issuer pays the telecom to have consumer information loaded onto the mobile device.