Finance: Citi Pay comes to the US (C)

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US customers of Citi-issued MasterCard credit cards can begin using Citi Pay, the bank’s proprietary mobile wallet, according to ATM Marketplace.

This marks Citi Pay’s fourth market, following launches in Australia, Mexico, and Singapore.

Citi Pay, which was built in partnership with Masterpass, allows Citi customers to make online and in-app payments at Masterpass merchants with the same credentials they use for online banking. Android users can also make NFC-based in-store payments.

This could be a strong play for Citi.

• Banks are in a strong position to garner wallet adoption. Forty-three percent of eligible US customers use their mobile banking apps, which makes bank-based wallets accessible and convenient. And these wallets could appeal to users that may have previously been hesitant to adopt mobile payment solutions because of security concerns, since 75% of consumers trust their banks the most to provide these wallets.
• And that could grow the bank. Giving users an accessible and trustworthy way to spend, especially on mobile devices, could lift volume on Citi cards specifically, which is good for the bank. But it could also help increase engagement with Citi’s mobile banking offerings, which could help the firm upsell consumers and increase loyalty, since mobile banking users tend to have lower attrition rates and consume more banking products.

But it isn’t great news for the mobile wallet ecosystem. Citi Pay is a particularly late entrant to an already-fragmented Android wallet market — Android users have Android Pay, Samsung Pay, bank-based apps, retailer-specific wallets, PayPal, and more — where adoption is already tenuous. For consumers, a major barrier to wallet usage is not knowing where a wallet can be used. Adding more choices could create mental friction that might push consumers to eschew wallets entirely and resort to simpler physical cards that are accepted across the board, ultimately creating the potential for further stagnating adoption of an already unpopular product category.

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