Citigroup gearing up to launch mobile wallet app

CitiBank is set to launch its own proprietary mobile wallet, in partnership with Masterpass, that will allow users to make online and in-app purchases across 33 countries. The move is part of Citi's plans to engage more customers and lift revenue. The mobile wallet is also an opportunity for the bank to create a "cross-selling opportunity" and introduce users to its other digital offers, including peer-to-peer (P2P) service Zelle. In-store mobile payments in the US are estimated to reach $75 this year, rising to $503bn by 2020.

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Later this year, Citi will launch Citi Pay, its own proprietary mobile wallet that will allow its customers to make online, in-app, and in-store payments.

In partnership with Masterpass, all customers will be able to make online and in-app purchases at “thousands” of merchant partners in 33 countries. Android users will also be able to make contactless NFC-based payments in-store at eligible terminals. Citi’s move follows similar wallets from other banks, including Capital One and Wells Fargo. The wallet will launch later this year in Australia, Mexico, and Singapore, and in the US in early 2017.

The bank could capitalize on consumer trust and convenience to facilitate adoption. The new product fragments an ecosystem already struggling with adoption issues, which could eschew users.

But Citi Pay helps eliminate friction for online purchasing, which might push Android customers to then test the wallet they’re using online in the store. Even more, 75% of customers trust their banks most to provide mobile wallets, which could help Citi Pay pick up users who might be fearful of security issues from competitors.

Citi Pay may be part of a broader strategy to more effectively engage consumers through digital channels.

Citi has been adding mobile banking features quickly. The bank has signed on with bank-owned digital peer-to-peer (P2P) service Zelle. And Citi recently launched the ability to initiate credit card disputes from its mobile banking app. Like these functionalities, Citi Pay could help drive up mobile banking engagement and tie customers more closely to Citi over third-party services.

The bank has signed on with bank-owned digital peer-to-peer (P2P) service Zelle. And Citi recently launched the ability to initiate credit card disputes from its mobile banking app. Like these functionalities, Citi Pay could help drive up mobile banking engagement and tie customers more closely to Citi over third-party services. That could help the firm increase lifetime customer value. In itself, wallet adoption could help increase spending on Citi cards, which could lift revenue. But even more, mobile banking customers tend to consume more banking products and have considerablylower attrition rates. That means that Citi could channel this engagement into a cross-selling opportunity and capitalize on customers that turn to the bank on a more regular basis.

Mobile payments are becoming more popular, but they still face some high barriers, such as consumers' continued loyalty to traditional payment methods and fragmented acceptance among merchants. But as loyalty programs are integrated and more consumers rely on their mobile wallets for other features like in-app payments, adoption and usage will surge over the next few years.

Evan Bakker, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on mobile payments that forecasts the growth of in-store mobile payments in the U.S., analyzes the performance of major mobile wallets like Apple Pay, Android Pay, and Samsung Pay, and addresses the barriers holding mobile payments back as well as the benefits that will propel adoption.

Here are some key takeaways from the report:

In our latest US in-store mobile payments forecast, we find that volume will reach $75 billion this year. We expect volume to pick up significantly by 2020, reaching $503 billion. This reflects a compound annual growth rate (CAGR) of 80% between 2015 and 2020.

Consumer interest is the primary barrier to mobile payments adoption. Surveys indicate that the issue is less the mobile wallet itself and more that people remain loyal to traditional payment methods and show little enthusiasm for picking up new habits.

Integrated loyalty programs and other add-on features will be key to mobile wallets taking off. Consumers are showing interest in wallets with integrated loyalty programs. Other potential add-ons, like in-app, in-browser, and P2P payments, will also start fueling adoption. This strategy has been proved successful in China with platforms like WeChat and Alipay.

In full, the report:



Forecasts the growth of US in-store mobile payments volume and users through 2020.

Measures mobile wallet user engagement by forecasting mobile payments' share of their annual retail spending.

Reviews the performance of major mobile wallets like Apple Pay and Samsung Pay.

Addresses the key barriers that are preventing mobile in-store payments from taking off.

Identifies the growth drivers that will ultimately carve a path for mainstream adoption.

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