Citi Pay Takes The Field

Another day, another “Fill-In-The-Blank” mobile Pay.

The last two years have seen an uptick in the number of players with digital payments ambitions and a variety of assets they hope will give them an edge.

So when Citi announced its entrance into the mobile wallet wars a few weeks ago — Citi Pay — we decided to find out why and how they will compete for the consumer’s mobile payments attention. For that answer, we went straight to the source: Barry Rodrigues, Citibank’s Global Head of Digital Payments.

In his conversation with Karen Webster, Rodrigues said that, in some sense, the numbers alone made the decision for Citi. Today, e-commerce is already worth around $2 trillion, he said, a number that will double over the next several years. With 100 million cards issued, the opportunity was too significant not to drive a strategy that would put Citi in control of its mobile payments destiny in a way that drives value for its customers and the merchants they shop.

But the numbers are only part of the story, Rodrigues noted. Citi Pay is about playing the mobile payments game in a very different way, with a team that is 100 million customers strong.

Giving The Customer What They Want

The best and most pressing reason to build a mobile wallet — even when everyone else is doing it, according to Rodrigues — is pretty simple to suss out. If the customers want one, you build one — and their data strongly indicated their customers wanted one.

“Our customers drove this  — 50 percent said they would like to have a bank-branded wallet because that made them more comfortable,” Rodrigues told Webster. “When we built Citi Pay we tried to make it the digital extension of the physical plastic in their wallets.”

They’ve also, Rodrigues noted, made it easy and natural for their customers to join. Auto-enrollment helps with that — customers who carry a Citibank card are automatically provisioned and have their card (or cards) loaded into the mobile wallet, after clicking to accept some terms and conditions.

A seemingly small step — but one that removes a massive point of friction.

Rodrigues also said that they’ve made Citi Pay its own app — though they could have easily built the functionality into the mobile banking app. That, he said, could end up cluttering the pages of non Citi Pay customers who don’t  need it — or make it too hard for customers who do want to use the services to find it.

Making it so easy for the customer that it basically fades into the background is important, Rodrigues told Webster, mostly because that’s also the easy way for customers to develop the habit.

Also critical to that habit formation? Giving customers lots of places to use it.

Leapfrogging Merchant Acceptance

As a Mastercard issuer, just as Citi cards rides the Mastercard rails today, Citi Pay rides the digital Masterpass acceptance rails today, too. That means that any merchant – physical or digital – that accepts the card networks’ mobile payments platform ipso facto accepts Citi Pay.

And this tie-in in critical, Rodrigues explains, because it means Citi doesn’t have to try to independently persuade millions of merchants around the world to accept Citi Pay. That process, as we’ve seen, is quite often the stumbling block that knocks well-intentioned and well-designed mobile payments players’ mobile legs out from under them.

“We could have tried to build an acceptance market — but it’s not an easy job and it takes a lot of time to rebuild the investment,” Rodrigues noted. “The card networks are doing a good job, and for us to leverage the 270,000 merchants Mastercard has today across 33 markets – that is a much better deal for us and our customers.”

And for Citi Pay, the ability to hitchhike on Masterpass’ efforts — and bring its 100 million or so auto-enrolled customers with them — makes those efforts stronger.  As Masterpass brings on more and more big mobile wallets under its banner — and so far it’s got Android Pay and Samsung Pay — it also gives more merchants more of an incentive to get on board the Masterpass platform, too.

“We think by enrolling our Citi Pay customers into Masterpass there is going to be a critical mass of consumers that should be interesting to retailers: both the ones that are connected today and the ones that have been sitting it out so far and who will connect tomorrow.”

It also, Webster said, triggers the behavior consumers have already developed.  When shopping in a store online, card members can do what they do in the real world: look for the Mastercard logo – or in this case, the Masterpass logo. When that happens, Rodrigues said, the first time a user clicks, a menu will appear with options to register an account, including Citi Pay. Clicking it registers that preference for that consumer.

“Customers only have to do that once,” Rodrigues noted. “After that, the Masterpass does all of that in the background — the solution becomes click and go.”

The Streamlined Future

The more “Pay” services proliferate, the more buy buttons the world gets. Webster noted that the problem at this point is that merchants checkout pages risk looking like NASCAR race cars – a sea of acceptance marks.

Rodrigues agreed — and noted that not only is that ugly, it’s not sustainable, because merchants don’t want to assault shoppers with overwhelming checkout pages that they need to navigate with a magnifying glass.

The future, Citi Pay believes — is building strong, open networks that make it easy for consumers to get what they want — without having to dedicate a lot of time to considering the nuts and bolts of how they are paying.  The payment happens in the background, probably as a collaboration between a lot of players who touch it along the way.

Citibank, with Citi Pay, Rodrigues said, is not as focused on “wining” the mobile wallet wars as they are doing what they do best – reimagining for a digital world: connecting their customers to the merchants they want to buy from as quickly and easily as possible.  If they do that, Rodrigues said, the rest will take care of itself.