Citibank latest to unveil digital wallet with Citi Pay

Dive Brief:

Citibank is the latest entrant in the digital wallet space, announcing Citi Pay to support online and in-app payments for all Citibank customers, as well as NFC-based in-store payments for Android smartphone users.
Later this year, Citi Pay Android tap-and-pay capabilities will roll out to Citi customers in Singapore, Australia and Mexico. The digital wallet will launch in the U.S. in early 2017, with online, in-app and tap-and-pay capabilities, and rollouts in other markets will follow, the financial services company said.
Citi Pay users will be able to make payments using the same Citibank online user ID and password they already use to manage their accounts online. Citi also said it is partnering with MasterCard to let users make payments through its Masterpass wallet.

Dive Insight:

In our coverage of the emerging alternative payments sector, we haven't talked about Citibank's efforts, mainly because this is the bank's first branded payment initiative. However, it has been dabbling in the payments sector through a couple of other initiatives. Earlier this year, Citi took steps into this space by enabling Samsung Pay for its card members in Singapore and Australia; it also joined Early Warning’s clearXchange person-to-person payments network to support P2P payments for its online and mobile banking members.

Can Citi Pay catch up with other digital wallets that have been around much longer? Options like Apple Pay, Android Pay and even other bank-based offerings like Chase Pay and Wells Fargo lately have entered a new phase of expansion. Just last week, Wal-Mart announced plans to integrate Chase Pay with its own branded payment app, for example. The MasterCard Masterpass partnership could help Citi Pay get off the ground, especially with retailers, and help it catch up to other digital wallet options that have had a year or more head start.

With other options abounding, one might question why Citi took the trouble at all to launch yet another digital wallet brand into the already crowded sector. However, every digital wallet service that has rolled out, whether it was Apple's, Wal-Mart's or Chase's, has had at least one thing in common — an established membership or base of customers. And, recently, there has been some indication that even retailers like Wal-Mart that have their own branded wallet may be open to accepting other mobile wallet options.

Citi has more than 100 million customers worldwide, and providing them with a Citi-branded payment option is something that could help the company encourage more loyalty to its own brand. Given how other banks have launched their own payment brands, it's also something that Citi customers have come to expect, and possibly demand.