Citibank India has teamed up with a local tech firm Ezetap on a Square-like App and reader-based system for turning mobile phones into card payment acceptance devices which will make it much easier for merchants to accept payment by cards.

The Reserve Bank of India-approved, PCI-compliant system will let merchants with an Android handset (note no Apple iPhone), dongle, and App accept payments from the country's 320 million cardholders.

Several retailers, including Flipkart, Shoppers Stop, Bajaj Allianz, Vodafone and BookMyShowm have signed up to the technology, which Citi says can be simply integrated into their back-end systems and customised to meet specific needs.

In addition,  customers can use their phones from their own home to purchase goods and services, pay insurance premiums, mobile bills or buy movie and theatre tickets.

---

Payment card acceptance in India is bound to accelerate with this type of development. Debit card transactions overtook credit-card transactions in 2011, and are continuing to grow faster, but, although cheaper than credit card payments, they are still much more expensive than cash. India needs a less expensive payment system at the point of sale.