O2 to launch mobile phone payment system

O2 is to launch a contactless payment system for mobile phones using Near Field Communication (NFC) wirlesss technology.

The company wants to create a 'mobile wallet' that will let customers make payments with their phone and transfer money to other users. The technology, which will be available later this year, allows people to pay for items by touching their compatible mobile phone against a special payment point.

"We will unveil full details nearer the time, but we plan to offer a range of services, including mobile payments, person-to-person money transfers and airtime top ups," said an O2 spokesperson.

O2 also confirmed it has applied for an e-money licence from the Financial Services Authority so it can offer monetary payments via mobile phone.

"Firstly we are recruiting a number of financial services experts to the O2 Money team. Secondly we will be partnering with specialised payments and processing partners," the spokesperson said.

The announcement from O2 comes after Everything Everywhere, the parent company of T-Mobile and Orange, announced similar plans to launch an NFC payment system.