Mobile phone giants T-Mobile and Orange, now part of Everything Everywhere, are joining forces with Vodafone and O2 to develop a "wave and pay" system on network handsets.
T-Mobile UK and Orange UK, which merged last year to form Everything Everywhere, are now teaming up with two more of the nation's biggest mobile phone operators to develop payment technology for handsets.
The joint venture, which will also include Vodafone and O2, will essentially turn mobile phones on the participating networks into wallets.
Users will be able to pay for goods and services with their mobile phones, simply by placing their phones near a reader - similar to the Oyster card system on the London Underground. The "wave and pay" technology, called near-field communication (NFC), has already taken off in places like Japan and South Korea.
Tom Alexander, chief executive of Everything Everywhere, which owns T-Mobile and Orange, said the new system would enable consumers to "manage their money and make payments using their handsets, helping advertisers reach their customers on the move, and helping banks provide their clients with an easy and convenient way of making payments."
Everything Everywhere, Vodafone, and O2 have stated that the NFC service will open up to all retail and ticketing companies, banks, and other mobile operators - among other businesses - by early next year. In the meantime, the networks are making significant investments towards the project.
According to IE Market Research, by 2014, NCF payments will account for about a third of the £700 billion global market for mobile phone payments.