MasterCard is teaming with The Port Authority of New York and New Jersey and NJ Transit for the eight month trial, which is set to kick off in early 2009.

Customers will be able to pay fares on buses and trains between New York City and New Jersey by tapping their contactless device at turnstiles and on fare boxes.

The trial will cover 13 Port Authority train stations and two connecting NJ Transit bus routes.

However the contactless service will only be available to MasterCard PayPass customers for the first two months but will extended to other bank-issued contactless card users for the rest of the trial.

The new pilot will also be compatible with a trial of contactless payments technology at ticket barriers on the New York subway which is being conducted by Metropolitan Transit Agency (MTA), MasterCard and Citi. The MTA pilot has been running on the Lexington Avenue subway line since July 2006. The test programme - which currently includes readers in 80 fare gates at 30 stations - is set to be expanded later this year.

Commenting on the latest trial, Anthony Shorris, executive director, Port Authority, says: "This is all about making life easier for our customers. The region's diverse workforce relies on our extensive mass transit network to commute and we need to find a way to take a bit of the hassle out of trips that often span two or three separate systems."

Contactless transit payments systems have already proved successful in Taiwan, Hong Kong and the UK.

In Hong Kong over 16 million contactless Octopus cards - which combine transit payments with debit functionality - are in circulation. The card is supplied by Octopus holdings which is owned by the major transport operators in Hong Kong.

Meanwhile Transport for London (TfL) said last year that it has issued more than 10 million Oyster smart cards since the e-ticketing system was launched in 2003. TfL is also working with handset manufacturer Nokia and phone network O2 to develop a scheme that will enable customers to pay for tube journeys using mobile handsets.

Also in London, Barclaycard launched its combined contactless Oyster travel and debit card - OnePulse - in October last year. The card has a standard chip and PIN payment system, Oyster card functionality and Visa's 'wave and pay' contactless payment technology, which can be used for transactions of £10 or less and billed on the credit card account.