DnB Nor, Telenor and MasterCard will begin testing the technology with customers in Oslo in the first half of 2008.

The system utilises MasterCard's PayPass contactless technology, which will enable customers to pay for low value purchases at certain retailers in Oslo city centre by tapping their handsets on a specially-equipped terminal.

"Once the testing starts, it will be the first of its kind in the Nordic region and among the first in the world based on standardised components," says Hanne Sjursen, group manager, e-ID and e-Payments, Telenor.

Carlos Rodriguez, general manager, Nordic region, MasterCard Europe, says: "The innovative combination of mobile and contactless payments gives consumers the choice of a new way to pay for everyday items that is faster, safer and more convenient than cash."

Earlier this month MasterCard revealed plans to launch an NFC-enabled mobile payments services in Japan that would allow Japanese customers to use contactless 'tap and go' PayPass technology at retail outlets around the world.

The card issuer recently claimed that 75% of customers that participated in a mobile phone PayPass pilot programme in Taiwan preferred the contactless technology to traditional contact-based cards and made payments more often.

A report published by Juniper Research earlier this year predicted that the popularity of mobile payments is set to rocket over the next few years, with the value of the market rising from $77.6 million in 2007 to $11.5 billion in 2011.

The Norwegian initiative comes as Sony and Dutch chipmaker NXP Semiconductors announce the creation of Moversa, a joint venture company set up to promote smart-card applications in mobile phones by developing a chip that includes both companies' contactless formats: Mifare and FeliCa.

First samples of the secure chip will be available by mid-2008 with initial commercial deployments targeted for the end of next year.

Moversa will have a nominal capitalisation of $146,600 and a total capitalisation of $28 million. Sony and NXP will each hold 50 percent of the company, which will be based in Vienna, Austria.