Nokia, one of the first handset makers to turn a phone into a wallet, now wants to sell services that will make these kinds of devices useful.

But the mobile giant isn't doing so directly. Instead, it has formed a joint venture with Germany's Giesecke & Devrient, which makes smart cards. The venture, Venyon, wants to develop mobile phone payments based on NFC (near-field communication), which uses an RFID (radio-frequency identification) chip and antenna to exchange information with a payment station from a range of a few centimetres.

Typically it would involve tapping the phone against a London underground turnstile, a vending machine, a payment device at a checkout stand, or another phone, Pesonen said.

Phones are perfect for payment because people carry them almost everywhere, Pesonen said at an event in San Francisco yesterday, and devices with the technology should hit the market next year.

Like 3G mobile data services, NFC first got off the ground in Japan with slightly different technology, in this case Sony's FeliCa system. Now big names including Sony, Microsoft, HP, Visa and MasterCard are backing the technology through the NFC Forum and there are trials taking place in several places around the world. But outside Japan and South Korea, there are few phones equipped to use it.

Venyon isn't aiming at the hardware end of the problem but at the need for an infrastructure through which retailers and financial services companies can work with carriers and handset makers. Although standards bodies are working on specifications for this, Venyon is worried that the market will be in full swing by the time those standards are finished. If each set of partners develops its own technology, fragmentation would slow down adoption, Pesonen said.

Ovum analyst Roger Entner thinks many people eventually will embrace payment by phone for its convenience. The practice might be even more popular in countries where consumers don't yet have credit cards, he added. But Entner is less worried than Venyon about fragmentation. The company wants to jump out ahead and grab market share, but more competitors means better ideas, he said.

"I have great trust in the market forces," Entner said.