First Data, Tyfone work on mobile wallet

Tyfone and First Data aren't alone in working on this type of concept. Earlier this year Visa signed a deal with DeviceFidelity to market a similar MicroSD card system. It is designed to let end-users make Visa payments at any retailer that can scan a contactless device.

Tyfone may also have some competition from phone applications. For instance, Starbucks is trialing an iPhone app that serves as a prepaid card. When users approach the register in a store they bring up the application, which features a barcode representing their account. The clerk scans the barcode, which debits the user's account.

Companies have been working on the idea of using a mobile phone as a wallet for years. In late 2006, Nokia formed a joint venture company designed to encourage near-field communications technologies. But in December last year, it sold its share in the company.

One of the biggest barriers may have been the idea of building the technology into the hardware of mobile phones or on SIM cards, which requires all the other parties involved in the technology to work with mobile operators. "That's what has put the breaks on NFC," said Narendra. Plus, in the U.S., some operators don't use SIM cards.

Tyfone and First Data say they hope to start offering products to end-users in the second half of this year.