MasterCard and Visa have agreed a technical standard for contactless payments in a move aimed to speed up adoption of smartcard technology.
The technical standard will ensure that point of sale terminals will be able to process payments from the new breed of cards that use embedded chips and radio frequency identification tagging technology to authorise payments.
Cardholders authorise a payment by waving their card near the terminal.
MasterCard and Visa have already agreed an international technical standard for chip and Pin cards, called EMV.
Andy Kellett, senior research analyst at Butler Group, welcomed the technical standard. "The fact that these two organisations are coming together is not just common sense, it is absolutely essential," he said.
Art Kranzley, chief e-business officer and executive vice-president of advanced payments at MasterCard, said, "Agreeing one common standard benefits all in the value chain. Merchants and terminal suppliers can invest and deploy contactless devices with confidence, knowing they will have to develop and support one communications specification, making the manufacturing process easier and less costly."
In a report published last week, professional services firm Deloitte said advances in smartcard technology and falling unit costs had removed any remaining barriers to adoption.
"Consumers are much more attuned to the idea that a tiny chip incorporated on a card, or within an everyday device such as a phone, could be used to store money and pay for a daily paper, a cup of coffee or a bus fare," said the report.
It added that widespread consumer use of smartcards would depend on making them easy to use, getting backing from retailers and working out a profitable business model.