Paying for goods by mobile phone moved a step closer to becoming reality with the recent announcement that mobile phone operator Everything Everywhere will offer the service from summer 2011.

Everything Everywhere - a joint venture of mobile phone operators Orange and T-mobile - will team up with Barclaycard to offer the service to its customers. In the short-term the service can only be used for making payments up to a maximum of £15 (a limit which has been set through an informal agreement between the banks and industry), however it is anticipated that as the technology and demand increases this limit will also increase.

Contactless payment technology, in various forms, has increased exponentially in recent years but this announcement is the first solely in relation to mobile phones.

Whilst the rise of contactless payment technology is no doubt to be welcomed, it does bring with it fresh privacy and data protection issues. Customers will need to be aware of the dangers of fraud and the consequences of having their mobile phone stolen or hacked. In addition, due to the fact that contactless technology often requires the use of personal data, there is the increased risk of customers having their personal data harvested or used for other purposes. This also means that data controllers and data processors will need to be aware of their obligations under the Data Protection Act 1998.

That said, this announcement clearly heralds the next big step for the future of contactless payment. Gerry McQuade, Chief Development Officer of Everything Everywhere, commented: “We’re making something that’s been talked about for many years a reality and very soon, using your mobile to buy a sandwich, a cinema ticket or in time, even something bigger like a computer will simply be the norm".

How the technology is used in practice, and what its effects will be on privacy and data protection, are issues that will be watched very closely in the coming months and years.