In a pairing that points to the growing role telecommunications is playing in retail financial services, MasterCard International said Wednesday that it teamed up with smart card technology company Oberthur Card Systems to develop ways to secure purchases over mobile phones.

The pact could advance smart cards by eliminating the need to develop a high-cost infrastructure for handling such transactions, and also keeps MasterCard in the lead of a race that extends well beyond the financial services industry.

The threat, said Duncan Brown, director of research for North America at the research firm Ovum Inc. in Burlington, Mass., is that cellular phone operators are looking for their own ways to control mobile electronic commerce, which could become a booming global business.

"There is some urgency on the behalf of financial services to be proactive in getting into the payment processing of mobile commerce," Mr. Brown said. "Because if they don't, cell phone operators are happy to do it."

Both MasterCard and Visa International have recognized the importance of mobile devices in the future of financial services.

Visa has been working with a Swedish mobile company, Ericsson, to embed credit card information directly into a mobile device using a radar technology. In this case, the handset is the communication device, not the smart card.

The announcement came during the same week that Malcolm Williamson, Visa's president and CEO, spoke at the World Economic Forum in Davos, Switzerland, on the topic of "Banking in the New Millennium." Mr. Williamson said banks need to recognize that consumer preferences in their interaction with banks will "change dramatically within the next several years."

"Mobile phones, personal digital assistants, and other devices will soon become common payment and financial transaction devices - with or without banks," Mr. Williamson said in a statement. "One of our greatest priorities at Visa is to drive the standards needed to ensure that banks will continue to be payment leaders in this emerging environment of mobile commerce."

The MasterCard agreement is a boon to Oberthur, which has been trying to get a leg up in the market for mobile telephones that use the Global Systems for Mobile communications standard, or GSM. Oberthur, a French company with U.S. headquarters in Los Angeles, recently bought De La Rue Card Systems, and competes in the GSM market with Schlumberger Ltd. and Gemplus.

Oberthur will enhance its GSM chip card products to support MasterCard's credit, debit, and stored-value applications.

The GSM standard has so far gained acceptance mainly in Europe but there are an estimated five million cellular phones already in use in the United States that could be turned to such use.

Most major smart card vendors have been racing to develop products to secure subscriber authentication for digital cell phones, and industry experts say the growing GSM market provides one of the best opportunities for global chip card acceptance.

The agreement will "accelerate the smart card market here in America," said Christopher Jarman, vice president of electronic commerce and emerging technologies at MasterCard. The convergence of mobile phones and chips "gives us a smart card acceptance device which is very important, and it starts to give us all the security benefits that smart cards can bring."

Though the agreement is not exclusive, MasterCard will be designated Oberthur's "preferred payment brand" for mobile commerce transactions.

Last November, MasterCard announced the formation of a global mobile commerce team to focus on the convergence of the card payments and mobile telephony industries.

Together with Oberthur, MasterCard is planning mobile commerce pilot programs in more than seven countries, the companies said.

"There's a tremendous market out there for mobile payment devices enabled by smart cards and this is the first of a million announcements we'll see," said Dan A. Cunningham, president and chief executive officer of Potomac Systems and Technologies, a consulting firm in Potomac, Md.

"It will help bring credibility to Oberthur, especially in the North American market, which they are seeking," Mr. Cunningham added.

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