Total System Services Inc. plans to use mobile phones to gain a larger foothold in micropayments through a service that would allow card issuers to use loyalty points and cash for point of sale transactions.

Ashim Banerjee, the chief information officer of the Columbus, Ga., transaction processor's TSYS Acquiring Solutions unit, said the service is to be rolled out late in the first quarter.

It would enable micropayments through smart phones containing a downloaded payment application.

Other providers also are offering downloadable apps for point of sale purchases. The TSYS service, however, would let users transfer noncash currency such as card-loyalty points "or other unconventional sources of funding yet to be mentioned" to other consumers or to merchants agreeing to accept them, Banerjee said.

"Issuers of points are very keen that you use your points," he said. "They are not interested in letting points last."

In introducing the service, TSYS will focus "on smaller cities, primarily college towns [with] a few thousand merchants," Banerjee said.

TSYS hopes to enroll up to 80% of the merchants in a given location. Merchants would need to upgrade their payment terminals with new software but would not need to buy new card readers to accept the payments.

TSYS handles roughly 5 billion transactions a year, about 20% of which are micropayments of no more than $10. The average transaction is about $80, Banerjee said.