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U.K. wireless operators partner on mobile commerce

Everything Everywhere, the joint venture between Orange and T-Mobile, Vodafone and Telefonica's O2 are partnering in the U.K. to develop a mobile payment network for smartphones.

Three of the top wireless providers in the U.K. are joining forces to speed up the deployment of mobile payments that will allow shoppers to pay for things with their cell phones, according to Reuters.

Thursday the news service reported that Everything Everywhere, the joint venture between Orange and T-Mobile, Vodafone and Telefonica's O2 have agreed to create a mobile commerce system that would bring together retailers, banks and advertisers.

For years, there's been talk that consumers would be able to use their phones to buy things using a technology called Near Field Communications, which allows very secure wireless connections at very short distances to be made for these payments.

But despite years of talk not much has actually happened in developed Western markets. That said, mobile payments have become widely used in Japan and South Korea. And in developing countries people have been using mobile phones to conduct transactions because traditional banking facilities aren't available.

Even the service hasn't yet taken off in the U.S., it is getting more buzz lately as more retailers adopt near field communications terminals and companies such as Google throw their weight behind the effort.

Last month, Google announced it will be working with Mastercard, Citigroup and First Data to offer a mobile payment system. Google envisions putting all your credit cards and other information that is normally stored in a physical wallet such as a driver's license or reward cards, in a Google digital wallet. These companies will be testing out the new service with Sprint Nextel in selected cities in the U.S. this summer.

Google has already put NFC technology in the Nexus S and many more it plans to put the digital wallet and mobile payment functionality in all future versions of its Android software. NXP Semiconductors , which is the leading supplier of NFC chips, has said it expects 20 NFC-enabled phone models to be on the market by the end of the year, according to Reuters. This will largely be driven by Android by the popularity of Android.

The U.K. operators announcing the mobile payment alliance this week haven't said much about the revenue model for their new joint venture, but they have said that they will work with advertisers, media agencies and retailers to provide offers via the mobile platform and provide loyalty coupons that can be stored on smartphones.

The set-up sounds similar to what Google plans to do. But unlike Google, the operators have not announced direct relationships with banks or credit card companies.

Last year, AT&T, Verizon Wireless, and T-Mobile USA launched Isis, a joint venture that would provide mobile payments. Initially, Isis partnered with credit card company Discover. But it was not working with the leading credit card companies Visa and Mastercard. In May, Isis abandoned the idea that it would compete with Mastercard and Visa credit cards and announced it would open its system to these credit card issuers and other banks. It also said it would use the existing mobile payment infrastructure instead of trying to build a new one.