A trial group of Taiwanese citizens are already using their mobile phones to pay for subway rides using a contactless payment system, and they will soon start testing handsets with credit and cash cards on board.

The subway system in Taipei already accepts contactless payment cards for all rides, but using mobile phones to make such payments is new.

The technology for the payments is built right into the SIM (subscriber identity module) cards inside the handsets, said Chiang Yen-hsu, a researcher on Chunghwa Telecom's ETC&IC card project.

The subway payment trial has already started, and a shopping trial will begin soon, he said.

In September, credit card company Visa announced a six-month public trial of a contactless payment system on mobile phones in Taiwan.

A total of 500 Chunghwa Telecom subscribers will use NFC (near field communication) equipped Nokia 6131i handsets to make contactless payments at 3000 stores that already accept Visa payWave contactless cards in Taiwan.

Taiwan was chosen because 1.4 million people here already use contactless payment Visa cards, the company said.

As part of the trial, advertisements and coupons will be sent to handsets over the airwaves. Users passing by posters or other media embedded with NFC tags in popular shopping areas will receive specific offers, including movie, restaurant and bar discounts.

For smart phones, RFID (radio frequency identification) or NFC tags will be used in the future to send signals connecting them to Web sites designed for small screen sizes and that contain useful information, such as movie times, bus, subway, train, airplane schedules, and more.

"If you're waiting for a bus, then an RFID signal installed at the bus stop could let you know exactly where your bus is and when it will arrive," said Chiang.

Chunghwa Telecom is Taiwan's largest mobile phone operator by subscribers.