The network operator O2 has announced that it is offering customers its own mobile payment system, which is called O2 Wallet. The company hopes to take a slice off this lucrative growing market, which now includes Barclays, Google and PayPal.

Seemingly consumers can transfer any amount of money between £1 and £500 between accounts via their mobile phone, but they cannot, at the moment, use the system to pay for goods in shops and other outlets.

However, while using it for direct shopping is not available at the moment, the O2 Wallet will allow consumers to search for products online and purchase them from their phone from around 100 retailers including Comet, Debenhams, Sainsbury’s Direct and Tesco Direct.

The idea of using contactless payments via near field communication (NFC) is expected sometime in the future.

With the rapid growth of using smartphones to make financial transactions, James Richards, director of mobile at Intelligent Environments, a banking software provider, said: “Consumer appetite to use the ever-ubiquitous mobile device to make payments and manage money is alive and kicking.”

O2’s new wallet system is similar to a pre-payment card in that customers load money onto the wallet from their credit or debit card, which can then be used to transfer money to different linked accounts or shops online.

Interestingly O2 says that the system is available to everyone and not just its own customers. In short, it is not linked to any O2 bill.

O2 is the latest company to get involved in this latest technological revolution. Barclays recently launched its own version for Barclaycard customers, called Pingit.