Barclays bank is giving customers a way to pay for small purchases with their mobile phones at a variety of merchant and transit locations.

Barclay’s payments division Barclaycard has introduced PayTag, which is a near-field communications tag that users can stick to the back of their mobile phones. By holding a phone outfitted with PayTag over a contactless payment terminal, users will be able to pay for purchases up to 15 British pounds, or approximately $24 U.S. dollars, via their Barclaycard Visa credit card account.

“Research carried out by Ernst and Young on Barclaycard’s behalf predicts that in 2016, £3 billion worth of payments will be made with mobile phones in the UK,” said Tom Gregory, head of digital payments at Barclaycard, London. “But at the moment not many mobile phones allow you to make contactless payments, which is why today is so important.

“At Barclaycard we have used our experience and creativity to allow you to pay for things by simply sticking Barclaycard PayTag to you mobile phone so that you can hold it over a contactless terminal without needing to upgrade or change mobile phone operator,” he said.

“With Barclaycard PayTag we have come up with a simple way to put NFC on any phone, meaning that payments become easier and more convenient using something that most of us are guaranteed to have on us all the time.”

Contactless terminals
The introduction of PayTag comes at a time when the number of contactless point-of-sale terminals in Britain is expected to grow significantly. According to research from Visa, the number of contactless terminals will rise by 50 percent this year for a total of 150,000.

Contactless terminals are expected to be available at a wide range of retail locations, including McDonalds, Boots and Tesco.

Additionally, London buses are expected to begin accepting contactless payments by the end of 2012. London’s underground subway the Tube subway system is also expected to start accepting contactless payments next year.

PayTag is available at no cost to Barclaycard Visa account holders. The tag itself is approximately one-third the size of a credit card.

Barclaycard will start to sending PayTag  to a small group of customers on May 10. The service is expected to be expanded to millions of Barclaycard customers later this year.

Beginning in June, users will be able to make purchases of up to 20 British pounds, or approximately $32 in U.S. dollars.

Barclaycard launched Britain’s first contactless mobile service with wireless carrier Orange last May. Last week it was announced that credit or debit card holders from all British banks would be able to load money onto Barclaycard’s mobile payments application, Quick Tap.

Also recently, Barclays expanded availability of its Pingit app that enables person-to-person payments via mobile phones, making it available to anyone in Britain over the age of 16 years who has a current British bank account and a British mobile phone number.

“We expect many customers will place their Barclaycard PayTag on their mobile phone, and those that do will get a flavour of what it feels like to use their handsets to make a payment,” Mr. Gregory said.  “Long term we see Barclaycard PayTag as complementary to true mobile payments, just as contactless credit cards are complementary to online banking and payments today.”