Cash is no longer king for customers of Etisalat, which plans to launch a mobile payments system in the UAE.
The telecommunications operator said it would allow customers to use high-end smartphones as a replacement to hard currency by the end of the year.
About 600 outlets in the UAE will initially be able to accept mobile payments, made when customers touch their smartphones against a sensor. For security protection, a personal identification number (PIN) will be required before a transaction is approved.
Users will eventually be able to use their phones as they would credit cards and as an alternative to travel cards on the Dubai Metro, the operator said.
The launch of certain services will depend on approvals from the Central Bank and the telecoms regulator.
"We're competing with cash," said George Held, the group products and services director for Etisalat.
The operator said yesterday that it would launch cashless payments by the end of the year.
Smartphone users will be able to tap their phones against a reader to make purchases of up to US$50 (Dh183.66) in selected outlets. Money will be deducted from a customer's balance, rather like using a debit card.
The telecoms firm has partnered the payments companies MasterCard Worldwide and Network International to roll out the new technology.
Users will have to replace the Sim cards in their phones, and the technology will first be available on the BlackBerry 9900 phone, followed by other handsets.
The system uses near-field communication (NFC) to authorise transactions made via a smartphone.
An increasing number of phones featuring such technology are being launched on the consumer market.
Samer Soliman, the vice president and head of processing at Network International, which runs a network of point-of-sale terminals in the UAE, said the company planned to boost the number of UAE retail outlets equipped with the system.
"We are planning to have another 600 outlets in the coming months," said Mr Soliman. The first to feature the technology include Costa Cafe, Burger King and Seattle Best Coffee, he said.
Users will be able to recharge their accounts via Etisalat outlets, their banks or at currency exchange houses, said Mr Held.
There will be no additional cost to the consumer in using such technology, he said.
"If the cup of coffee costs $1, the cost of the cup of coffee is $1 to you," said Mr Held.
However, Etisalat executives were vague on how the company planned to make money from the initiative.
"We'll make some money hopefully from somewhere," said Enrique Beza, a senior manager for m-commerce at Etisalat UAE. "But we are not participating in the transactions. Our business model will be other kinds of agreements and services."
Mr Beza said he hoped the mobile-payments system would help boost loyalty.
Etisalat executives said the company was working on agreements to allow consumers to use their smartphones as credit cards.
The company is also negotiating with Dubai's Roads and Transportation Authority (RTA) to allow for the use of smartphones as an alternative to travel-cards, known as Nol cards, on the Dubai Metro.
Users will be able to touch their phones to the existing ticket barriers in stations, said Mr Beza.
"All the transport facilities of the RTA Metro are already enabled for NFC," he said. "It is our goal to have the RTA Nol card in your Sim card. And we are discussing this."