SMARTPHONES will replace wallets in a new world-first trial starting in Australia today.

The three-month pilot program by Westpac and MasterCard will see debit card information securely programmed into a phone's SIM card, letting users pay for goods by tapping a mobile phone at the cash register.

The SIM card will operate like a credit card chip and users will be able to make purchases up to $100, though experts warn the trial needs to test the security of the system.

MasterCard innovation head Matt Barr said the trial was world first as it used technology that would not limit users to just one phone or force them to use a special case or accessory.

''It's the first pilot of its kind using a technology within the phone,'' Mr Barr said.

''That's an important step in terms of getting to a mass-market solution.''

The technology works by programming debit card information securely into a phone's SIM card, making it equally as secure as a credit card.

The trial SIM cards, provided by Optus, will be used in Samsung Galaxy S III handsets for the pilot, but Westpac said normal SIM cards could be reprogrammed online and inserted into any phone in future.

To use the smartphones like a credit card, users will simply touch the handset against a MasterCard PayPass card reader, with 82,000 terminals already available in Australian stores including Coles, 7-Eleven and JB Hi-Fi.

Westpac consumer lending and payment products head Axel Boye-Moller said the closed trial would continue for three months, with a view to rolling it out widely if the technology was embraced by participants.

''This is about testing the customer experience,'' he said.

''All our research and feedback has shown that people are really ready to transact using their mobile phones. Out of our 3.4 million customers online, 43 per cent use their mobile phones to process payments.''

Telsyte research director Foad Fadaghi said consumers were ''ready to adopt'' mobile phone payment technology, though he warned that trials like this one would have to thoroughly test its security.

''There is a latent demand for an easier way to pay for things and avoid carrying coins and small notes,'' he said.

''The challenge is that the security side is not completely proven. We haven't come across many cases of fraud but it's probably one to watch in this trial.''

With this pilot program, Westpac joins Commonwealth Bank in offering mobile phone payments in Australia.

It launched a special $49.95 Apple iPhone 4 case with its Kaching app in December last year that can be waved in front of card readers to make credit card payments.

How the mobile payment trial works

- Optus provides a phone SIM card securely programmed with Debit MasterCard details

- Users insert SIM card into a Samsung Galaxy S III smartphone

- The smartphones use the Google Android Westpac TAP app

- To pay for goods up to $100, users tap the phone against a credit card reader at the check-out

- Phone transactions are listed in the app for closer inspection