Together with Visa and the Finnish-Swedish bank MeritaNordbanken, Nokia, the Finnish cell phone manufacturer, is testing a system for making point-of-sale purchases with cell phones. And at the CeBIT computer show in Hannover, Germany, this past week, Nokia showed off a prototype of a mobile payment system called PayPal.com. The system is also being demonstrated at the Wireless 2000 show, put on by the Cellular Telecommunications Industry Association, in New Orleans this week.

PayPal.com is owned in part by Nokia and plans to merge with X.com, an online financial services company. The PayPal.com system has been in place for several months, and it is being adapted for cell phones. It works like this: after opening an account on the company's Web site, people can send money to one another via e-mail. The PayPal.com method calls for just an e-mail address (or eventually a phone number) to send, beam or dial in a payment. Once the money is sent, the amount is charged to a credit card or bank account.

The recipient retrieves the money by filling out a form attached to the payment, which in turn registers the recipient for the service. PayPal.com then credits a credit card, deposits money to a bank account or sends out a check.

PayPal.com is especially popular for paying for merchandise on eBay and other online auction sites because it eliminates the need to send checks through the mail. Since the service began last October, some 350,000 users have signed up, and more than 10,000 new users sign up each day.

The introduction of the cell phone into the process can change things greatly, said David Sacks, vice president for strategy at PayPal.com. He conjured a scene from the wireless future: ''Walk down the street, a few blocks away from your favorite Starbucks, pull out your Web-connected cell phone, you get a Starbucks menu, click espresso, and it's sent. And you've not only ordered it, but you've paid and you can go pick it up.''

PayPal.com does not displace credit cards or electronic bill payment services. Rather, it extends the use of electronic fund transfers to person-to-person payments and small cash payments. That has made it particularly popular with eBay users. EBay has its own system for paying by credit card, called Billpoint, which it introduced yesterday.

Tapio Hedman, vice president for communications at Nokia Mobile Phones, said that m-commerce, when combined with information delivery via the Web, makes the cell phone an especially powerful tool. Not only can a phone be used to buy a bus ticket, but, he said, ''if you're waiting for a bus in Finland in February, you definitely want to know if it's 5 minutes or 25 minutes for the next bus to come by.''