Bank customers will now be able to transfer up to £500 simply by sending a text message by using a new app from mobile operator O2.
The O2 Wallet – which can be downloaded by customers on rival networks – enables customers to make daily transfers of between £1 and £500 by sending text messages.
Those receiving the messages will be asked to accept the transfer by entering their own bank details.
O2 has stressed the importance of security, saying that the 'Wallet' has been trialled extensively for months.
"We recognise that security is absolutely key," said James Le Brocq, managing director at O2 Money. "This, we believe, is the safest and most secure way to deliver mobile payment services."
The service is compatible with 'the majority' of smartphones as well as iPads, while those without smartphones can still use the majority of features of the O2 Wallet providing they have web browsing capabilities on their devices.
The app will also allow users of smartphones with near-field communication (NFC) chips to effectively use their phone as their debit or credit cards.
Customers can load money onto their devices from their cards and pay for items and goods by holding their devices over contactless payment terminals.
It comes just a week after Barclaycard launched a new 'mini credit card' for users to attach to the back of their mobile phones to enable contactless payments in retailers such as McDonalds.
Despite being used in other countries for years – NFC has been popular in Japan since 2004, for example – the technology has received a lukewarm response from consumers and retailers alike in the UK so far.
However, the number of phones with NFC capabilities is expected to increase significantly in the next couple of years, with the next incarnation of Apple's iPhone predicted to include the technology.
Mobile banking and shopping online on our phones are already very popular in the UK .
The proportion of people using mobile banking increased from 9.7% in 2010 to 20.4% in 2011, whilst shopping on mobile devices is set to increase by 53% in the next 12 months hitting £4.5 billion - making Britons the biggest mobile shoppers in Europe.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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