Bank of America Corp. is collaborating with Visa Inc. and DeviceFidelity Inc. on a mobile-payment program to begin next month in New York enabling consumers’ smart phones to operate as contactless-payment devices, Visa confirms.

The test, using microSD chip technology integrated with a mobile payment application, is BofA’s first foray into mobile contactless payments, a bank spokesperson says. The test will run through the end of the year.

Bank of America says it will issue microSD chips to consumers selected to participate in the test, providing them with an application that will act as an electronic wallet within their mobile phone, the spokesperson says. Once the phone is set up, consumers may use their phone as a payment device at merchants who accept contactless payments.

Consumers tap their phone in front of the contactless terminal, which can read the phone from up to four inches away, and the microSD card provides their secure payment information to the merchant, the spokesperson explains.

Visa says its microSD technology enables immediate point-of-sale authorization of credit and debit payments, and consumers receive confirmation on their phones a few seconds after the transaction is completed.

Bank of America declined to comment on the scope of the test or any fees for participants.

Visa also is working with U.S. Bancorp on a similar pilot program slated to begin in October, but the bank declined to provide details.

Visa last February announced plans to develop microSD-based contactless mobile payments as an interim strategy before Near Field Communication mobile payment technology becomes widely available (see story) .

Industry observers say that microSD technology, while falling short of the potential for NFC chip-equipped phones, is a logical next step for the payments industry. NFC chips enable two-way communication with other NFC chips for payments and to support the downloading of information as such as coupons and rewards.

 While the payments industry waits for widespread availability of NFC phones, “there needs to be a bridge technology,” Todd Ablowitz, president of Double Diamond Group, a Centennial, Colo.-based consulting firm, tells PaymentsSource. “Whether it’s banks or retailers, mobile payments are where the payments industry is heading.”

Once its mobile-payments pilot is complete this year, BofA will evaluate the results and consider expanding the program to other major metropolitan areas, the bank spokesperson says.

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