More than 1000 people taking part in the pilot can use their phones to pay for bus, tram, metro and train tickets and, using a credit card registered on the phone's SIM, make contactless purchases at around a thousand retail outlets around the city.

The NFC functionality is also being used for tourist services, including an interactive visit to the Leonardo da Vinci machines pavilion at the Museum of Science and Technology.

The pilot has been launched at a GSMA summit in Milan, with Telecom Italia highlighting that its SIM-based system is aligned with the trade body's recommendations, making it easy to move credentials from one phone to another.

Telecom Italia is working with Intesa Sanpaolo, which in 2011, used its Move and Pay platform to become the first bank in Italy to run a mobile proximity payment pilot. Over the next few months, Move and Pay will become available via an app that will gradually add more features to Intesa Sanpaolo's mobile offering, including loyalty services.

Oscar Cicchetti, head, strategy, Telecom Italia, says: "Telecom Italia's commitment and agreements with major partners and aggregators of this ecosystem, including Intesa Sanpaolo, ATM, Trenord, Kinetic and Logital, ensure that NFC services will soon be available to all of our clients, from individuals to major corporations and government departments."

In February Intesa Sanpaolo announced plans to pilot small-scale internal trials of contactless mobile payments in Milan and Turin in partnership with another wireless operator, Nòverca.

Earlier this month another Milan pilot was outlined, this one from Vodafone Italia and MasterCard.

Italian bank BNL, part of the BNP Paribas Group, has also commenced a small scale trial in Rome, with 150 participants using Samsung Galaxy S III phones embedded with a BNL MasterCard.