The pilot will see 100 of the bank's staff given Android handsets fully-equipped with a secure element embedded in the SIM card. Together with the user's virtual Debit MasterCard on the phone, participants will be able to pay for items, by tapping their phone in-store on a contactless NFC PayPass payment terminal.

The app also includes an instant feedback form which will be used to tailor the final product during the commercial development phase.

Westpac's head of mortgages, cards and merchants, Axel Boye-Moller says: "Mobile banking represents a significant change in the way customers and banks do business and Westpac customers will be instrumental in helping design the final application."

The latest pilot follows a trial conducted by the bank last May of contactless stickers which could be attached to a mobile phone as a bridge to full-blown SIM-based payments.

Westpac rival CommBank has yet to enable contactless payments on the Android version of its Kaching mobile app, preferring to wait until the handset and terminal market matures.

Says Boye-Moller: "Online and mobile are the cornerstone of Westpac's business. Currently 3.4 million Westpac customers are digital customers, 43 per cent of whom use their mobile phone to process payments online. The pilot enables simple mobile payments for purchases and reflects our approach towards progressive payment solutions for our customers.