The one year pilot is scheduled to begin in the second quarter of 2009 and will enable users to pay for journeys by tapping their cards against readers on around 200 Stagecoach buses in Merseyside.

MasterCard says the trial is the first time a contactless bank card will be used to make payments on public transport in the UK. Unlike London's Oyster transit system, the card does not need to be topped up because funds are automatically debited from the debit or credit card.

Users will also be able to make payments of £10 or less with their PayPass contactless cards at retailers in the area that accept the technology.

Tom Wileman, regional director, Stagecoach Merseyside, says: "This new state-of-the-art system will make bus travel faster and more convenient for thousands of people in Liverpool every day and help attract car users to more sustainable public transport."

In a separate move, MasterCard says it has inked a deal with Faber, Coe & Gregg which will see the US merchant accept contactless PayPass transactions at its 80 food and retail stores from next year.

Faber operates retail brands in airports, train stations, highway rest stops and hotels on the east coast of the US.

"MasterCard PayPass is a perfect fit for food and retail establishments located in transit hubs because it allows customers to quickly make their purchases and be on their way, instead of waiting in long lines," says Denis Bouchard, group head, US merchant product sales, MasterCard.

MasterCard is already working with transport operators in New York on a contactless payments trial that will enable customers to use devices such as cards, key fobs and mobile phones to pay fares on buses and trains. The firm is teaming with The Port Authority of New York and New Jersey and NJ Transit for the eight month trial, which is set to kick off in early 2009.