Everything Everywhere has signed a five-year deal with MasterCard to allow mobile payments to be made using near field communication (NFC) technology.
The contactless technology will be the first service to be made available to customers through the partnership.
The two firms said they plan to expand the scope of the deal into other areas, including person-to-person money transfers, loyalty rewards and digital payment services.
The arrangement will also see the two collaborate on developing services for small businesses to take payments using mobile devices.
The companies have been working together for three years on Orange's Quick Tap service, the first commercially available NFC-enabled payments service in the UK, and the Orange Cash prepaid card.
Gerry McQuade, chief marketing officer of Everything Everywhere, said working with MasterCard was an important step in making mobile payments more widely available.
"By moving our existing co-branded card offers onto mobile devices, we are closer to a world where our customers will be able to use their phone to pay for travel, pay for small purchases and take advantage of loyalty rewards from their favourite retail outlets," he said.
Marion King, president of MasterCard UK and Ireland, said the company's "vision" is of a world beyond cash, where consumers and small businesses can benefit from simple payments using smart technology.
"The partnership we are announcing today builds on our strong heritage in the mobile payments space and ensures that MasterCard remains the partner of choice for leading businesses in the UK," she said.
"As the use of cash continues to decline, we will be able to provide Everything Everywhere's 27 million customers with an attractive range of new payment services backed by the processing power and security of MasterCard," added King.
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