Starhub and EZ-Link offer cell phone payment system for public transportation

At least they do in Singapore. All you have to do is tap your NFC capable phone to the scanner. NFC stands for near-field communications.

So basically this works a lot like most of the newer credit/debit cards that are coming out with the scanning technology were you just have to tap your card to the reader and off you go. The only difference it works with cell phones instead, this may not be the first mobile phone based payment system, but it definitely seems like the most functional.

Singaporean phone manufacturer iWOW has given away 1000 phones that work with the technology. The iWOW SZ1.0 phone has two chips, the EZ-Link chip for payment of transportation or really anywhere else the EZ-Link cards are accepted, except you can check your balance on the phones screen. The second chip is an NFC processor that allows you to download promo stuff, or other useful info like bus routes through a GPRS data connection or from smart tags in posters.

Using the phone to pay for bus rides [via crave]