Nope, this isn't mobile payments
This is basically the same as carrying a contactless Barclaycard, but stuffed inside your mobile phone. There's no "e-wallet" planned at the moment, and this really isn't actual mobile payment. It's just a Barclaycard. On a SIM. Deep joy.
You'll only be able to make contactless payments for things that cost less than a tenner. Your Oystercard (also in the phone, natch) will have to be charged at an Oyster terminal. You'll have to enter your PIN into the phone every few transactions to verify it's still you that has it.
Basically, this is a really stupid idea. You will have to carry your Barclaycard with you *anyway*, because not that many places have contactless readers and you can't use the phone to buy anything over £10, but now your phone is a much more tempting target for thieves.
@Nicholas Wright: no, they won't need to cover that under the insurance because it's exactly the same from the point of view of the Consumer Credit Act as having your credit card lost or stolen. The consumer isn't liable, unless you count "liable to get stabbed in the face for waving their phone/free cash for thieves around on the Tube".
@Paul: it's not the most stupid idea ever, but it has to make the Top 20.
@Max: It will still work even when the phone is switched off. It won't work with a *completely* flat battery, but "battery insufficient to run the phone" and "battery completely flat" are in no way the same thing in this context.
@Jerome: No, this is not an e-wallet, this is not a new Mondex, there is no "cash" on the phone. It's a Barclaycard - just like any other but effectively superglued to a mobile phone - the contactless facility of which can be used to make micropayments. There is nothing even slightly interesting about it from a consumer perspective and certainly nothing terribly revolutionary from a technology perspective.
This has been tried, several times before, and nobody has ever cared.