The partnership between chipmaker ARM and G&D, the world’s second largest smartcard manufacturer, may bring chip-and-PIN levels of security to mobile apps, and also aspires to secure NFC (Near Field Communication) technologies.

The agreement will see G&D’s Mobicore operating system embedded into future ARM chips, which are currently used by mobile manufacturers including Apple and Nokia. The tiny OS will fire up whenever a secure transaction is initiated, ensuring that intercepting the details will be more difficult. Contactless payment systems such as NFC have been generally stalled by a lack of agreement over security standards and hardware.

Richard Brown, ARM mobile manager said: “This initiative will provide a basis for future NFC and remote payment systems to build upon. Because the G&D OS is separate to the phone OS, any other OS, from Android to Symbian can be used. We will release security APIs for the product shortly, and expect products to be on shelves within 18 months.”

Card payment firms such as Visa are also keen on rolling out the NFC technology, going so far as to pledge that the 2012 Olympics will be entirely cashless for visitors. More than 5,000 retailers, including McDonald's, Krispy Kreme and Eat have signed up to the 'wave and pay' scheme.
A recent report predicted that the market for mobile phone-based authentication products and services will generate $153 million in 2010 and that the market will grow to almost $760 million in revenue by 2014; an increase of $607 million.

In addition, by 2014, almost 114 million unique users will generate nearly $760 million in revenue for technology vendors involved in products and services that enable the mobile phone to become an authentication device, according to the analyst report from Goode Intelligence.