O2 started to trial a phone which can be used as an Oyster card and a Barclays credit card at the same time.
500 Londoners will be provided with Nokia 6131 handsets during this six month Near Field Communication (NFC) technology pilot.
225 of them will also be provided with GBP 200 credit each which can be spent on purchases of less than GBP 10 where contactless technology has already been implemented.
Anything more would require a PIN to be typed in.
The consortium behind the project includes AEG, Barclaycard, Nokia, O2, TfL, Transys and Visa.
No roll out dates has been announced and it would take at least 12 months before commercial versions are released.
Such convergence however highlights the risks that might be incurred if the phone is stolen, lost, broken or simply runs out of battery.
O2 says that it would take only a single phone call to "cut the cord" for everything on the phone.
The Register mentions that secure storage on the Handset and even the O2 SIM card will be used to store financial transactions.
O2's NFC phone also raises the prospect of having your ID card grafted on your mobile phone as well.
The group also made it clear that customers would not be charged through their mobile account but could top up their Oyster account at train stations.
Contactless payments and transactions are already well established in countries like Japan, Korea and the US.