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MasterCard Worldwide hopes to expand access to PayPass contactless-mobile payment, especially to customers of small banks and credit unions, with its new partnership with mobile-banking software provider mFoundry.

The idea behind the deal, which includes an undisclosed amount of investment by MasterCard in the U.S.-based technology vendor, is that some of the hundreds of banks and credit unions that now use mFoundry’s mobile-banking software will expand the m-financial services with PayPass.

Of course, that depends on whether those financial institutions have deals with mobile operators or other owners of secure elements in NFC phones, where the PayPass application will be stored.

James Anderson, senior vice president for mobile product development at MasterCard, said the partnership seeks to make it easy for banks to make PayPass part of a service they already offer–mobile banking. He said MasterCard would also integrate its over-the-air provisioning service, MOTAPS, into mFoundry’s m-banking application.

But Anderson acknowledged that “to enable Mobile PayPass, the consumer must have a MasterCard-approved NFC handset, and the bank has to have an agreement in place to access the secure element on the mobile device,” he told NFC Times.

To offer their mobile-banking services, banks just have to offer the downloadable app running on customer handsets and integrated with their servers.

But to offer PayPass payment, they will have to deal with either mobile carriers–which will own the SIM cards and many of the embedded chips in NFC phones–or handset makers or mobile platform providers that will also own many of the embedded chips. An example of a platform provider is Google, which controls the secure element for its Android-based Nexus S 4G phone used for the Google Wallet.

“If it wasn’t for the secure-element battle, it would be the perfect extension,” said Todd Ablowitz, president of the Double Diamond Group consulting firm, of the idea to add PayPass mobile payment to mobile-banking offerings. “Because of the secure-element battle, the forces that control the chips are setting the rules of the game.”

Of course, banks could issue their own secure elements, in the form of microSD cards that come with their own built-in antennas and embedded chips. There also could be microSD cards that work with the built-in antennas in full NFC phones.

 The mFoundry deal is not the only initiative MasterCard is taking to get its PayPass technology included in NFC mobile-payment rollouts. It is the first, and still the only, payment network involved in the Google Wallet. It also will support Isis wallet when U.S. mobile carriers Verizon Wireless, AT&T and T-Mobile USA launch the NFC service in two cities around June of next year.

And MasterCard is a partner in the first commercial launch of NFC payment in the United Kingdom, the Quick Tap service, introduced by mobile operator Orange UK and issuer Barclaycard.

Besides providing mobile-banking software to more than 500 banks, mFoundry designed the mobile-payment application rolled out by Starbucks in the United States using 2D bar-code technology.