Lloyds Banking Group has said that it is planning to launch a new mobile payment system allowing traders and owners of micro businesses to accept customer payments using their smartphone.

The banking group has already entered into a deal with mobile payments business, Monitise for offering to the clients in the country. The business owner can simply download the app and turn the smartphone device into a point of sale terminal that will be capable of placing an order or sending a receipt to the customer by text message or email.

The payments by card can be made through a portable pin pad developed by Monitise that is then connected to the smartphone through Bluetooth, the wireless protocol. Monitise's app will also allow business clients to check outstanding invoices and send reminders to customers for payments.

The service is expected to be launched for the Lloyds commercial banking customers in autumn. The service will be primarily aimed at small companies and sole traders, such as restaurant owners and tradespeople.

Aidene Walsh, managing director for cards and transaction banking at Lloyds Bank, said: "There are more than 3.5m sole traders in the UK who are missing out at the moment because they do not have access to existing mobile payments technology and we want to plug that gap with a service that is low cost and easy to use."