Microsoft Corp. is working on a version of its Windows Phone software that will let users make contactless payments using their phones, two people familiar with the plans said.

Microsoft, of Redmond, Wash., aims to include mobile payment technology in new versions of its operating system for smartphones to narrow Google Inc.'s lead in handset software, said the people, who asked to remain anonymous because the features are not public. The first devices with these features may be released this year, the people said.

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