On Track Innovations (OTI) said in a statement that T-Mobile's Near Field Communication-enabled (NFC) phones infringed one of the company's patents. A spokesman for T-Mobile USA was not immediately available for comment.

NFC is an emerging technology being added to cellphones as the mobile industry hopes to encourage consumers to use their cellphones for payments instead of plastic cards. The idea is that consumers can wave their NFC phone at the check-out terminal to pay.

OTI, an Israeli company, provides technology to MasterCard (MA.N) and Visa (V.N) for contactless cards. It said that the infringed patent also covers loyalty programs and data mining.

T-Mobile USA, the No. 4 U.S. mobile service, and a unit of Deutsche Telekom (DTEGn.DE), is also a partner in Isis - a mobile payments venture with the top two U.S. mobile operators Verizon Wireless and AT&T Inc (T.N).

Sprint Nextel (S.N), the No. 3 U.S. mobile provider has teamed with Google Inc (GOOG.O) to offer NFC-based mobile payments services competing with Isis.

Shares in OTI rose 12 cents, or 8.2 percent, to $1.58 in morning trade on Nasdaq. It filed the suit in the United States District Court for the Southern District of New York.

The lawsuit is On Track Innovations Ltd. v. T-Mobile USA Inc No. 12-CV-2224.

(Reporting by Sakthi Prasad; Editing by Mark Potter, Dave Zimmerman)

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