The two companies claim that the virtual wallet and NFC system will be the largest of its kind in the world.
The Vodafone branded system will function similar to other virtual wallet systems for mobiles, such as Google Wallet, and will be available to Vodafone's 400 million customers across 30 countries - the payment infrastructure being run through Visa's payment network.
Vittori Colao, Vodafone's Group Chief Executive, believes that mobile wallet is the next stage in smartphone evolution.
"It offers our customers the speed, simplicity and convenience of managing their everyday transactions with a single wave or tap of their smartphone, using innovative and reliable services developed by Vodafone and Visa - technology and providers they can trust. Our mobile wallet will be open to any service provider and we are committed to enable all partners to provide our joint customers the richest service portfolio possible."
Both Vodafone and Visa will now work together to push the technology to industries across the board to help retailers get their equipment up to speed, and push adoption of the standard. Many of the UK banks have been slow to act in this space, leaving it to new media companies and the mobile operators to provide their own solutions.
The service will initially be launched in Germany, the Netherlands, Spain, Turkey, and the UK, starting in the coming financial year. Other countries within Vodafone's global portfolio will follow.
In developed markets, such as the USA, Australia and the USA, the Vodafone wallet will be NFC compatible through Visa's PayWave, meaning users can simply swipe their phone to pay for small items such as newspapers and coffees.
Visa's European CEO, Peter Ayliffe, says the new system will transform the way people pay for goods the world over.
"Our partnership with Vodafone represents a huge stride forward for mobile payments. Visa's future of payments initiative is more than just a promise: these services are real,tangible and coming to the mainstream consumer market in the very near future.
The Vodafone solution will be compatible with competitors systems, including its m-commerce joint-venture with Everything, Everywhere (Orange and T-Mobile's owner) and O2.
Vodafone said it is in discussions with a large number of service providers to host innovative new services within the mobile wallet; including banks, retailers, transport and utility companies, event organisers, smartphone application developers and advertisers.