Shares of "smart card" technology company On Track Innovations (NASDAQ:OTIV) were among this morning's big gainers. The company's stock jumped approximately 20% at last check on news that MasterCard will use its technology, along with that of Atmel (NASDAQ:ATML), to power its contactless PayPass system. Atmel will supply the microcontroller, while On Track will pitch in the operating system and other technology.

If you've watched much network television, you've seen commercials for the SpeedPass available to ExxonMobil (NYSE:XOM) customers. In short, users swipe a wand over another electronic device and money is deducted from their account. (I requested one years ago -- still in the mail, I suppose?)

PayPass is a similar concept, except that it's folded into regular credit cards that can also be used in the normal fashion. It's been on trial in Florida and, apparently, is ready for its big rollout. (On Track, incidentally, took part in the trial.) A PayPass card could be used to buy movie tickets and snacks, for example, simply by waving the card in front of a glass window.

Deals like this will be important for On Track. It's a relatively small player in a competitive business, and is up against much larger companies such as Infineon (NYSE:IFX) and Philips (NYSE:PHG). On Track spends heavily on marketing, research, and development and, as such, has never made money. Gross profits were better than 50% in 2002, but operating losses topped $4 million on just less than $18 million in sales for the year.

Taken more broadly, it's encouraging that the company is moving successfully into different markets. Most of its revenue has historically come from equipment used to purchase gasoline and to access self-contained areas such as schools and corporate campuses. Financial information about the MasterCard transaction wasn't available, but at On Track's present size it seems likely that it will be material.

All this is good news, but perhaps most interesting is yesterday's announcement that On Track plans to refill its cash coffers by issuing $7.4 million in stock. (The company is also selling warrants at a higher price.) That's welcome cash, but with that deal averaging out at about $5 per stub, one wonders whether stockholders might be able to get a better deal given today's sudden move.

At any rate, they won't vote on the sales until Dec. 30 -- perhaps time enough to renegotiate should the share price hold firm.

Will making credit cards easier to use drive Americans deeper into debt? See what Fools are saying on our Consumer Credit/Credit Cards discussion board.

Dave Marino-Nachison can be reached at dmarnach@fool.com.