Debit card or credit card, virtual cash is coming

In case you haven't already heard, the completely cashless society is about to arrive. Soon, like the monarch, you won't need to carry cash at all, just plastic. From this September the roll-out of new "wave and go" contactless payment systems from Visa Europe and MasterCard will go live starting from the City of London and Docklands.

The payment system is designed for small purchases of £10 and under. Rather than using the cash in our pocket, similar to Transport for London's Oyster card, you will simply wave your debit or credit card at a card reader carrying the ripple symbol and the transaction will go through always assuming your account is good for the purchase!.

You will be able to see all your transactions on your credit or debit card statement and, for security purposes, you might be asked to use a PIN occasionally. Also known as an electronic purse or virtual cash, the benefit of this technology is that it will speed up transactions for small amounts and in theory will bring about the end of irritating queues at newsagents, ticket offices and fast food outlets.

It will be initially piloted in seven postcodes in the City to Canary Wharf among a number of retailers and selected cardholders from participating banks such as HSBC, Bank of Scotland, Halifax, Lloyd TSB and Royal Bank of Scotland.

A few months later, the contactless payment system will be rippled out across London and finally, it will go national in 2008 when it is estimated that there will be 5 million contactless cards in circulation and 10,000 retailers accepting them.

It will be similar to the introduction of chip and PIN. Retailers interested in taking up the scheme will have to upgrade their payment equipment to take the "ripple" reader and the banks and credit card companies will have to send out new cards to us incorporating the contactless technology.