Is this end for notes and coins?

Prepare for a revolution in the way we spend our cash. From next year the Oyster card, until now used as a pre-payment pass for travelling on the London tube and bus network, will transform into a shopping card which ultimately could replace the coins in our pockets and purses.

The new-style Oyster card will not be a debit card or a credit card. You won't have to put in a PIN number every time you use it, and you won't need a bank account. It will be "tap and go" - shoppers will just have to touch a retailer's till. It aims to be a fast and simple way to buy low-cost items without having to fumble around for coins while others in the queue behind start getting restless.

Currently Londoners load up their plastic Oyster cards with cash, then tap it each time they pass through tube barriers. The cost of each journey is deducted from the card, and once it has run out, travellers top it up again.

But Transport for London has its eye on a much bigger market; the £100m that Londoners spend every day on low-cost items, from a newspaper and a Starbucks latte in the morning, through to a Pret A Manger lunchtime sandwich, then an evening dash into Tesco Metro for milk, juice and a pre-prepared meal. At each point, TfL hopes an Oyster card will be used instead of coins and notes.

It's not the first time a "contactless" card has been launched; 10 years ago a system called Mondex was piloted in Swindon, but turned into an expensive flop. What makes Oyster different is that it's already in the hands of millions of Londoners, who've become accustomed to topping up and swiping. Currently the average balance put on an Oyster card is £50 but TfL sees that rising to around £100 once "e-money" goes ahead.

But Londoners won't be the first to embrace the cash-less society. That honour goes to Edinburgh, where thousands of staff at Royal Bank of Scotland's HQ are piloting Paypass, a new low-cost item payment system that goes one step beyond Oyster. The plan is that holders do not even have to take the card out of their pocket or purse.

It works by radio transmission when it's close to the retailer's contactless reader attached to chip and pin card terminals.

The authenticity of the card is validated from its processing chip. But there are security measures - so there will be occasional prompts for a PIN.

The pilot will run within RBS's sprawling HQ, which includes a number of shops and eateries.

RBS's partner, Mastercard, calls it "the war on cash" and is designed to make under £10 card transactions profitable.

Mastercard expects it to be used in historically cash-only locations such as convenience stores, fast food outlets, vending machines and parking meters.

At TfL, Will Judge, the manager of Oyster's e-money project, says the rollout will begin next year. "After the launch of Oyster we quickly saw the logical leap to using it for other purchases. We have done a lot of research and are now in discussion with one other party to make it a reality.

"We are confident there is a market. It only takes 200 milliseconds for an Oyster card to be read, and if that can be replicated in store it's very appealing. Its principal attraction is speed - having to put in a Pin number would destroy the benefit."

That other partner - Oyster refuses to disclose who - will be a major bank, to satisfy concerns raised by the Financial Services Authority. The regulator wants to make sure that e-money systems are failure-proof; it would be horrified if a massive computer failure suddenly prevented millions in the capital from spending their e-cash.

Oyster and Mastercard are keen to talk up the benefits of "tap-and-go" but the biggest winners are likely to be retailers. Handling cash costs shops a small fortune - from Securicor deliveries through to bank charges and in-store security. "There's also the losses from staff putting their fingers in the till," says Mr Judge.

What about security? Will customers really be prepared to have a £100 card that could be pinched and used without even having to tap in a Pin?

Mr Judge says it's no more risky than withdrawing £100 at an ATM, and research suggests that once the risks are explained, customers are comfortable with the idea.