When the Oyster is your world

It seems simple enough. Take a successful electronic payment card used by 2.2m people on London's tube and buses and allow them to buy newspapers and bread with the same piece of plastic.

Transport for London, the body that oversees the tube and bus network, thinks it has found the Holy Grail sought by many banks and finance companies; a cheap and convenient system for buying small items. Last week, it advertised for a partner to provide more extensive banking facilities to take electronic payment into areas beyond the reach of Visa, Switch and Maestro.

London Mayor Ken Livingstone is behind the move, which could eventually go into all UK towns. It is based on the success of the Oyster card, which any visitor to central London will see being slapped on tube turnstiles and bus ticket machines as passengers rush to work. Card readers deduct cash from the card each time one is used. Passengers top up the cards direct from their bank accounts or over the phone.

The initial targets are the small newsagents, bakers and grocers that have so far ignored the electronic banking revolution. Parking, which is either run by local authorities or NCP, is another area where Oyster could make inroads.

Mr Livingstone says: "Oyster is already making travel in London quicker and easier, by speeding up the bus service, cutting queues at tube stations and helping to take cash off the buses. Now the smartcard technology can make Londoners' lives even easier - Oyster users will be able to pay for their car parking or for a pint of milk in the local shop with their card, instead of using cash."

The last serious attempt to replace cash for small payments was by NatWest, but it failed to gain much support for its Mondex card. Oyster is unlike Mondex because stolen or lost cards can be stopped and the card can soon be topped-up automatically. Mondex held cash that was lost if the card went missing.

But Oyster will confront the same problem as Mondex - people still like cash. When things go wrong with electronic payment systems, it can be more problematic trying to sort things out.

Londoners have already tackled some of these dilemmas following the introduction of the congestion charge. Capita, the firm which operates the congestion charge, has been inundated with complaints, to the extent that its customer email system has been overwhelmed.

Many of the complaints relate to a £5 charge made in error that many people struggle to justify spending hours trying to retrieve. A spokeswoman for Transport for London said Capita had no involvement in the Oyster system, which is run by EDS.

Few problems have emerged so far, which is why the Mayor is so keen. However, a trial by Oyster in Swindon was reportedly lacklustre, with residents who rejected Mondex several years ago saying they see no need for another piece of plastic in their purse or wallet.