A cashless society came a step closer last week when the banking industry confirmed plans to allow credit and debit card customers to pay for low-value items by simply tapping their card on a reader.

The “tap-and-go” technology will allow consumers to pay for newspapers, coffee or sandwiches worth less than £10 quickly and easily without having to input their Pin or fumble at the till for change.

The technology will be incorporated into chip-and-Pin cards issued in London from September, and nationally in the new year.

Barclaycard, Britain’s biggest credit card provider, has already teamed up with Transport for London (TfL) to launch a combined Oyster and credit card in September.

The industry estimates that more than 5m “contactless” cards will be in use by the end of next year and accepted by at least 100,000 shops. Here we answer your questions.

How will the contactless cards work?

The new technology will be incorporated into standard debit and credit cards from September, but instead of having to input your Pin in a shop, you will simply wave it over a card reader. This will make it quicker and easier to buy small value items.

So will I need a new card?

Contactless cards will replace your existing cards. The first batch will be issued in seven London postcode areas between The City and Canary Wharf – EC2, EC3, EC4, E1, E14, SE1, SE16. A national rollout is expected by the end of 2008.

Seven firms – Bank of Scotland, Barclaycard, Halifax, HSBC, Lloyds TSB, NatWest and Royal Bank of Scotland – will take part in the first phase of the rollout, with others expected to follow suit later in the year.

The banks will contact customers who regularly use their cards in the seven postcode areas within the next few weeks to inform them of the plans.

It is not yet clear if banks will wait until current cards expire or issue new ones, though Royal Bank of Scotland says it will replace existing cards in the initial rollout. It will offer an opt-out option if customers do not want the new technology.

“The plan is to eventually make contactless cards the standard-issue card,” said a spokesman.

How will I know where I can use the card?

Contactless cards will carry a recognisable symbol and customers will be able to use their cards anywhere they see the symbol at home or abroad.

Will there be a limit on how much I can spend?

Yes, each separate transaction can be no more than £10, although there are no limits on the number of £10 transactions you can make.

Is it safe?

Though there is no limit on the number of £10 transactions that can be made in a day, the cards will monitor unusual activity and may occasionally prompt users for a Pin number.

Oliver Steeley of Mastercard said: “Though there will doubtless be people who spend time in their bedrooms trying to crack the technology, we are confident that the new cards will be as secure as today’s chip-and-Pin cards.”

Apacs, the UK payments authority, said contactless technology would not affect protection under the Banking Code for fraud liability. This states that the customer is not liable for losses unless the bank can prove he or she is at fault.

Will there be charges?

There may be additional charges to use the contactless cards, on top of what you would normally pay for your credit card, but the banks have yet to confirm them.

How will the new Barclaycard work?

The Barclaycard Oyster card will work seamlessly between the contactless, credit card and Oyster functions. You will be able to top up your Oyster credits in the same way as a standard Oyster card at stations and retailers. You will not need to switch or change the card.

Are there any other new ways to bypass cash?

You can now use your mobile phone to buy train tickets.

Chiltern Railways has started the second phase of a mobile-phone ticketing scheme which allows users to buy online and have an E-day ticket sent to their mobile in the form of a text. Special hand-held devices at stations, including Marylebone in London, will read the tickets.