Cashless cappuccino as coffee shop introduces the pre-pay caffeine fix

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A café chain is launching a coffee card so customers can pay for their shot of caffeine without having to fumble for change at busy times.

Staff at Costa's 430 branches will swipe the pre-pay card in a machine, deducting the cost of purchases from the holder's account. Credits for the card of between £5 and £75 will be bought online or in person at a shop.

The scheme follows the introduction of the Oyster pre-pay card on London trains and buses, and is another step towards a cashless society. Last year, spending on credit, store and debit cards overtook spending by cash for the first time: £295bn against £273bn. Next week, Visa will launch a pre-pay card for people who find coins and banknotes inconvenient but who do not want to use credit cards.

Costa - the UK's second biggest coffee chain after Starbucks, which has 500 outlets - said research from trials at 22 coffee shops in Birmingham and Glasgow during August and September showed that customers liked the card. One in 10 signed up for the scheme, which will also award loyalty points, with one third of cardholders using it daily.

Three out of five cardholders said they felt more positive towards the brand; and queues at peak times were reduced.

Britain's coffee market will be worth £1bn a year by 2009, according to the Institute of Grocery Distribution. Chains control about 30 per cent of the market.

Costa, founded by the Italian brothers Sergio and Bruno Costa in 1971, plans to open a further 300 shops nationwide by 2008.

Mike Lawless, Costa's head of UK retail marketing, said: "As the sector becomes more competitive, improving customer loyalty and retention will be a fundamental driver of our long-term success."