London travel card links with Barclays to extend reach

Barclaycard will next year begin offering debit and credit cards that incorporate an Oyster card account, the pre-paid tickets widely used in London to pay for bus and Tube journeys.

Britain's biggest credit card provider yesterday announced that it has signed a three-year deal with Transys, the consortium that runs the popular Oyster card scheme in conjunction with Transport for London, to combine the two cards.

The deal means that from next summer, customers with Barclaycard credit cards or Barclays Bank Connect debit cards will be able to use their plastic to pay for journeys using the swipe readers installed throughout London's transport network.

Customers will pre-load their Oyster card accounts with cash, as they do under the current separate system, and fares will be deducted from this balance, rather than from their bank or credit card accounts.

While the Oyster facility will only be useful for customers in London, the new plastic will also come with contactless payment technology that could be used nationwide. This will enable cardholders to pay for purchases worth less than £10 by swiping their cards over a reader, rather than having to input a personal identification number (PIN).

The swipe method will be available in any retailer that installs the machines necessary to read the cards. Barclaycard said yesterday that it would work with Visa, the credit card network, to roll out the machines to retailers in 2007.

Barclaycard said the cards would be particularly useful in retail outlets such as fast food restaurants, coffee shops, newsagents, car parks and bars and pubs, reducing the need for customers to carry cash.

Antony Jenkins, the Barclaycard chief executive, said: "London has seen huge success with the Oyster card - it's difficult to imagine how we managed beforehand and putting Oyster and Barclaycard together will make life even easier for Londoners."

The project will be the first multi-function contactless debit or credit card in Europe, though the technology has been used in parts of North America.

Payment industry analysts said the initiative was a genuine breakthrough, but warned that card users might take some time to get to grips with the idea.

"This type of innovation is very much welcomed in the cards market," said Robert Kenley, head of credit cards at Moneysupermarket. "However, the convenience of having three payment types on the same card could potentially lead to customer confusion about which part of the card is being debited."

Mr Kenley pointed out that while Oyster payments would not be added to customers' credit card balances or taken from their bank accounts, the contactless transactions would.

The new cards are being introduced in association with Visa Europe; the facilities will initially only be available with Visa plastic.