LONDON (Reuters) — Fumbling around for loose change to buy low-ticket items such as a cappuccino or newspaper could soon become a thing of the past as Britain's banks introduce contactless payment cards.Debit and credit cards will be updated with the new technology from September this year, says APACS, the UK's payments association.

That will allow consumers to pay for transactions of $10 or less at participating retailers and vending machines by waving their card over a reader.

Users will not routinely have to enter their PIN, but the chip on cards will track activity and, as a security measure, people will occasionally be asked to enter their PIN.

The payment method will first be introduced in seven London postcodes, from the City to Canary Wharf, and will be followed by a gradual national upgrade in 2008.

The Bank of Scotland, Barclaycard, Citi, Euroconex Technologies, Halifax, HSBC, Lloyds TSB and the Royal Bank of Scotland will participate in the first phase of the roll-out.

Cardholders will be contacted by their card provider, and upgraded cards will carry a "ripple" logo.

A similar logo will be displayed at participating outlets.

Contactless payment systems, such as London's Oyster travel card, have proved popular as they reduce the need to carry cash.

They are well suited to fast-food outlets, coffee shops, newsagents, off licences, pubs, taxis, parking facilities and vending machines.

The banking industry estimates that more than five million contactless cards will be issued by the end of 2008, and that they will be accepted in at least 100,000 outlets.

Each year there are more than 20 billion payments of $10 pounds or less in the UK.

The roll-out is being led by MasterCard and Visa, and customers will be able to use contactless-enabled cards in other countries that have adopted the technology, such as the United States.

Jose San Juan, Visa UK's managing director, said: "I am pleased that the industry has united on standards for cards and terminals that will provide a highly convenient and quick way to pay for low value items.

"By the autumn, the first UK cardholders will be buying a coffee or a sandwich in a split second, and retailers will enjoy quicker transactions, the security of the payment guarantee and an end to the high costs associated with handling cash."

John Bushby, a general manager for MasterCard Europe, said the launch would give Londoners a "completely new way to pay".

"Our experience ... has shown us that consumers love the convenience, simplicity and security of being able to 'tap and go' when paying for everyday things," he added.