London's transport authority has given up on plans to use its Oyster ticketing system as a form of electronic money.

Oyster cards can currently be loaded with season tickets and used like paper tickets or loaded with pre-paid credit which is then deducted as users travel in tube trains and buses.

Transport for London (TfL) had hoped to extend the scheme so that the pre-paid credit could also be used to pay for small items in shops.

Because the cards use radio technology to communicate with the readers, they are quick and only need to be briefly touched on the card reader for the payment to take place.

For that reason, TfL had hoped that Oyster could provide a cheaper and faster alternative to credit card and cheque payments in small shops. Credit card companies charge relatively high fees to small shops, so many are reluctant to accept card purchases at present.

However, a spokesman for TfL said that it had failed to come to an agreement with any companies to process the payments, and has concluded that it is 'not economical to process e-money in the way that was originally planned'.

TfL says that despite the setback it is still interested in the idea of using Oyster as electronic money and will be looking at other ways to do so, such as incorporating Oyster technology into bank cards.