Barclaycard, Transport for London (TfL) and Visa have teamed up to put contactless payments and Oyster card functionality together on the capital's plastic.
The bank will do a live trial early next year with a view to rolling out the 'wave and pay' credit and debit cards across the capital from 2007.
Barclays customers will soon be able to use their cards in the normal chip and PIN manner; as an Oyster by placing the card on the TfL readers; or to make contactless payments at retailers around London.
For purchases of less than £10, consumers will complete the transaction by just placing the card against the reader, while for more expensive items users will have to verify the deal by entering their PIN as usual.
How the cards will be branded and priced are yet to be worked out, although the cost of using the new technology is likely to be folded into interest rates rather than charged as a monthly fee.
Barclays is in negotiations with retailers but has not yet signed any deals with vendors to accept contactless payments. It says the tech will suit "fast food outlets, coffee shops, newsagents, off licences, bars, pubs, parking facilities and vending machines".
A similar scheme, the Octopus card, is already used in Hong Kong where users can pick up their paper at a 7-Eleven convenience store or buy fizzy pop from a vending machine by using stored credit on the card.
A spokesman for TfL said the bank was given sole rights to use Oyster "because Barclays and Visa invested significantly in developing the chip... it was considered fair to grant this period of exclusivity".
It's not the first time the Oyster card and contactless payments have been linked. In 2005, TfL announced a shortlist of bidders for an e-money project that would allow Londoners to make small purchases with their transport cards.
Earlier this year, the plan was ditched, with TfL saying that none of the bidders had matched their criteria.
In the past, one e-money sticking point had been the question of infrastructure and whether retailers or financial institutions would pay for the necessary kit. "What we end up charging them will depend on the individual relationship with have with them," the Barclays spokesman told silicon.com.