Barclaycard and the Oyster transport payment card will be combined on one card, which will have new "wave and pay" technology allowing users to pay for low-value transactions at participating retailers, the companies said today.

"This new deal will mean that from next year people can buy low cost items and take advantage of Oyster fares on the same card, reducing the need to carry cash," Ken Livingstone, the Mayor of London said in a statement.

Cardholders will be able to pay for everyday items worth less than £10 such as their morning coffee, sandwich or beer - in less than a second
by waving the card over a reader as they do on the bus on the underground.

The Barclaycard will also have a standard chip and PIN function for transactions of more than £10.

The cards are expected to be available by the summer of 2007, following a live trial earlier in the year.

Barclaycard said the agreement with TranSys, the consortium which runs Oyster card in partnership with Transport for London (TfL), gives it exclusive rights to put Oyster on its cards for at least the next three years.

There are more than 6 million Oyster cards in use. The technology was introduced in 2003 and TfL has encouraged its use by reducing fares for users.