Transport for London is considering allowing Oyster smartcard users to pay for low-value goods such as newspapers...
and milk as well as train or bus journeys.
TfL has been running a pilot programme in the London boroughs of Greenwich, Newham, Croydon and Lewisham where cards are being used in libraries and leisure services.
The expansion plans for the Oyster card, which has more than 2.2 million users, echo those of the Hong Kong Octopus smartcard, which has about seven million cards in circulation. In addition to making journeys on the subway the Octopus cards can be used as a cash alternative in phone booths, vending machines and snack bars.
Experts predict that Radio Frequency Identification (RFID) tags and "contactless" payment card technologies will transform the UK payment market.
Jay Walder, managing director of finance and planning at TfL, said, "This is a significant step towards extending the convenience of Oyster even further. The dash to the cash point and worrying about small change for parking could be things of the past. Oyster will become a quick and easy alternative for these kinds of purchases."
TfL said stolen or lost cards can be stopped so no one else can use them.
Last year there were calls for an inquiry into technical problems that has hit the London Underground's new Oyster card system.
A computer glitch prevented some underground passengers from getting through Tube barriers.
The 17-year Prestige project is being delivered by a consortium of EDS, Cubic Corporation, Fujitsu and WS Atkins in what is one of the largest PFI schemes in the UK transport sector.