Leader: Banks may regret Oyster e-money fiasco

Why is the Oyster card such a success? Because we commuters are lazy.

We can't be bothered to run our paper tickets through the machines when we can simply touch a card to a reader.

But now it seems that everyone involved has been equally lazy in allowing the Oyster e-money scheme to fizzle out.

The Oyster card is a great platform for the UK's first e-money deployment. Oyster cards are already in five million back pockets and the readers are in thousands of newsagents across the capital.

Similar rollouts in Singapore and Hong Kong prove the technology works and commuters are very keen to have it.

And yet, there's no rollout in sight. So who do we have to blame?

The banks certainly don't come out of this blameless. Fears over cannibalising their debit card business and interchange fees have doubtless put the banking community off. But surely this is a spectacularly short-sighted move.

After all, who wants cash? Not commuters - it's inconvenient and fiddly. Not the merchants - cash can be stolen and it takes time to process as commuters hunt through their pockets and wallets, causing queues to build up and disgruntled shoppers to wander off before making a purchase. And certainly not the banks - processing cash payments is expensive for them.

The first mover in contactless stands to win a great deal, not least the captive audience the Oyster card will bring with it.

Cash is on the way out - payments made by coins and notes are in "slow decline", according to payments industry body Apacs. The Oyster scheme was a chance for the payment processors to sneak a little bit more of the cash market into electronic form.

The opportunity remains though, with Transport for London (TfL) still open to offers from would-be suppliers. So here's where it would make sense for the likes of Tesco, with its extensive network of local shops across London, to step in and combine the Oyster functionality with the Tesco Club Card and let harried shoppers pick up their sandwiches without hunting down the right pounds and pence.

It's surely not an outrageous leap of imagination to see the retailer, which shuffles one in every eight pounds spent in the UK through its tills, getting deeper into banking territory. It's got the energy, the precedent and the commercial clout to make a partnership with TfL a success.

And when Tesco starts cutting the banks out of their own business, the payment processors might wish they'd been just as forward thinking.