The new "wave and pay" technology - which is being trialled by Westminster City Council in central London - is set to eliminate the need to carry around pocketfuls of cash or enter chip and pin details to pay to park, and will complement the council's already cashless parking scheme.
Instead, motorists with "contactless" credit or debit cards can simply swipe them across a contactless reader attached to the parking machine.
This is the first time the technology has been used to pay for parking in the UK.
The smartcard technology is similar to the Oyster Card which is widely used by millions of commuters on London's transport network.
Drivers, however, will not have to top-up or buy weekly or monthly permits as the payment is automatically debited to their debit or credit card.
The technology will be trialled by Westminster for three months across 20 pay and display machines in the West End, which will be modified and fitted with wave and pay card readers.
Danny Chalkley, Westminster's cabinet member for city management, said: "We believe Westminster's role in pioneering wave and pay technology could play a vital role in modernising the way motorists pay to park across the UK.
"We think this new way of parking has the potential to be the model for the future of parking because it is so very easy and convenient to use."
The pilot will begin in the New Year and if successful could be expanded across Westminster.
Southampton City Council also has plans to implement the wave and pay scheme early next year.
Other local authorities are watching the trial and may embrace the technology if it is a success.
The equipment has been designed and developed by parking systems manufacturer Parkeon and marks the culmination of 18 months of research, development and testing.
Parkeon, which operates in 40 countries worldwide, said Westminster was the first council in the UK to use the new wave and pay system.
Bob Barnes, Parkeon's UK parking director, said: “We are delighted to be trialling the use of wave and pay cards in on-street parking terminals within Westminster before the technology is made available nationally.”
“The contactless card revolution will soon be upon us, with more than four million such cards already issued.”
"We expect virtually every credit or debit card to handle contactless payments within the next few years as new contactless cards are issued when old cards are replaced.”
Wave and pay smartcards can already be used across many parts of the UK to buy low-cost items such as coffee, newspapers, and bus tickets without the cardholder having to confirm every transaction with a pin number.
The cards are offered by several leading financial institutions including Visa, MasterCard and Barclays.
Amer Sajed, CEO of Barclaycard UK, said: “We have distributed millions of contactless enabled debit and credit cards to customers and already have thousands of live terminals accepting contactless payments throughout the UK.”
“We welcome this move to trial contactless parking machines as they are a perfect example of how these secure contactless payments can make life quicker, simpler and more convenient for customers when buying everyday items”
Retailers including Boots, Coffee Republic and Prêt A Manger already allow customers to pay using contactless technology.
Safeguards to protect users of contactless technology against loss or theft include a £10 limit for payments without identification and a cap on the number of consecutive transactions.
The cards also incorporate a “spot-check” security function that requires cardholders to confirm their identification with a chip and pin transaction on a regular basis, which with the Parkeon equipment can be done at the parking machines.
Wave and pay bank cards were first introduced in September 2007. It is estimated that there are currently 4.2 million cards in use.
Westminster is the largest parking authority in the UK with over half a million vehicles entering the city's 8.5 square miles every day.
The council was the first in the UK to introduce "Pay by Phone" parking, which allows motorists to top up their parking charges remotely, eliminating the need to return to vehicles.
To date more than five million Pay by Phone transactions have been made.
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