TfL (Transport for London) confirmed in February that it will upgrade all Oyster card readers across the capital to work at the touch of a bank-issued debit or credit card. The new system is expected to be up and running on all of London's 8000 buses in time for the 2012 Olympic Games, and rolled out onto the Tube, DLR, Tram and London Overground network before the end of 2012.

However, in a report published, today the London Assembly's transport committee has warned TfL that the new system must be fair to all passengers and not disadvantage those who choose to stick with the Oyster card.

While some passengers may welcome the convenience of using a contactless bank card to pay for travel, the committee says it is concerned that the one in five people who do not have a credit or debit card could miss out on cheaper fares offered on the contactless system.

In addition, despite TfL's assurances that the new system will be "100 per cent safe", passengers have serious concerns about the security of their card data that could prove to be a barrier to take up of the plan, says the report.

The committee cites a survey carried out by Which? that shows Londoners still need some winning over to the idea of contactless payment cards. Only 54% of 158 Londoners would be willing to only use this method, even provided it gave them the same benefits as currently offered under the Oyster system.

The main driver for TfL's decision to move to a bank card system is money; with reduced commission and processing costs, as well as a reduction in the number of Oyster cards produced and issued. The body's business plan claims that it should break-even on its £75 million investment in contactless payment technology within 12 years and make significant savings as Oyster card use is reduced.

Yet, the transport committee is "unconvinced that it [TfL's case] makes a compelling argument for introducing contactless payments, or that the scheme will deliver the return TfL expects on the £75 million it is spending on the early phases".

Therefore, the committee has referred the business case to the IIPAG, the panel that advises on TfL's investment programme, for an independent look at underlying assumptions, costs and benefits.

The report also urges TfL to make sure its revamped Oyster system adopts the government's ITSO standard for smart ticketing to ensure national compatibility. It does back TfL's decision to adopt a wait-and-see approach to mobile payments, agreeing that the bank card roll out can be easily adapted at a later date, when there is a stronger business case for mobile.

More details are also being demanded on the wider implications of the adoption of contactless cards, including how staffing at TfL could be affected, and the potential lost revenue for the 4000 small retailers in London that sell Oyster top-ups.

IIPAG will prepare an assessment of TfL's case by March, with the operator asked to report back by September on all the issues raised, including: how it plans to ensure the system is secure, how it will ensure all customers will have access to the cheapest fares and how well the introduction of contactless payments on buses in April goes.

Caroline Pidgeon assembly member, chair, transport committee, says: "It's only right that Transport for London is looking to new technologies to enhance its ticketing offer, but many passengers are sceptical about using bank cards as tickets, and others simply won't be able to. If contactless payment is to prove successful we would expect to see a far more detailed and compelling case for its introduction. Most importantly, we want guarantees that all passengers will continue to have access to the cheapest fares no matter what type of ticket they use."

Read the report here: