Credit and debit cardsare expected to overtake cash this year as Britain's most popular method of payment, according to a new industry report.

It will be the first time that card payments have outstripped cash outlay for goods and services. There are 246 plastic card transactions made every second.

Total plastic card use is expected to exceed ￡269bn in 2004, just a whisker ahead of the predicted ￡268bn for cash payments, said banking industry body the Association for Payment Clearing Services.

The group, which represents the major banks, said credit cards had become "demonised" as one of the main causes ofballooningdebts, but added: "Without plastic, our society would virtuallygrind to a halt."

Last year, the number of plastic cards in use in Britain grew by 13m, or 9%, to 160m - the equivalent of 3.5 cards per adult. Two-thirds of card transactions are now made using debit cards.

Plastic accounted for ￡244bn of spending in 2003. "This year, total plastic card use, if business card usage is included, is expected to top ￡269bn. In 2005 it is expected that personal plastic card usage alone will overtake cash payments," said Apacs.

In terms of numbers of transactions, cash will remain much bigger than plastic for some time to come, it added. "Cash will always remain there for low-value payments."

Meanwhile, 2003 was the year thate-commerce"came of age" in the UK. More than 18 million people bought goods or services online, up 50% on 2002. Credit cards accounted for 69% of the 200m transactions, with debit cardsmopping upmost of the remainder.

Last year was a landmark year for another reason - the first reduction in card fraud for eight years. Fraud losses on plastic cards fell by 5% to ￡402m as measures to combat crooks started to take effect.

A new generation of cards containing computer chips is being introduced, and by the end of this year most people making face-to-face purchases will have to type their four-digitPin numberinto keypads at tills and will no longer have to sign receipts.

(Agencies)