Plans for a widespread system for cashless payments to be in place in time for the 2012 Olympic Games are likely to be thwarted by retailers’ hesitation in adopting the necessary technology.

Under the plans, large areas of the UK, including the Olympics site in east London, would become cashless environments where contactless technology allows consumers to simply hold up cards to a reader to buy goods and services without the need to enter a PIN code.

But contactless payments will only take off if major retailers embrace the concept, said Sandra Alzetta, senior vice president for consumer market development at Visa Europe.

“Consumers love contactless, but we need the buy-in of the big high-street retailers to move this forward. We are starting to build up numbers, but mainly within smaller businesses, such as coffee chains,” she told delegates at the Digital Money Forum in London last week.

Many banks are already working on contactless card offerings. Barclays is providing suitable cards to up to three million customers this year and expects the majority of its clients will have received them by 2011.

And because of the success of the Oyster card for transport ticketing, London is the best place to launch contactless initiatives, according to Will Judge, head of future ticketing at Transport for London (TfL).

“We have trained this city to be contactless-ready. ­ All you need to say to a Londoner is: ‘It is like Oyster’,” he said.

Judge said that one of the problems with contactless cards is foreign visitors’ unfamiliarity with the concept, so TfL is looking at the possibility of accepting global, interoperable technology, such as Mastercard's PayPass or Visa's PayWave on Oyster by 2012, to improve the way the capital serves tourists.

“Whether it is Oyster, PayPass, PayWave or another standard remains to be seen, but there is every possibility that London will host the first contactless Olympic Games,” he said.

But unless large retailers adopt terminals to support contactless payments, the entire proposition will be undermined, said payments expert Dave Birch, a director at supplier Consult Hyperion.

“Another problem is that currently, contactless terminals are in the wrong places. Adding the technology where you can already make card payments is great, but contactless needs to be introduced where cash payments are a nuisance ­ – vending machines, for example,” he said.

Mobile payment technology has also been overlooked by retailers, said Birch, but value-added services such as loyalty schemes, discount vouchers and special offers could bring a much-needed sales uplift.

“Whereas contactless technology is about cash replacement, mobiles can offer a lot more than that; ­ this is what retailers need to realise,” he said.