To catch the future of payment schemes, go underground. Beneath the streets of the nation's capital, more than 60 percent of peak-time riders on the Metro (Washington, DC's subway network) have switched from magnetic-stripe tickets to "smart cards" embedded with memory chips and radio transponders. Riders can load as much as $200 into their SmarTrip cards at a kiosk or over the Internet. Antennae built into subway turnstiles pick up radio signals from the cards and convert them into streams of bits that denote the embarkation point and subtract money from the card's memory. Similar systems are being planned for other U.S. cities, and next year London will adopt these newfangled fare cards for its famous double-decker buses and massive Underground subway network.

But the ultimate destiny of such electronic-payment devices goes way beyond multibillion-dollar public-transit projects. Smart cards and rival gadgets are rapidly evolving into technology platforms that could trigger changes in everything from urban commerce and suburban shopping sprees to national security. Commuters could eventually use such devices not only to buy coffee and newspapers, but also to store bus transfers, hold medical records and drug prescriptions, download coupons, and redeem tickets to museums and sporting events. "The current thrust is to reduce or eliminate the cash handled by these fare collection systems," says David de Kozan, vice president of market planning and support at San Diego-based Cubic Transportation Systems, which supplies cards and readers to the Washington and London transit networks. "But the technology can also provide other tools. You could rent out spaces on the card for different applications."