Within the next five years passengers on public transport in England's major urban areas will be able to travel without a paper ticket, Transport Secretary Andrew Adonis announced today.

England's nine largest urban areas will receive £20m to bring smart and integrated ticketing to the greatest number of people most quickly through the Smart and Integrated Ticketing Strategy launched today. The strategy also sets out the Government's goal for every area of England to have access to smart ticketing by 2020 and contains nearly 30 Government commitments to help make this happen.

Smart tickets - a system where a ticket is stored on a microchip, on a smartcard (like Oyster) or even on a phone or bank card - can give improved journey times and faster, hassle-free purchasing and use of tickets, with associated benefits for local government and operators. The Government estimates that the benefits of 'integrated smart' ticketing, that allows travel across operators and across modes, could be worth over £1 billion per year.

To incentivise bus operators to install smart ticketing systems, the Government has also announced an 8% increase in the Bus Service Operator Grant (BSOG) if they have ITSO smartcard infrastructure on their buses.

The £20m smart ticketing fund will be available in the 9 largest urban areas in England outside London - Greater Manchester, West Midlands, Tyne and Wear, Merseyside, South Yorkshire, and West Yorkshire, Nottingham, Leicester and Bristol. The funding will go towards implementing ITSO smart ticketing schemes in each region.

Bus operators will also receive a further 2% increase in their BSOG rate if they have installed their buses with GPS technology - which allows the operator to track the position of their bus. Together these incentives could be worth around an additional £1,000 in grant per bus each year. Encouraging the take up and use of GPS systems will help realise the potential for passengers to receive real-time information about bus services and bus performance.