PASSENGERS will be allowed on Merseyside buses without a paper ticket within five years.

Transport Secretary Lord Adonis announced that they will instead be able to use “smart” technology to pay their fares.

Microchip tickets will be installed in transport “smartcards” paid for in advance or on a person’s phone or bank card.

The move is expected to improve journey times and deliver “faster, hassle-free” purchasing and use of tickets.

Merseyside is one of nine major urban areas outside London which will pioneer the system. Ministers expect it to be fully up and running by 2015, five years ahead of the deadline for the rest of the country.

Bus operators will see an 8% increase in government grants – around £1,000 per bus – to install the technology and the necessary back-up systems.

That will boost grants across the nine areas by £20m.

Smartcards will eventually be available on other forms of public transport.

Lord Adonis said: “The benefits of smart ticketing to passengers are clear – quicker, easier and potentially better value journeys on buses, trains and trams, whichever company runs the service.

“We could even see the death of the paper ticket as direct payment and mobile phone technology picks up pace.