The Economist has a leader and detailed article on the digitisation of small payments, and resulting reduction in use of cash.

Yet signs of the new order are everywhere (see article). This week mobile-phone operators announced services that will allow people to use their handsets to remit money to those in other countries, even if both parties do not have bank accounts. Numerous mobile-phone shopping-systems are entering commercial use, especially in Asia. Japan has roughly 500 smart-card operators that supply “digital wallets”. Edy, the biggest, oversees 15m transactions a month at 43,000 stores. In America MasterCard, Visa and others have introduced plastic cards that without a signature or pin number can settle bills under $25. Londoners will soon be offered a credit card that doubles as a tube pass and a “wave and pay” purse

Source: Digital money | The end of the cash era | Economist.com

Some examples in the article (subscription required)

• Mobile phones are becoming an increasingly popular way to make all sorts of payments. In America fans of the Atlanta Hawks have been testing specially adapted Nokia handsets linked to their Visa cards to enter their local stadium and to buy refreshments.
• Earlier this month Visa and SK Telecom, South Korea’s leading mobile company, announced the commercial launch of a phone-payments system aimed initially at 30,000 subscribers.
•  In Japan hundreds of thousands of transactions, from buying railway tickets to picking up groceries
• On February 12th, 19 telephone operators with networks in over 100 countries said that people would be able to use their handsets to send money abroad
• Britain’s Vodafone and America’s Citigroup are also launching an international money-transfer service developed from the M-PESA remittance service which is already operating successfully within Kenya
• Pre-paid or “smart” cards, like those used by Hong Kong’s Octopus and London’s Oyster for travel on subways, provide a lot of convenience—and for operators as well as passengers, because money is expensive to handle
• For customers in a hurry, being able to pay with their keitai—as mobiles are known in Japan—is a lot easier than using cash. Many handsets now perform the various functions of cash, keys, credit cards and ID
• Edy is the biggest contactless-payment method in Japan and is accepted by some 43,000 stores. The system is operated by bitWallet (itself jointly owned by NTT DoCoMo, the country’s largest mobile-phone operator, and Sony). Edy accounts for 15m transactions a month, a rate that is doubling annually. It has about 23m users, of which 4.5m are already on mobile phones. The nearest rival is Suica, the brainchild of JR East railway, with over 18m accounts
• Many of the keitai-credit systems rely on a NFC chip called FeliCa, which was developed by Sony. This chip is embedded in both NTT DoCoMo’s wallet phones and the new Pasmo system. The chips have to work rapidly and reliably, says Ted Osamura of FeliCa. For instance, the railway operators have insisted that their system can admit 60 passengers a minute through each ticket barrier