Over a million smart card readers would be installed in supermarkets, newsagents, service stations, lunch bars, dry cleaners and other shops and by vending machine proprietors such as Coca-cola.

Half way through next year, Australians would be encouraged to make major changes to personal banking.

"In future, there will be no need for Australians to go to a local bank branch to withdraw cash," Mr Gregg said.

"The National Australia Bank, Westpac, ANZ and the Commonwealth Bank will all encourage their customers to load cash into their smart cards over the telephone.

"The banks' goal is for Australians to replace cash with smart cards for most small purchases.

Mr Gregg said the banks wanted to "put a compelling proposition to their customers" by offering six quite different card options:

• A reloadable electronic purse that could be recharged by ringing a bank from home, office mobile telephone or personal computer.

• A replacement for all magnetic strip MasterCard credit cards.

• To store urgently needed personal information such as allergies, medical history and/or insurance details.

• A security pass to open electronic gates and doors at private clubs and offices.

• To replace customer loyalty scheme cards such as Fly Buys and Frequent flyer points.

• For customer verification in electronic commerce and banking transactions.

"In future, ATMs may be much more helpful. After reading each customer's smart cards, they will know how much cash you usually require and your usual choice of denominations."