The UK transport department has announced plans to install a paperless ticketing system across nine urban areas in England over the next five years.

The $32.7m (£20m) grant, under the new Smart and Integrated Ticketing strategy, is part of the government’s plan to launch a smart card payment system across the whole of England by 2020.

The card payment system uses a microchip, placed in a card, to improve journey times and easier purchasing and use of tickets, which the government believes could add up to as much as £1bn in savings per year.

The urban regions to get the technology first include Greater Manchester, West Midlands, Tyne and Wear, Merseyside, South Yorkshire, West Yorkshire, Nottingham, Leicester and Bristol.

Transport Minister Lord Andrew Adonis said that the benefits of smart ticketing to passengers are clear – quicker, easier and potentially better-value journeys on trains, buses and trams.

“Getting this technology on board will help reduce congestion and pollution, improve the local environment, and help us, operators and local authorities provide the 21st-century public transport network that we know people want,” Adonis said.

A recent Department survey indicated that the smart tickets could have the potential to attract as many as 25% of current non-public transport users onto the system and that a smart card with a daily cap could increase some individuals’ trip rates by over 14%.