A study by Dove Consulting and the American Bankers Association suggests that PIN debit will overtake signature debit within the next five years as the cost of PIN pads fall and consumers switch to safer ways to pay.

Debit cards were used for 31 per cent of payments in the US in 2003, while cash and cheques accounted for 47 per cent of payments, compared to respective figures of 21 per cent and 60 per cent in 1999.

This was reinforced by research from MasterCard in the United Kingdom, which predicted a widespread increase in debit card payments, once chip and PIN cards are widely held.

The switch from signature-based payments to PIN-based data entry will make a third of people more likely to reduce the amount of cash that they carry around.

"It seems that peoples’ wallets and purses will soon be a lot slimmer as shoppers who say they will pay by cash less frequently plan to carry around 42 per cent less in notes and coins," said Paul Lucraft, general manager business services Northern Europe, MasterCard.

Of those surveyed, 41 per cent stated that they would pay using their debit card more often following the roll-out of chip and PIN. MasterCard’s findings also show that three million people who currently don’t have a credit card will apply for one once chip and PIN cards are in place. This is due to the extra level of security that will be offered by the cards