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The Oyster card is a new form of electronic ticketing, designed for use on Transport for London services and National Rail services within the Greater London area.

Oyster cards can be used to store both period travelcards (of one week or more) and a pay-as-you-go balance, known as Pre Pay. The Pre Pay balance is automatically debited by the correct fare at the end of each journey by tube or DLR and each time a bus or tram is boarded. The Pre Pay balance is also debited by the relevant amount if the user travels by tube or DLR beyond the zonal validity of any travelcards stored on the card.

Users of the system can increase the Pre Pay balance on their card at the ticket office or at newer smart ticket machines at Underground stations, online at the Oyster card website and from some retailers.

The card can hold up to three period travelcards at the same time, each with different validity dates and zonal coverage. Period bus passes can also be charged to the card. The system is designed to be multi-modal and works across London's Tube, DLR, tram and Bus network.

Users with period travelcards can also travel on rail services within the Greater London area in all the zones they have validity for on their card, however Pre Pay is only available on rail routes which run alongside London Underground lines (such as c2c), where tickets are interchangeable. Pre Pay is not planned to be launched on the rest of London's Rail network, mainly because of the difference in pricing structure between train operators. Transport for London is actively encouraging train operators to adopt its zonal ticket pricing system within London so Pre Pay can be introduced on their routes. Rail routes entirely or almost entirely within the Greater London area are likely candidates for early conversion.

Pre Pay single ticket prices for bus, tube, DLR and tram have been held at 2003 rates to encourage customers to switch to Oyster. For journeys on the tube and DLR at weekends special low prices have also been introduced to encourage customers to use the system when it is less busy. This system will be expanded in January 2005 to offer cheaper tickets at other times when the system is less busy (i.e. very early in the day) and divert passengers away from using the system when it is at capacity (i.e. at peak times).

A capping system, with a delayed planned introduction during 2005 will convert multiple single tickets to the cheapest ticket available that covers all journeys made that day. It is unclear if the delay is because of problems with the software which will need to be able to read the card, make a complex calculation and then write back to the card within the time the card is in communication with the reader.

There are no immediate plans to roll out the Oyster card to the National Rail Network outside the Greater London area, though the Association of Train Operating Companies is interested in developing an ISO 14443-type card, like Oyster. As of 2004, it is not clear whether the two systems will be compatible.

The Oyster card is a contactless smartcard. Travellers wave the card over a distinctive yellow circular reader positioned on automated barriers at Underground stations to 'touch' in and out at the start and end of a journey. Every London Bus also has a reader, on the driver's ticket machine. The system is based on Philips's MIFARE chip technology, with a current proximity range of about 10cm. The scheme is operated by TranSys .

The system has been criticised as a threat to the privacy of its users. Each Oyster card is uniquely numbered, and registration, though not compulsory, is required in order to use the online Oyster services. Usage data is stored both on the card and centrally by Transport for London. Privacy groups are afraid about how this data will be used, especially given the introduction of the London Congestion Charge by Mayor of London Ken Livingstone in February 2003.

The Oyster card may have been inspired by Hong Kong's transportation system, which uses the similar Octopus card. As with the Octopus card and other pay-as-you-go smartcards, also notably in Japan, there is the potential for future expansion of the Oyster card to act as an electronic purse, or even as a credit card or mobile phone payment system.