Credit cards may soon go the way of the dinosaur as increasingly mobile smart phones usurp plastic for instant payments.

The most recent innovation that is helping credit cards on their way to extinction is Australian banking major CBA introducing a new application is calls tap and pay, which allows smart phones to connect to payment devices such as cash registers, and also allows for facebook and email payments.

CBA has named the app Kaching, and it works by taking the information that is coded into into the magnetic strip of a credit card, and storing and transmitting it by phone instead.

The app makes use of Near Field Communication (NFC) technology, and has already been introduced in America, where its use already encompasses the replacement of keys, passports, receipts and business cards.

Users of the application need not be customers of CBA in order to be able to receive payments made using Facebook or by email, and are instead taken to an external collection site.

A CBA spokesperson said the lender would like the app to be able to penetrate across all payment gateways in Australia from businesses to individuals.

"Mobile and online social payment is the next step in transaction technology and now Australian consumers will no longer have to rely on cash or cards to make payments to family, friends or businesses, the spokesman said.

He added that Kaching would also enable businesses to reduce their reliance on cash.

The application was designed in close collaboration with Apple, with security of the system being the key ingredient in its development.

The app will make use to password encryption technology, so that if a user loses or has their phone stolen, their personal data including banking information could not be compromised, since it is not stored locally on the phone.

He said the app would also help businesses reduce the need for cash.

Receivers of payments would also be protected with any funds that had not been credited, restored after 14 days.

Kaching will be available before Christmas to Apple iPhone users with iOS4 and above.