Glasgow is set to become the first city in Scotland where taxi customers can pay for their journeys using chip-and- pin technology.

Industry leaders in the city have agreed to a trial of hand-held terminals in 20 to 30 taxis within the next two months. If it proves successful, the kit could be fitted to Glasgow Taxis' fleet of 1000 cabs.

It is hoped that the technology will improve service for customers, particularly Glasgow's growing business community, and offer drivers an extra guarantee of payment.

Customers will only be able to pay for journeys using their debit and credit cards for fares of £12 or more, and a 12.5% fee will be added to absorb the cost of using the equipment. Robert Dunabie, company secretary of Glasgow Taxis, the fourth biggest taxi firm in the UK, said: "What we're doing is looking at this on a trial basis.

"There are a lot of business people now coming into Glasgow and they would rather pay for things on credit card.

"This is mainly for the benefit of the business community and we are trying to move with the times and show we're a forward thinking industry.

"It also gives people another opportunity to get home safely when they don't have any cash."

Allowing customers to pay for their trips while remaining in the cab will also avoid the need for drivers to stop at cashpoints during journeys, Mr Dunabie said, and avoid the risk of customers running off without paying. He added that it was required to enforce a minimum chip-and-pin fare and a handling charge to "get the scheme off the ground" although he added that this could change in the future.

At present, Glasgow Taxi customers can pay for a taxi journey using their card if they give their account details over the phone. In Edinburgh, some cabs are equipped with swipe machines which allow the customer to sign for the trip.

But the chip-and-pin technology is widely seen as the most secure method of payment for both customer and driver.

A spokeswoman for the Public Carriage Office in London said that chip-and-pin technology was to be brought in to the city over the summer. The service is already available on a limited number of taxis in Liverpool and Manchester.

Glasgow Taxis will pay for the chip and pin terminals for the drivers taking part in the pilot.

Bill McIntosh, of the Scottish Taxi Federation, said: "More and more people are looking for the type of facility where they can use credit cards. We are a credit-driven nation and it is getting harder and harder to live without plastic."

He said that the security of drivers had been considered when devising the scheme.

"If a driver uses a chip-and-pin terminal, the transaction is authorised there and then and the driver is guaranteed to get paid.

"But it is more to improve the convenience to the public," Mr McIntosh said.