Parliamentary Secretary to the Prime Minister Alan Tudge said the government was planning trials of the cards "in a small number" of places that are yet to be decided later this year.

He said the government was talking to communities where there were problems with "welfare-fuelled alcohol and drug abuse" and community leaders were prepared to back a trial.

"The potential upside could be absolutely life changing in terms of community safety for women and children," Mr Tudge said.

The card, which was suggested by mining magnate Andrew Forrest in a report to the government last year, would be redeemable at any Australian shop that accepts Visa with electronic and EFTPOS payment facilities. But it could not be used to buy alcohol or drugs or gamble.

The trial would not make people's welfare payments completely cashless, to allow for situations that are cash only – such as catching a bus or buying lunch at school.

Mr Tudge said people who were not heavy drinkers or problem gamblers would not notice a huge difference in their lives.

"Instead of reaching for cash for something, you'll have to reach for your card and tap," he said.

But in terms of dealing with alcohol-fuelled violence, Mr Tudge said the card could quickly have "an enormous impact".

In his report to government last year, Mr Forrest recommended the so-called "Healthy Welfare Card" be made available to all Australians who were on benefits.

Social Services Minister Scott Morrison praised the cashless card as an "excellent idea" on Sunday but said there were no plans "at this stage" to roll it out to all those on benefits.

"We are proceeding carefully and patiently and incrementally," he said in Sydney.

The federal government has been in talks with banks during the past six months about what would be technically feasible with the debit cards and when the technology might be introduced.

More than 20,000 Australians have their welfare incomes managed voluntarily or compulsorily in places such as Perth, the Kimberley region, Cape York, Bankstown and Shepparton.

The existing schemes, which were introduced by Coalition and Labor governments, quarantine at least half of a person's payment for necessary items and prevent spending on things such as alcohol, cigarettes, home- brew kits and pornography. At this stage, the various schemes are due to end in mid-2015 and mid-2016, and the government has been considering its next move in the area.

National Welfare Rights Network president Maree O'Halloran said she had serious concerns about compulsory income management and did not think it would solve problems such as alcohol abuse.

"It's like making people children," she said, adding that the evidence on the effectiveness of income management was "mixed".

Ms O'Halloran said it would be sad to see the card used to control people and take away their choices.