Pocket money being handed out in cash is a dying tradition; with parents now using digital means to pay their children's allowance.

So says new research from digital banking software firm Intelligent Environments, whose latest study has found that a third of parents (34 per cent) are now using online banking to pay pocket money into their children's bank account, rather than give them cash.

Just over a quarter (28per cent) said they go even further and pay their children in the digital currencies used in games such as Minecraft or Moshi Monsters, as well as credit for use on iTunes.

David Webber, managing director at Intelligent Environments, said: "There's a terrific clip on YouTube of a baby trying to use a magazine as an iPad, truly evidence of digital engagement at a young age.

"Nothing has changed more than the way in which we manage our money; our research shows that in a world of apps, e-books, digital music, and online games, more children than ever are asking for their weekly allowance digitally to fuel modern-day spending such as in-app purchases, in-game currency and digital music downloads."