The fault is the first of its kind for more than two years, according to TfL.
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The Oyster system on London's public transport network has suffered a fault, rendering the electronic cards inoperable for about five hours.
The cards are used as a form of payment across the city on the Tube, buses, trams and the Docklands Light Railway.
A fault lasting from about 0530 BST to 1030 BST on Saturday meant card readers did not work and some passengers could be charged a maximum fare by mistake.
Transport for London, apologised and said Oyster faults were "very rare".
It said a problem of this nature had not occurred since March 2006.
Passengers touch the electronic card on the reader on entry or exit to a station, or when entering a bus.
Official apology
A spokeswoman said: "Due to a technical problem with the Oystercard computer system, card readers across the network have not been accepting cards.
"Ticket barriers have been left open so that passengers can pass through therefore journeys have not been adversely affected by this problem."
Machines used to place funds on the cards were also affected by the fault.
Free bus travel will continue on the roads until individual buses return to their garages for their systems to be reset.
Any passenger who entered the underground or DLR system while the system was down and finished their journey after it was repaired may be charged the maximum fare.
In a statement, TfL said: "All passengers who incur a maximum fare on Saturday 12 July will be given an automatic refund on Tuesday. They do not need to take any action.
Transport success
"We are investigating the cause of the problem, will ensure that any necessary refunds are honoured and apologise to our passengers for any inconvenience caused."
In May, London's transport commissioner Peter Hendy said 17m cards had been issued since the introduction of the Oyster system in 2003.
He added that it had successfully sped up journeys and reduced queues on the city's public transport network.
Passengers can currently use Oyster cards as a travel card to cover fares for periods up to one year, as well as to cover single journeys for travel to London destinations including overground stations.
People using the cards can also use them on a pay-as-you-go basis by topping up the amount of money on it to cover journeys of varying distances.
It recently emerged that commuters within London travelling on First Great Western (FGW) trains will be able to use pay-as-you-go Oyster cards from September.
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