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PayPal Adds NFC Support: Just Tap Phones to Send Money

Today at the MobileBeat 2011 conference, payments leader PayPal announced it would support NFC (near field communications) on mobile as a new way to both shop and pay. The company demonstrated its solution in the form of a new NFC-enabled Android widget that lets people send payments just by tapping two phones together.

The widget will arrive later this summer, the company said.

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NFC is an up-and-coming technology that allows for data exchanges over short distances. It forms the basis of mobile wallet solutions like Google Wallet and Visa’s digital wallet, for example, which aim to replace leather-bound bill holders with nothing but a mobile phone. Everyone from Google to the banks to the credit card companies to the carriers themselves, are involved in developing NFC solutions for their customers these days, although very few programs have officially launched as of yet.

It’s no surprise then, that PayPal is joining in with its own implementation of NFC. As a top provider in the payments space, it had no choice but to participate in this emerging trend.

PayPal Does NFC on Android

The application itself looks great. In the demo (see the video here), a PayPal user can either send money or receive money using the widget. After one person initiates the request, both people just tap their phones together until they buzz. That means the data transfer is complete. However, for security purposes, users do have to complete the transaction with the entry of a PIN or password.

It’s a lot like how the contact sharing mobile app Bump works, except that the underlying technology is different. Bump uses sensors on both iPhones and Android, while NFC requires the use of a special chip in the phone itself, something that’s still somewhat a rarity on today’s smartphones. Today’s demo involved Samsung’s Nexus S, but other NFC phones are on their way, including the upcoming BlackBerry Bold (9900/9930) devices, Nokia’s Astound, variants of the Samsung Galaxy S II and others.

Recently, PayPal made another acquisition aimed at bolstering its mobile presence: Zong, a mobile payments company that specialized in carrier billing. Zong enabled end users to pay for digital items like virtual goods and in-app purchases, by having those items charged to their phone bill. NFC, however, is more often associated with paying for physical goods – like store-bought items from a local retailer. By attacking on both fronts – virtual and physical – it’s clear that PayPal is aiming to retain its place among the top payments companies even as the technologies surrounding payments around are revolutionized by the mobile platform.

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