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Summary:

Google CEO Eric Schmidt said Gingerbread, the upcoming update to Android expected in the next few weeks, will include support for near field communications, making it possible for users to soon tap their phone and use it as a credit card.

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Google CEO Eric Schmidt said Gingerbread, the upcoming update to Android that will roll out in the next few weeks, will include support for near field communications, making it possible for users to soon tap their phone and use it as a credit card. Schmidt took the stage at the Web 2.0 conference and showed off NFC on what appeared to be a Nexus S, the successor to the Nexus One. NFC is a technology that allows a user to tap and pay by bringing an embedded chip in close contact to a receiver. The Android operating system will now include support for the technology, allowing users to pay for items at point of sale systems by just waving their phone.

You’ll be able to take these mobile device and you’ll be able to walk into a store and do commerce and figure out where you are with your permission,” Schmidt said. “It could eventually literally replace your credit card.”

It’s not just for commerce. A user could also check into a location using NFC. And they could access Groupon like deals. Schmidt said credit card companies are excited about the prospect of tap and pay because it improves the loss rate of regular credit cards. He said it underscores the power of mobile devices, which while underpowered have a lot of functionality that a desktop PC can’t manage.

NFC is one key piece of mobile payments though there are some lingering questions about consumer interest in it. James Anderson, VP at MasterCard Worldwide told me today the standards on NFC are now largely set. Now he said it’s a matter of phones including the technology, something Nokia has started doing and Apple is rumored to be pursuing. He said there are already more than 80 million NFC devices, mostly NFC-enabled credit cards and 265,000 contactless merchant locations around the world. It’s still unclear if all the Android manufacturers will start including the necessary hardware but now that the software is settling into place, look for NFC to become more of a reality here in the U.S.

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