Since I own two Android smartphones with NFC chips — the Galaxy Nexus and Galaxy Note 2 — I’m interested to see what else I can do with NFC. So I bought five NFC stickers and set out to learn. Turns out these little tags are already coming in handy: I’m using them to change my phone settings when I leave home and when I return.

Unfortunately, the NFC tags and software I started to use seem limited to Samsung phones and there appear to various tag standards. I’ve already found a new free Android app and other tags for a more universal solution. NFC Task Launcher, for example, works on the Nexus 4 smartphone built by LG. The developer also sells NFC tags in several different shapes, sizes and even for both indoor and outdoor use. And the supporting application offers more control options as well.

For now, I’m just experimenting but I’m thinking that with several NFC tags around the house, I can eventually tie into my home automation system and much more with this low-cost wireless tech.

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Stop me if you’ve heard this one before: mobile payments are going to be huge. There are an awful lot of companies betting on the prospect but year after year we keep hearing that mainstream adoption is just around the corner. Representatives from Google, PayPal, and NeuAir argued that if payments is just one part of the mobile shopping experience, that day might finally come.

“Payments are not fun,” said Hill Ferguson, vice president of PayPal Mobile, at least one company that has fun processing payments. “Shopping is fun,” he said, saying that companies hoping to get consumers interested in their version of a mobile wallet need to provide a complete experience, including deals, offers, loyalty cards, and even special offers like installation or delivery that regular payees can’t access.

Consumers are already using their mobile devices during the shopping experience to compare prices, said Jason Spero, head of mobile at Google. “You have to plan for price transparency” if you’re a big retailer, he said, and if you’re a smaller one “you have to win on something other than price.”

Obviously, there are a few different ideas on how to make this happen. PayPal wants to build a virtual wallet that is accessible from a mobile device and contains payment information, merchant loyalty cards, and things like coupons all in one place, Ferguson said. Google has been focused more on the concept of NFC-enabled wireless payments through mobile phones, but has been rumored to be considering other alternatives and Spero acknowledged that while Google thinks NFC is a winner in 2012, it might not the “the only way to deliver the (mobile) wallet.”

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I took matters in my own hands by installing Google Wallet myself. I first had to root my phone and install a custom recovery application. But after that, it took me all of five minutes to install Wallet by following the steps here on the XDA-Developers site. It’s not something I’d recommend to casual smartphone users, but if you’re one of those that root your phone or install custom software, it’s a simple process.

Google provides a $10 credit for all new Wallet users, which I received upon signing in to the software with my Google account. You can also link a Citibank MasterCard to the Wallet app, so I did that too. Citi will initially limit your spending to $100, but you can request an activation code to enter in the Wallet app for access to your full credit line. I didn’t do that until after my first purchase.

Here’s an admittedly bad video of my first Wallet use at a gas station; I was juggling two phones while trying to keep my personal information off-camera (and trying not to cause an explosion by using a smartphone at the pump!), so this didn’t work out the way I had planned. And of course, doing multiple takes would cost more money, so bear with me. I’ll do a better video soon; promise!

I routinely pay for goods and services with a PayPass-enabled credit card, so the experience was very similar. Google Wallet requires a four-digit PIN to be unlocked and then, instead of holding a credit card near a wireless terminal, you simply hold the phone near it instead. My phone vibrated, and the gas pump made a small acknowledgement sound once the NFC chip was recognized. I was able to immediately pump my gas, and the transaction appeared on my smartphone’s display.

There’s an area in Google Wallet to make notes on each transaction, which is nice. You can also have the location automatically recorded. I tend not to get paper receipts for electronic transactions, but I know some people do. It would be nice if Wallet let you take a picture of the receipt and attach the image to the specific transaction.

From a safety perspective, I have no real concerns. I’ve already been making purchases at wireless terminals with my credit cards for at least two years. This is no different. In fact, it’s probably more secure. Anyone can find my credit card and use it to buy things. But on my phone, someone would have to unlock my device to gain access to it, then also know the PIN for Google Wallet.

Overall, I find Google Wallet to be simple and effective. I used it again today at a McDonald’s; it should work at any of the PayPass terminals in the U.S. As a result, I plan to keep using it as often as possible. After all, I always have my phone with me.

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As the owner of a Google Nexus One handset since launch day, I considered upgrading to the Nexus S when it debuted in December. Google stayed with a 1 GHz single-core processor and 800×480 resolution screen, so I decided to pass. However, Samsung’s Super AMOLED display is a nice upgrade, with bolder, vivid colors and better outdoor viewing. The same screen technology is used on the AT&T Infuse 4G that I recently showed off on video. The Nexus S was also one of the first Android handsets to gain a front-facing camera, which can now be used for Google Talk video chat. And because it’s a Nexus phone, the handset is easier to root and install custom software, plus it should see Android updates faster than other phones.

But I think the real reason for the Nexus S appearing with support for AT&T is the NFC chip inside. In May, Google announced its Wallet service, a method to pay for goods by tapping a smartphone on a payment terminal. NFC payments have long been promised but haven’t yet been delivered in the U.S., and Google Wallet sounds like it has all the right pieces in place. Except there’s currently only one handset on one carrier that supports it, and that carrier is No. 3, Sprint, which has the Nexus S 4G.

At the Wallet launch, Google said it planned to expand support to more phones, and I suspect the Nexus S for AT&T is the next Wallet-capable handset. For $99 on a much larger carrier, Google can increase the Wallet user base much more quickly than it can through Sprint. Of course, releasing an AT&T version of the Nexus S only adds more potential to Google Wallet. But it doesn’t guarantee a large uptake for one key reason: Compared to the latest and greatest handsets with speedy dual-core processors, the Nexus S is already looking long in the tooth.

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It’s likely we’ll hear a growing number of NFC-related announcements from handset makers in the near future, even though wireless payments and NFC technologies have been bandied around for several years. Why? While the concept of short-range radio chips embedded in a personal device have always made sense, it’s only recently that a semi-standard infrastructure has begun to take shape for smartphones to leverage. Last month, Google lined up the all the pieces to the puzzle with Google Wallet and support from Citibank, MasterCard, Sprint and First Data. But the new service is limited to San Francisco and New York City for now, and only works with Sprint’s version of the Nexus S handset.

It may sound surprising that Sony Ericsson appears next in line for NFC adoption, given that its first few Android handsets were slow to see software updates. The Xperia X10, for example, debuted with Android 1.6 in late 2009, at a time when Android 2.0 was arriving. The handset maker eventually offered an upgrade to Android 2.1, but it was delayed and took nearly a year to get out to handset owners. When it comes to “cutting edge” Android functionality, Sony Ericsson isn’t at the top of the list.

But last September, the company refocused by dropping the Symbian platform, and proclaimed that it planned to beat out Samsung, HTC, LG and others as the top supplier of Android handsets. Sony Ericsson currently holds 9 percent of the Android handset market according to Strategy Analytics. The first result of the company’s shift is the  smart use of Sony’s PlayStation gaming roots in the form of the Xperia Play smarpthone. The Android 2.3 device doubles as a gaming handheld, complete with Sony PlayStation Portable game controls and titles from Sony’s library.

The Xperia Play isn’t setting sales records, but it shows that Sony Ericsson trying to make good on its promise of leading the pack. And if the smartphone maker can integrate short-range wireless communications that let the phone be used for purchases, to unlock doors or to earn deals based on proximity, the company can build on its momentum. At the same time, Sony Ericsson can help change NFC from just a nice theory into a practical feature on a range of phones.

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Lately, there’s been talk of two such players, but I’d argue there are four, and all four have different takes on what they offer for wireless payments:

1. The handset makers, who could sell more hardware as consumers upgrade to NFC-enabled phones.
2. The software companies that power mobile devices, because if they can control the software, they have a foot into the door of the entire payment system while also gaining valuable spending data.
3. The traditional payment processing companies such as Visa  and MasterCard, which have owned this space for decades, earning a small cut of every credit card transaction along the way.
4. The network operators themselves, who provide the pipe for smartphone data use.

What does this mean? The longer that arguments between these four parties go on, the longer it will take before we have a readily accessible system for wireless payments. That’s part of the reason Colin Gibbs suggested NFC payments wouldn’t take hold in 2011. (subscription required)

The most recent arm-wrestling is between Research In Motion and the carriers, reports the WSJ. RIM is planning to put NFC chips directly inside future BlackBerry handset models, which upon first glance, sounds like a positive step forward. And it is, because it would enable handsets for wireless payments. But RIM wants payment credentials — the account data that’s currently in magnetic strips of credit cards, for example — to be stored directly and securely on the phone. While RIM’s plan would advance wireless payments, it will also add more incentives for people to purchase BlackBerry handsets and give RIM valuable consumer data on consumer spending preferences. It could even boost BlackBerry sales if such data is easier to transfer to a new BlackBerry, instead of another phone brand, during a handset upgrade.

Carriers would instead like to see such account data stored on the SIM card of a phone, which would make it easier to switch to any handset that’s enabled for NFC transactions. But that’s not the only reason. Because carriers, not the handset makers, control the distribution of SIM cards, carriers would then control that consumer account data. And the carriers have their own plans in this battle as well: AT&T, T-Mobile and Verizon Wireless are collaborating on a mobile commerce network called Isis. The three largest U.S. operators have partnered with a payment processor in Discover, as well as a card issuer in Barclaycard, so even “new” payment networks are reliant upon companies with years of experience in this space.

I spoke earlier today with one of the companies well-versed in mobile payments to make sense out of the many moving parts here. Mastercard SVP & Group Head, U.S. Emerging Payments Lead Mario Shiliashki, explained that through the company’s PayPass technology, it has been offering wireless payments for nearly eight years, and no matter what newcomers enter this game, they’ll likely need to work with the established players that built payment networks.

We’re device and technology agnostic, but we license PayPass, which can be in a handset, a credit card or other form factor. What companies need to realize is that MasterCard and others have spent years creating a payment infrastructure. NFC is simply the wireless mechanism to start a transaction. The infrastructure after that takes care of how money moves, ensures that transactions work every time and preserve legal rights for consumers, merchants and banks.

That makes sense to me, although it’s difficult to overlook the potential influence of disruptive newcomers such as Google and Apple. Google’s Nexus S handset has an embedded NFC chip, and the company recently updated its Android operating system to them in other devices, too. Effectively, handset makers and third-party developers could create payment solutions that could, for example, transfer money between two individuals when tapping NFC-enabled phones together.

And “Apple is a considerable player” as well, Shiliashki noted in our conversation. The company has built up a portfolio of 200 million credit card accounts through its iTunes store. Apple has continued to disrupt with the store: what started as a simple way to purchase music has become a way to buy software applications and rent and purchase movies and television shows. The next step could be to bring NFC payments to the mainstream consumer, if rumors of including an NFC chip the next iPhone are true. Given that RIM, Google, Nokia and other handset makers already do this, or plan to in the near future, it’s a safe bet.

Until some of these battles are fought and won, the promise of paying for everything with the wave of a phone in the U.S. is still a ways off. We’re getting closer, but I agree with Shiliashki, who says this will be a multi-year story. Everyone involved wants to own the customer relationship and profit from it, so for the time being, you can still leave home with your phone, but you’d better bring your wallet too.

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Companies looking to attract mobile-payment customers ought to be looking at 18- to 35-year-olds, according to a national study released today. Hitachi Consulting and the Bank Administration Institute (BAI) conducted the research, which shows that the “millennial” generation will likely drive mobile payment adoption in the coming years. Not only does the study help define who’s comfortable with payments on the go, but also what features are important in such transactions. Although the mobile payment market is expected to generate $633 billion by 2014, the lowest-hanging fruit is found in the younger crowd.

According to the study, when compared to other generations polled, millennials show the highest levels of using contactless payment methods (12 percent) and micropayments of $5 or less on the Internet (56 percent). While only 5 percent of those surveyed said they have a mobile device capable of making in-store purchases, 46 percent of that group is made up of those under 35 years old. What mobile or in-store payment aspects are important to this group? Ease of use topped the list, with 35 percent of survey respondents considering this a priority. Surprisingly, security and safety ranked behind at 27 percent, while speed of transactions grabbed the attention of 20 percent of those surveyed.

Brick-and-mortar stores, not to mention financial institutions, should definitely take heed of this kind of research. The relatively younger crowd is more willing to leverage the Internet, since many have grown up with it as recent teens, and consumers in this age group are adopting the mobile web faster than others too; last month, research group Forrester found that 23 percent of U.S. consumers age 18 to 44 own a smartphone, the highest adoption level for any age group. And the youngest of these, aged 18 to 30, use mobile web services the most: 85 percent regularly text message, compared to 57 percent of all consumers, and 37 percent use the mobile Internet, far higher than 23 percent of the total population.

Given the increased smartphone adoption in this group — and the fact that most new smartphones have a memory card slot — I’m thinking that Visa’s wireless payment memory cards show the most potential right now. Then again, it may not matter what I think: I’m too old to be in the millennial crowd, even with a smartphone.

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