PayPal widget brings 'bump-to-pay' to Android smartphones

Digital payment company PayPal on Wednesday debuted its person-to-person payment technology that utilizes Near Field Communications (NFC) embedded in Android smartphones. To initiate payments, users need to only type in the amount of money they want to share, and then hold their phone up to the phone belonging to the recipient.

This is a major advancement for NFC mobile payments, a field where banks, payment companies, and software makers are all scrambling to establish early dominance.

The first phone to take advantage of Android's NFC stack is the Nexus S, which Google used to launch the Google Wallet service, and which was also used to demonstrate T-Mobile, AT&T and Verizon's Isis mobile payment joint venture and Credit Card company Visa's digital wallet initiative which will launch this fall.

Paypal, likewise, demonstrated its NFC Android widget on the Nexus S at MobileBeat 2011 on Wednesday. The company says the feature will be available to consumers "late this summer."

I recently spoke to Eric Duprat, CEO of silicon biometrics company Verayo, who formerly served as PayPal's General Manager of Mobile solutions. Duprat, whose main concern is security, shed an interesting light on the challenges for PayPal in NFC.

"When you are moving money on a mobile phone, the level of security dictated by Google or Apple is not really sufficient. So when you are using PayPal on a mobile phone today, the security really isn't good enough," Duprat said. "I mean this in only a nice way, because PayPal is a very strong company when it comes to risk management for the consumer. I don't want to say 'Oh my God, it's not secure to use PayPal on the phone!' It is secure. But…the level of attacks are going to improve and increase in the future, and the role of these companies is to be ahead of the game all the time."

"Today, they are ahead of the game, don't get me wrong. But they have to continue to be ahead of the game and also push these security concepts. And really, that should be the first concern for all these companies who are willing to move consumer money around," Duprat said. "What is going to matter in the future is how easy it is going to be to pay with any device you have connected to the Internet. PayPal and Google and such have a challenge that they have to leave the Internet, their comfort zone, and go out into the physical world. Meanwhile, banks and credit companies are leaving the physical world and getting into Internet payments. And where is the crossroads? It's mobile devices."

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