PayPal shows off mobile tap-to-pay

eBay-owned online payments company jumps into the near-field communications fray with a demonstration using Sprint's Nexus S at the MobileBeat conference.

PayPal's Laura Chambers demonstrates the tap-and-pay move at the MobileBeat conference today in San Francisco with VentureBeat editor in chief and moderator Matt Marshall.
Video by James Martin/CNET, screenshot by CNET staff

PayPal on Wednesday showed off the ability to transfer money and pay by tapping two phones together as it looks to secure its role in the burgeoning mobile-payments area.

PayPal's senior director of mobile operations, Laura Chambers, demonstrated the tap-and-pay move at the MobileBeat conference in San Francisco by placing together two Nexus S smartphones (see video below). The phones are equipped with a near-field communications, or NFC chip, which allows for a quick transmission of information--in this case data about the amount of money transferred. The transfer happens through a special PayPal widget.

The demonstration shows PayPal is jumping on the NFC bandwagon, which has been embraced by the likes of Google, payment systems manufacturers such as Verifone, and credit card issuers such as Visa and MasterCard. The growing number of players also indicates the crowded room through which a payments provider like PayPal must navigate.

Google also used the Nexus S when it demonstrated its Google Wallet mobile payment capability. Bank of America, MasterCard and Research in Motion are testing their own payment system using NFC. The wireless carriers have a joint venture that plans to begin holding NFC trials next year.

PayPal, meanwhile, already handles mobile payments through an application that communicates via a Wi-Fi or a cellular network, or through the mobile browser or text message. It has also experimented with NFC stickers placed on the back of phones, but the tests were limited in scope.