Google prepping NFC-based phone payment system

Google is preparing a phone-based contactless payment system that could debut this year, a report has suggested.

In a Bloomberg piece on Tuesday, "two people familiar with the plans" said the system, based on near-field communications (NFC), would allow people to buy small items by tapping their handsets on a reader at a shop's checkout. This is already becoming commonplace with contactless debit cards, but NFC technology is starting to make its way into phones such as Google's Nexus S.

According to the article, eBay may also launch a commercial NFC service in the second half of this year, allowing peer-to-peer transactions, such as a diner tapping his share of the bill onto his dining companion's phone.

Along with its embedded NFC chip, which can work even when the handset is out of power, the Nexus S also runs the new 'Gingerbread' version of Android, which includes the ability to read information from NFC tags.