PayPal Intros Phone-to-Phone “Tap” Payments

PayPal this morning announced a new mobile phone widget that will let smartphone users “tap” their phones together to exchange money. The phones don’t actually have to touch, but only come within reach of each other’s short-range near field communications (NFC) radio signal.

The widget is a light-weight app that sits on the desktop of the phone, and launches automatically when the phone is tapped with another phone to transfer or receive money.

The “tap” trick works only by using two Samsung Nexus S phones, as it is the only phone on the market that ships with an NFC chip inside. As more phones get the chips–which is expected to happen in the short term–they too will be able to use the payment widget. The widget won’t be in wide release until this summer. The video below shows how it works.

Senior director of PayPal Mobile Laura Chambers says PayPal has seen fast growth in consumer interest in mobile payment technology. “But at PayPal, we’ve said all along that consumer behavior won’t change unless we’re able to offer an experience that’s truly better than what’s available today,” Chambers says.

The new technology could find plenty of takers in the small business community, especially among boot-strap businesses that want to be able to take payments quickly and easily at the point of sale. But, like most services of this kind, its success will depend entirely on how widely available it is on all kinds of mobile devices and operating systems, and how many consumers find a reason to actually download it.

So, cool technology, and PayPal seems like the right company to introduce it, but we’ll have to wait and see if the new widget has real star quality.