PayPal demonstrates NFC effectiveness at MobileBeat 2011

PayPal demonstrates NFC effectiveness at MobileBeat 2011

Responding to the growing number of consumers clamoring for the ability to make mobile payments through their devices, the online payment firm PayPal recently showcased its wireless system in action on the Android-operated Samsung Nexus S smartphone.

The near field communications system lets people make payments by touching two of the devices together, while also using an Android widget. The company recently presented the system at MobileBeat 2011 and, according to Laura Chambers, senior director for PayPal Mobile, the move is another step to create a new way that people shop and pay for their items.

"This feature will be out in the market late this summer," wrote Chambers in a blog post. "You have to use it to believe it, but with a simple 'buzz' you’ll be able to transact with friends, family, colleagues and employees easier than ever before. Sometimes the most obvious solutions are the most elegant."

The Android platform may have gotten off to a late start compared to other operating systems, but PayPal using it for its NFC demonstration is no coincidence. By 2015, 500 million Android users will stretch across the globe, making it the dominant operating system for years to come, according to research by Global Industry Analysts.

The move to create an NFC-capable system comes after increased activity in the mobile payments market. According to a PayPal report released last month, mobile payments are expected to reach $3 billion this year, which is double the company's previous projection. Merchants using PayPal Mobile reportedly experience gainsof up to 37 percent.

Despite the positive outlook from PayPal, other research is even more enthusiastic for the mobile payments market. In fact, according to Forrester Research, mobile ecommerce is expected to reach $6 billion this year and approximately $31 billion by 2016, opening up the possibilities for mobile payment services even more.

Today, 8 million customers are using PayPal mobile to make purchases through their mobile devices, which is also an increase from the previous figure of 6 million, according to Chambers.

The market for NFC-capable devices is expected to grow at a rapid pace, which is exactly what PayPal is hoping for. Research by IHS iSuplli indicates that the number of NFC devices is projected to reach 550 million by 2015. To put this in perspective, only 50 million units were in the market in 2010.