Android phones “to replace your credit card”

Google’s next version of its Android smartphone software will support mobile payments.

Google chief executive Eric Schmidt showed off a yet-to-be-released phone with a Near Field Communications (NFC) chip that allows consumers to quickly pay for items by tapping the phone against a special terminal.

Schmidt said support for the technology will be integrated into the next version of its Android software, “Gingerbread”, which he said will be introduced in a few weeks.

“One way to think about it is, this could replace your credit card,” Schmidt said, speaking at the Web 2.0 conference in San Francisco.

Google had no immediate plans to develop any of its own mobile applications to take advantage of such payment capabilities, but Schmidt expected other companies to do so.

My guess is that there are going to be 500 new startups in the mobile payment space as these platforms emerge

“My guess is that there are going to be 500 new startups in the mobile payment space as these platforms emerge,” Schmidt said. He added that Google would partner with traditional credit card industry players, like payment processors, rather than compete with them.

While NFC technology has been available for years, interoperability with Google’s Android software should make the technology more widespread.

In a roundtable briefing with reporters, Schmidt said Google’s ability to marry its smartphone software with internet-based services enabled features like turn-by-turn driving directions and real-time foreign language translation, which distinguished it from rivals’ offerings.

“We would argue that our platform is better for applications that are network-resident and that need that kind of power,” Schmidt said.

Schmidt also said that the Chrome OS was set for release in a few months – later than expected – and was designed for devices with keyboards, suggesting tablets would stick with Android.

Facebook rival

Yesterday, Facebook unveiled a revamped version of its messaging system that could make it increasingly competitive with web-based email systems such as Google’s Gmail and Yahoo’s mail service.

Asked about Facebook’s potential effect on Gmail, Schmidt said that additional competition would be beneficial, and chided the press for focusing too much on the competition between Google and other technology companies.

“You all are focused on the competition, as opposed to the fact that the market’s getting larger,” Schmidt said. “And there’s no question that more entrants into communications technologies, mobile technologies and so forth, bring more people in.”