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Near Field Communication and all contactless technology

BARCELONA – Smartphones that can pinpoint a person’s location, know his interests and tap to pay with NFC should "revolutionize electronic commerce as well as payments," said Google CEO Eric Schmidt today at the Mobile World Congress in Barcelona.

Schmidt, responding to a question following his keynote presentation this evening, described a little bit more of the company’s vision for how NFC-enabled smartphones could be used for mobile promotions and payments.

"There is another mega-scale opportunity right in front of us," he said. "This phone has this chip called the NFC chip. It has basically an 80-character secured element that is very difficult to break. It’s encrypted. And it could be used as a secure ID for electronic transactions."

Schmidt, who will step aside as CEO in April but will stay on at Google with the title of executive chairman, gave the example of himself walking down the street carrying his NFC phone, with shops on each side:

The phone "remembers I need new pants or need some new product," he said. "And it knows where I am, and it knows ahead of me there is a store on the left and a store on the right, and one is going to offer me a 20% discount, and one is going to offer me a 30% discount."

The phone would show him the two offers, he continued. "It’s programmed that I’m a cheapskate; that’s why I always take the biggest discount. And it tells me to turn right. I walk in the store. The store knows I’m coming. The pants are ready."

Schmidt then indicates a tapping motion with his phone, as he quickly pays. He would pick up the pants and leave the store. No hassle or fuss.

"You don’t think this is going to work, guys? Trust me, this is consumerism," he said.

Schmidt noted that consumers would have to opt in to such a mobile-promotion and shopping service, so that the application and databases located on the "cloud" would be able to act on their likes and dislikes and buying patterns.

Schmidt didn’t say anything about Google offering a payment service itself, though speculation continues that it would be involved in the payment transaction. Some observers say the company would at least have to have access to the data on the consumer’s buying habits in order to roll out a mobile-advertising or promotion service.

Google is building a mobile wallet that would be a default app for its Android mobile operating system and would allow banks or other service providers to put their applications in it, sources have told NFC Times.

Schmidt in November first publicly endorsed NFC technology at another conference, holding up what later turned out to be the Nexus S NFC phone and proclaiming that the device could "replace your credit card."

In his reference to NFC tonight, which only lasted a few minutes, Schmidt initially stumbled on the meaning of the NFC acronym, only getting the "Near Field" portion of it.

His keynote focused in general on the promise of smartphone technology and cloud computing to improve people’s lives.