The soon-to-be-released Google Android Gingerbread mobile phone will include Near Field Communication (NFC) technology, allowing for mobile payments with the phone, Google CEO Eric Schmidt said this week at the Web 2.0 Summit in San Francisco, according to PC World.

An NFC chip installed in the phone gives it the capability to communicate via radio wave with a merchant’s point-of-sale device. To make a purchase, the customer will wave his Gingerbread near the POS device, and the charge will be placed onto his pre-selected payment account — whether it be credit card, bank account, PayPal or another account.

"This could replace your credit card," Schmidt said.

Payment via an NFC-enabled phone will be more secure than using a plastic card, he says, because the phone keeps the account number encrypted and password-protected. "The credit card industry thinks that the loss rate (for phone payments) is going to be much better. They're just fundamentally more secure," Schmidt said.