Microsoft planning NFC mobile payments for Windows Phone 8

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Microsoft plans to include Near Field Communication (NFC) technology in Windows Phone 8. NFC support will allow for mobile payment features in the next version of the Windows Phone operating system, according to two people familiar with the plans cited by BusinessWeek.

The first Windows handsets that would allow users to pay for items in stores by bumping their device against a compatible cash register may be released as soon as this year. In addition to payments, NFC also lets consumers use their phones to redeem coupons and loyalty points at local merchants.

Microsoft holds 14 patents referencing NFC according to the US Patent Office. Still, the software giant will likely get a lot of backing in its mobile payments effort from Nokia, the biggest handset maker that recently said it would switch to using Windows Phone as the primary OS for its smartphones. Nokia already said it plans to make NFC a standard feature of Symbian smartphones this year.

Google added NFC to the release of Android 2.3 and the Nexus S (codenamed Gingerbread) in December 2010. Despite this early start, Google is still working out the mobile payment system for Android; it reportedly only recently teamed up with MasterCard and Citigroup.

If Microsoft wants to keep up with Google, it will need to partner with similar companies in time for the release of Windows Phone 8. NFC is one of those technologies that won't get adopted en masse unless users look around and notice that they could be using it. For this to happen, support has to arrive in stores first.

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