Thompson, who officially starts on Monday, replaces Tim Morse, Yahoo's chief financial officer, who had been interim chief executive since September. Carol Batz was fired in September after two-and-a-half years on the job after failing to raise revenue or gain ground on Facebook, Google and other rivals.

Thompson will also join Yahoo's board of directors, which is currently looking to sell stakes in Asian Internet companies. The company may also sell a stake to private equity investors. When Batz was fired the board said it was considering the sale of all or part of the company.

At PayPal, Thompson grew revenue to $4 billion from $1.8 billion and increased the number of users to 104 million from 50 million in 190 countries.

"Yahoo! has a rich history and a solid foundation to build on, and its continued user engagement is one of the many reasons for my enthusiasm," he said in a statement. "Clearly speed is important but we will attack both the opportunity ahead and the competitive challenges with an appropriate balance of urgency and thoughtfulness."

The current mobile payments market centers around several cores: direct carrier billing, mobile wallets, online and offline sales, mobile credit card readers and application stores. During meetings with various mobile payments experts and executives at CTIA last week, the most uttered phrase was: "This is not something I would use to buy a fridge." Where are mobile payments going?

Editor's note: This story is part of a series we call Redux, where we're re-publishing some of our best posts of 2011. As we look back at the year - and ahead to what next year holds - we think these are the stories that deserve a second glance. It's not just a best-of list, it's also a collection of posts that examine the fundamental issues that continue to shape the Web. We hope you enjoy reading them again and we look forward to bringing you more Web products and trends analysis in 2012. Happy holidays from Team ReadWriteWeb!

The Non-Promise of NFC

OK, let us get one thing straight: NFC may never be a widely used form of payments. There are so many reasons why it will not be. Foremost, the logistics of NFC are a nightmare. The actual technology is probably ready. The infrastructure around the technology is not. There are too many competing interests coming from above the retail market that creating a universal NFC reader between smartphones and financial services is not going to happen anytime soon. The closest thing to a widely used system would be Mastercard's PayPass, but even as widespread as that is, it is no where near the type of market penetration that would create an inflection point for NFC to take off. Second, PayPass needs a software upgrade to offer any type of deals, something that will be important in the mobile payments world.

See our series on NFC In 2011 for more on the world of NFC payments.

NFC payments on the top of Gartner's Hype Circle

The second half of the NFC conundrum is that there are a lot of hands reaching for the supposed pile of money that NFC payments will enable. Look at Google's announcement of the Wallet product. Or the ISIS partnership between Verizon, T-Mobile and AT&T. Google is partnering with Mastercard, CitiBank, Sprint, FirstData, Verifone, VivoTech (the NFC partner), Hypercom, Ingenico and NXP (another NFC partner). All of these large companies are going to want a slice of the pie.

Where does that leave the retailers? You know, the ones that are actually trying to make money with good and services? Sadly, on the outside of the circle. The carriers are the biggest culprits, wanting to take as much as 50% of transaction revenue because it is "going over their pipes." The financial services companies will be happy taking their normal rates in the 1.75% to 3% range as long as there is a promise that more people will pay electronically (read: sans cash). Between retailers, partners and infrastructure, NFC has years to go before it will be viable for all parties involved.

Can the Google Wallet project really push NFC adoption?

What will happen in this time frame? Think about the so-called "4G" technology WiMax. The technology is already becoming antiquated with LTE and all the major carriers are working on the next version after that. Sprint is keeping a hybrid of WiMax and LTE going forward but overall it is a tech that died before it even matured. NFC may be the same. What if there are massive leaps in quantum teleportation in the next several years? Does NFC become the WiMax of the payment world?

Maturation Of Direct Carrier Billing

The "I do not see myself buying a fridge with this" line comes mostly from the direct carrier folks. Direct carrier billing is the perfect area for micro-payments and payments that stem from ease of use. Think of parking. If you could pay for your parking on the street with your phone, would that convenience be worth an extra couple of cents on the dollar to you?

The direct to carrier ecosystem has evolved to the point where it actually makes sense for offline and online use. Zong (acquired by eBay for PayPal integration), PaymentOne and Boku are the leaders in this space. PaymentOne has processed $5 billion in mobile payments and lets users pay with their phone numbers, validating transactions via text. Zong allows that capability as well.

Payment One's "One Care" features, announced last week at CTIA, makes direct to carrier billing safe and secure. Transparency is important in mobile commerce because consumers do not really trust their phones to handle their money quite yet.

The most important aspect of direct to carrier billing now is that the revenue mechanism has been flipped. It used to be that merchants only got some 40% or less of payments while the carriers and partners took the rest. Even with high margin transactions, that is unacceptable. Today, direct to carrier billing provides the merchants with more than 80% of the revenue, sometimes nearly 95%.

The Dongle World: Smartphones As Credit Card Readers

Square, VeriSign and Intuit are pushing hard into the dongle department. Jumio is doing the same thing, just without the dongle. There is not much to be said about the dongle world that we have not already touched on at ReadWriteWeb outside of the notion that it is bringing easy credit card readers to the mobile masses.

The dongle competitors are not worried about what is happening in the ecosytem because it does not really touch their core business. For instance, PayPal does not see NFC or dongles infringing on its business in any way, shape or form. As Laura Chambers, PayPal's head of mobile, said in a recent interview, "we are not worried about much in the ways of competition. There is a lot of white space in the industry for horizontal movement."

What Is PayPal Really Doing?

In the interview with Chambers, the first question I asked was, "Why does it seem like PayPal has become a "me too" operator in mobile payments?" It is a fair question, even if Chambers balked to acknowledge that PayPal has been in "me too" mode for the last year or so. PayPal has ignored the dongle movement and NFC is not on its radar as a technology it feels it needs to integrate.

"What is the difference between a tap versus a swipe?" Chambers asked. "We are working with what works in the current infrastructure ... We have sat down with consumers and merchants to work with them on what they want."

PayPal is growing sideways because there is not a ton of room right now to grow vertically.

PayPal will get into NFC solutions when the time is appropriate. Its strategy now is to create as much flexibility for consumers as possible through its mobile wallet program. PayPal's stance is data driven - the company can track when and what consumers buy from mobile phones and tablets. Hence, PayPal is focusing on the shopping end of the spectrum, as opposed to a pure payments play.

"60% of people buy more and spend more on mobile," Chambers said. "But, we see that people are not really buying different things on mobile ... the No. 1 driver of growth in mobile payments is boredom."

That fits in well with what PayPal sees as "couch commerce." They released a study recently saying that mobile shopping is going to boom this holiday season. As such, PayPal is ready to deploy an end-to-end solution for merchants and consumers to reward loyalty and provide deals and offers along with digital receipts.

PayPal believes that it has a lot of room to grow in mobile through these types of horizontal movements. We are also seeing this on a non-mobile front with eBay partnering with Facebook and the Open Graph API and the new X.Commerce initiative that consolidates the PayPal, Zong, Magento, RedLaser and Milo technologies. The company is calling it an "open commerce ecosystem."

Future Of Mobile Payments

This article is the first in a series of the trends in mobile payments that ReadWriteWeb will be working on in the next several months. There are a lot of questions and the answers are just beginning to emerge. Who are the winners in the space? Are retail shops in danger of "becoming expensive fronts for online shopping," as Chambers said in the interview? Does NFC really have potential to disrupt offline payments or is it just cool technology? These questions and more are what we will be tackling in the months to come.

Back in September, PayPal predicted that mobile payments would explode this holiday season. That seems to be true, at least thus far.

Did you shop from your couch today and last night? Tell us about your experience in the comments below.

PayPal and Facebook want to bring together the world's biggest social network, and the world's largest online payments company - and e-cards may be the bridge to making that happen.

PayPal and eBay have come out with new infographics today to show just how well the companies are doing in the mobile realm. It is really kind of ostentatious actually. PayPal specifically realizes that it has lost a lot of the consumer mindshare in mobile payments with everybody talking about how NFC may or may not change how payments fundamentally work. Check out the stats and infographics below.

I cannot quite be sure if PayPal is creating the "couch commerce" prediction out of thin air or if that is something that people have actually been doing. Couch commerce is when a person is sitting at home, usually at night, and shopping via their smartphone or tablet. Laura Chambers, PayPal's head of mobile, said in an interview at CTIA in San Diego in October that the company sees a lot of data on people's spending habits and that there is lot of traction for evening shoppers.

Take a look at the infographics below. Tell us, are you shopping from your couch after Thanksgiving dinner?

The current mobile payments market centers around several cores: direct carrier billing, mobile wallets, online and offline sales, mobile credit card readers and application stores. During meetings with various mobile payments experts and executives at CTIA last week, the most uttered phrase was: "This is not something I would use to buy a fridge." Where are mobile payments going?

OK, let us get one thing straight: NFC may never be a widely used form of payments. There are so many reasons why it will not be. Foremost, the logistics of NFC are a nightmare. The actual technology is probably ready. The infrastructure around the technology is not. There are too many competing interests coming from above the retail market that creating a universal NFC reader between smartphones and financial services is not going to happen anytime soon. The closest thing to a widely used system would be Mastercard's PayPass, but even as widespread as that is, it is no where near the type of market penetration that would create an inflection point for NFC to take off. Second, PayPass needs a software upgrade to offer any type of deals, something that will be important in the mobile payments world.

See our series on NFC In 2011 for more on the world of NFC payments.

NFC payments on the top of Gartner's Hype Circle

The second half of the NFC conundrum is that there are a lot of hands reaching for the supposed pile of money that NFC payments will enable. Look at Google's announcement of the Wallet product. Or the ISIS partnership between Verizon, T-Mobile and AT&T. Google is partnering with Mastercard, CitiBank, Sprint, FirstData, Verifone, VivoTech (the NFC partner), Hypercom, Ingenico and NXP (another NFC partner). All of these large companies are going to want a slice of the pie.

Where does that leave the retailers? You know, the ones that are actually trying to make money with good and services? Sadly, on the outside of the circle. The carriers are the biggest culprits, wanting to take as much as 50% of transaction revenue because it is "going over their pipes." The financial services companies will be happy taking their normal rates in the 1.75% to 3% range as long as there is a promise that more people will pay electronically (read: sans cash). Between retailers, partners and infrastructure, NFC has years to go before it will be viable for all parties involved.

Can the Google Wallet project really push NFC adoption?

What will happen in this time frame? Think about the so-called "4G" technology WiMax. The technology is already becoming antiquated with LTE and all the major carriers are working on the next version after that. Sprint is keeping a hybrid of WiMax and LTE going forward but overall it is a tech that died before it even matured. NFC may be the same. What if there are massive leaps in quantum teleportation in the next several years? Does NFC become the WiMax of the payment world?

Maturation Of Direct Carrier Billing

The "I do not see myself buying a fridge with this" line comes mostly from the direct carrier folks. Direct carrier billing is the perfect area for micro-payments and payments that stem from ease of use. Think of parking. If you could pay for your parking on the street with your phone, would that convenience be worth an extra couple of cents on the dollar to you?

The direct to carrier ecosystem has evolved to the point where it actually makes sense for offline and online use. Zong (acquired by eBay for PayPal integration), PaymentOne and Boku are the leaders in this space. PaymentOne has processed $5 billion in mobile payments and lets users pay with their phone numbers, validating transactions via text. Zong allows that capability as well.

Payment One's "One Care" features, announced last week at CTIA, makes direct to carrier billing safe and secure. Transparency is important in mobile commerce because consumers do not really trust their phones to handle their money quite yet.

The most important aspect of direct to carrier billing now is that the revenue mechanism has been flipped. It used to be that merchants only got some 40% or less of payments while the carriers and partners took the rest. Even with high margin transactions, that is unacceptable. Today, direct to carrier billing provides the merchants with more than 80% of the revenue, sometimes nearly 95%.

The Dongle World: Smartphones As Credit Card Readers

Square, VeriSign and Intuit are pushing hard into the dongle department. Jumio is doing the same thing, just without the dongle. There is not much to be said about the dongle world that we have not already touched on at ReadWriteWeb outside of the notion that it is bringing easy credit card readers to the mobile masses.

The dongle competitors are not worried about what is happening in the ecosytem because it does not really touch their core business. For instance, PayPal does not see NFC or dongles infringing on its business in any way, shape or form. As Laura Chambers, PayPal's head of mobile, said in a recent interview, "we are not worried about much in the ways of competition. There is a lot of white space in the industry for horizontal movement."

What Is PayPal Really Doing?

In the interview with Chambers, the first question I asked was, "Why does it seem like PayPal has become a 'me too' operator in mobile payments?" It is a fair question, even if Chambers balked to acknowledge that PayPal has been in 'me too' mode for the last year or so. PayPal has ignored the dongle movement and NFC is not on its radar as a technology it feels it needs to integrate.

"What is the difference between a tap versus a swipe?" Chambers asked. "We are working with what works in the current infrastructure ... We have sat down with consumers and merchants to work with them on what they want."

PayPal is growing sideways because there is not a ton of room right now to grow vertically.

PayPal will get into NFC solutions when the time is appropriate. Its strategy now is to create as much flexibility for consumers as possible through its mobile wallet program. PayPal's stance is data driven - the company can track when and what consumers buy from mobile phones and tablets. Hence, PayPal is focusing on the shopping end of the spectrum, as opposed to a pure payments play.

"60% of people buy more and spend more on mobile," Chambers said. "But, we see that people are not really buying different things on mobile ... the No. 1 driver of growth in mobile payments is boredom."

That fits in well with what PayPal sees as "couch commerce." They released a study recently saying that mobile shopping is going to boom this holiday season. As such, PayPal is ready to deploy an end-to-end solution for merchants and consumers to reward loyalty and provide deals and offers along with digital receipts.

PayPal believes that it has a lot of room to grow in mobile through these types of horizontal movements. We are also seeing this on a non-mobile front with eBay partnering with Facebook and the Open Graph API and the new X.Commerce initiative that consolidates the PayPal, Zong, Magento, RedLaser and Milo technologies. The company is calling it an "open commerce ecosystem."

Future Of Mobile Payments

This article is the first in a series of the trends in mobile payments that ReadWriteWeb will be working on in the next several months. There are a lot of questions and the answers are just beginning to emerge. Who are the winners in the space? Are retail shops in danger of "becoming expensive fronts for online shopping," as Chambers said in the interview? Does NFC really have potential to disrupt offline payments or is it just cool technology? These questions and more are what we will be tackling in the months to come.

PayPal is predicting that mobile payments is going to boom come time for the holiday shopping spree. In a survey conducted by PayPal and research firm Ipsos, half of mobile payments users plan on making a purchase with their device when the holiday shopping season starts after Thanksgiving. Check out the infographic below for more details.

The survey was conducted in August 2011 of consumers who had made a purchase with their mobile device. So, the results can be a little misleading for the industry as a whole. Those who have made a mobile purchase once are most likely to do so again, which should be noted when viewing the stats below. PayPal also claims that most mobile payments of retail goods (note, NOT digital like apps, songs or games) was above $100, according to the survey.

PayPal believes that most mobile purchases will be made from home. Hence, they are calling the trend "couch commerce."

Are you going to be using your smartphone or tablet to make purchases of physical goods this holiday season? Let us know in the comments.

The WikiLeaks story has yet to end, despite the fact that some have theorized it soon will. So here is a second part to the timeline, covering all the stories from December 30 of last year down to the present.

"Last week a U.S. Justice Department court order was made public that directed Twitter to provide information on several of its users. The subpoena was made in conjunction with an investigation the U.S. Attorney General is making into the actions of the whistle-blower site Wikileaks and its leader, Julian Assange."

Wikileaks Calls for Sarah Palin's Arrest January 10, 2011

"The official Twitter account for Wikileaks has posted a press release this evening drawing a comparison between the controversial rhetoric from public figures that some believe contributed to the attempted assassination on Saturday of Arizona congresswoman Gabrielle Giffords and the even more explicit calls from public officials for violence against Wikileaks spokesperson Julien Assange and others. The organization called for public figures making such calls to violence to be arrested and charged with crimes."

Evidence Stuxnet May Be an American-Israeli Collaboration January 18, 2011

"Among additional evidence that this was a U.S.-Israel attack...US succeeded in stopping an April 2009 delivery of Siemens controllers to Iran, according to several Wikileaks-released cables."

Police Arrest 5 Men Over "Anonymous" DDoS Attacks January 27, 2011

"British police have arrested five people for their alleged participation in some of the highly publicized DDoS attacks last month... The five are being held on suspicion of being involved in Anonymous, the loose affiliation of so-called hacktivists who have targeted a number of websites, including MasterCard, Visa and PayPal, with distributed denial of service attacks. These attacks followed WikiLeaks' release of U.S. diplomatic cables in late November, and were aimed to punish companies who'd shut down WikiLeaks' access to financial resources."

Wikileaks Competitor OpenLeaks Opens Doors January 27, 2011

"In September, a number of Wikileaks' partners quit that organization, complaining that its leader, Julian Assange, was too tyrannical and careless. In November, they announced they were creating a competing leaks service, called OpenLeaks. In December, it was supposed to go live. Now, in January, it has."

WikiLeaks Nominated for Nobel Peace Prize February 2, 2011

"WikiLeaks has been nominated for the 2011 Nobel Peace Prize, according to the Norwegian politician behind the proposal. The nomination of WikiLeaks was put forward by parliamentarian Snorre Valen, saying that the site was "one of the most important contributors to freedom of speech and transparency.'"

Leaked Security Firm Documents Show Plans to Discredit WikiLeaks, Glenn Greenwald February 10, 2011

"(T)he loose collective of online vigilantes - Anonymous - responded to a story in the The Financial Times and the actions of HBGary's CEO Aaron Barr by hacking into the company's systems and releasing tens of thousands of its emails and documents. Among those documents, an outline of plans to systematically discredit WikiLeaks, along with Salon journalist (and WikiLeaks supporter) Glenn Greenwald."

PayPal Freezes Donations to Bradley Manning Defense Fund [Updated] February 24, 2011

"Update: PayPal has just posted a press statement to its blog, stating that 'we have decided to lift the temporary restriction placed on their account because we have sufficient information to meet our statutory 'Know Your Customer' obligations.'"

British Court Orders WikiLeaks' Julian Assange Extradited to Sweden February 24, 2011

"A British court has agreed to extradite WikiLeaks founder Julian Assange to Sweden to face rape charges. His attorneys have said they will appeal the decision."

Alleged Wikileaks Leaker Faces Death Penalty March 2, 2011

"Bradley Manning, the U.S. Army private who allegedly passed classified documents to the whistle-blowing site Wikileaks, has just been charged with 22 additional counts, according to his attorney, Lieutenant Colonel David Coombs. Among these are 'aiding the enemy,' a capital offense."

First Academic Paper on WikiLeaks March 31, 2011

"Mark Fenster, Research Foundation Professor at the Frederic Levin School of Law at the University of Florida, has become the first academic to publish a paper on the implications of Wikileaks. The paper is titled 'Disclosure's Effects: WikiLeaks and Transparency.'"

WikiLeaks Makes Volunteers Sign Non-Disclosure with $20 Million Penalty May 12, 2011

"Calling all of the material leaked to the organization, the 'property' of Wikileaks, the agreement repeatedly treats the material as commercial product."

Just When You Thought It Was Safe to Go Back in the Water... Sony Pictures Hacked June 2, 2011

"On the heels of a Memorial Day weekend hack of the PBS website - an act of retribution for an unflattering Frontline report on Wikileaks, the prankster-hackers LulzSec have found their next target. And it's a target that's just recovering from another security breach, namely Sony."

Adrian Lamo Speaks About His Wikileaks Role June 4, 2011

"A central figure in the famous Wikileaks/Manning "cablegate" case from last year is Adrian Lamo, the "homeless hacker" who snitched on Manning to the feds and led to the latter's imprisonment. I first met Lamo about ten years ago, when he surprisingly took me up on an offer to spend the night in my New York apartment and come in to talk to a high school networking class I was teaching at the time."

Wikileaks Loses Control Over Diplo Cables, Exposes Sources [UPDATED] August 29, 2011

"Unedited versions of the United States diplomatic cables that Wikileaks has released over the last year have gone public, exposing sources around the world to possible recriminations. According to German news magazine, Der Spiegel, based on an original report in Der Freitag, a convergence of screw-ups involving the group's former German spokesman Daniel Domscheit-Berg and an external contact of Wikileaks leader Julian Assange wound up throwing the doors open to the full, unedited materials."

WikiLeaks May Be Petering Out September 8, 2011

"Peter Dorling, of the Sydney Morning Herald, who has followed the news surrounding Wikileaks and its Australian founder from the beginning, has published a fascinating, fair-minded story that theorizes an end to Wikileaks. After accidentally allowing the publication of their remaining diplomatic cables - which, along with the publication of the password to those cables in a book by two Guardian reporters made them public - Dorling believes there is not much left for WikiLeaks to do. Their leak-submission function has not in fact functioned for a year and there does not seem to be another Bradley Manning hidden in the wings."

Those arrested have been charged with conspiracy, which carries a maximum penalty of five years in prison and a $250,000 fine, and with intentional damage to a protected computer, which carries a maximum sentence of 10 years in prison and a fine of up to $250,000.

Anonymous leads PayPal boycott. The group, which is owning this week's hacking news, has launched "Operation PayPal," a boycott action against the online payment company. PayPal was a prior target of an Anonymous DDoS attack due to its refusal to handle payments to Wikileaks. (Remember them?)

Anonymous and LulzSec lead Pwnie nominations. They go head to head in competition for "Most Epic FAIL" and "Epic 0wnage." The Pwnies - pronounced "ponies" and whose award is a golden My Little Pony statuette - "is an annual awards ceremony celebrating the achievements and failures of security researchers and the security community." This summer's ceremony, the fifth annual, will take place on August 3 at the Black Hat Technical Security Conference at Caesar's Palace in Las Vegas.

4.8 million documents stolen from JSTOR, 18K academic papers uploaded to Pirate BayT. An archive containing over 18,000 scientific papers, downloaded from the academic journal database JSTOR, has been uploaded to The Pirate Bay, where they're now available as a torrent.

The papers were uploaded by a user named Greg Maxwell who says that his decision to make the large quantity of scientific papers available was a response to the indictment earlier this week of early Reddit-er and Demand Progress founder Aaron Swartz. Swartz has been charged with felony hacking and computer fraud for downloading some 4.8 million papers from JSTOR and faces 35 years in prison.

Chinese journalist attacked by hackers. Zhao Hejuan, a reporter for the Beijing-based Caixin Media, saw her Gmail account hacked. Hejuan was sent a Gmail security alert by Google on July 21, according to a statement by her company. She was in the midst of a story on child trafficking for Caixin Magazine. The attack originated from the same region where Zhao was reporting, Longhui county in Hunan Province. Subsequent investigation showed she had been hacked every day since July 19.

Webcam photo by Cory Doctorow

The widget will arrive later this summer, the company said.

It's no surprise then, that PayPal is joining in with its own implementation of NFC. As a top provider in the payments space, it had no choice but to participate in this emerging trend.

PayPal Does NFC on Android

The application itself looks great. In the demo (see the video here), a PayPal user can either send money or receive money using the widget. After one person initiates the request, both people just tap their phones together until they buzz. That means the data transfer is complete. However, for security purposes, users do have to complete the transaction with the entry of a PIN or password.

It's a lot like how the contact sharing mobile app Bump works, except that the underlying technology is different. Bump uses sensors on both iPhones and Android, while NFC requires the use of a special chip in the phone itself, something that's still somewhat a rarity on today's smartphones. Today's demo involved Samsung's Nexus S, but other NFC phones are on their way, including the upcoming BlackBerry Bold (9900/9930) devices, Nokia's Astound, variants of the Samsung Galaxy S II and others.

Recently, PayPal made another acquisition aimed at bolstering its mobile presence: Zong, a mobile payments company that specialized in carrier billing. Zong enabled end users to pay for digital items like virtual goods and in-app purchases, by having those items charged to their phone bill. NFC, however, is more often associated with paying for physical goods - like store-bought items from a local retailer. By attacking on both fronts - virtual and physical - it's clear that PayPal is aiming to retain its place among the top payments companies even as the technologies surrounding payments around are revolutionized by the mobile platform.

By buying Zong, eBay is attempting to position PayPal to be a leader in mobile payments for the years to come. Mobile payments are expected to be a $670 billion industry by 2015 according to report from Juniper Research. Zong is a middleman connection between merchants and telephone companies that allows users to make mobile purchases with carrier billing. Can Zong keep PayPal relevant in the mobile payment arms race that includes Google, Square, Verifone and many others?

The idea is to be able to use PayPal with the nine million merchants worldwide that accept the payment from the platform. Users can also buy digital goods with PayPal through Zong. PayPal expects to process $3 billion in mobile payments in 2011. Juniper said that mobile payments will be a $240 billion industry segment this year.

PayPal is definitely feeling the pressure of the competition. When Google Wallet was announced, PayPal executives were one of the first to offer comments to ReadWriteWeb. Here is what Anug Nayar said at the time:

"Put simply - before you try mobile (or any other payments) solution, you need to be great at payments. There is so much more than just technology involved to get payments right ... Any new solution must deliver something better than the existing way to do it. Not just different ... better."

Will Zong make PayPal better? Probably. It will also help it become a more ubiquitous option among all cellphones (smart and feature phones) devices across the world, which could make it a very important acquisition for eBay.

Google announced both Google Wallet and Offers today, which give users the ability to process payments through smartphone via NFC. Google Wallet will first be available for Nexus S Android phones via Sprint this summer and expand to other NFC-capable phones over time. The initial rollout will be in New York City and San Francisco. Wallet will first support a Citi MasterCard wherever MasterCard PayPass is accepted as well as a prepaid Google card. Now that NFC mobile payment is finally a reality, will it be a game changer in how people pay?

The original online payments leader, PayPal, expressed skepticism that Google can be a leader in payments.

"As the mobile payment leader (we expect $2 billion in payment volume to transact over mobile devices via PayPal in 2011), we'd be happy to comment," said PayPal spokesperson Anuj Nayar. "Put simply - before you try mobile (or any other payments) solution, you need to be great at payments. There is so much more than just technology involved to get payments right ... Any new solution must deliver something better than the existing way to do it. Not just different ... better."

Google rolled out the partners for the announcement today and there are some heavy hitters on the list: Citi is the bank behind the service, First Data is a point-of-sale company that handles 40 billion transactions a year, Verifone and Sprint will be the original handset provider through the Nexus S. Between Citi and First Data, there is enough payment knowledge that PayPal is now on notice as well.

Offers Goes After Groupon & Daily Deals

Groupon has yet another competitor as Google will deliver Offers to email inboxes and there will be deals through check-ins, online advertisements and Google Places. Groupon has partnered with Loopt and possibly with Foursquare in the past week, but the difference between Google Wallet and Groupon is that Wallet will be an app on any Android NFC phone, which according to Google, should be 150 million devices worldwide by 2014.

"This is not just an announcement, this is a real project," said Google's Osama Badier, a former top executive at PayPal.

Wallet & NFC Will Be Secure

One of the issues surrounding mobile and online payments has been security. Google said that it has taken industry best practices and added an additional layer on top. Payment information will be encrypted on the phone and the transaction will be secure between the merchant POS system and the security chip that manages the wallet on the smartphone. The wallet cannot be used unless it is unlocked with a PIN and NFC will be disabled if the phone's screen is off.

"We took the industry standard best practices with PayPass and smart card-based payments and wanted to make sure we added extra on top of that to really protect consumers and their credit card information," said Robert von Behren, one of the co-founders of the Google Wallet project. "This chip has a lot of security baked into it and this is where we are storing the credit card information."

Coming Soon...But Not Too Soon

While Google Wallet and Offers are cool, it may take a while for the technology to become mainstream. Smartphones sales are increasing exponentially and within the next several years most people will own some type of smart device with NFC enabled. But, if you thinking about paying for your Christmas presents with your phone this winter, you probably will not be able to. Holiday season 2012 is more likely.

"This will accelerate the growth of NFC technology and handset adoption, however, it is still at least 1-2 years away from mass adoption and significant market penetration," said Dan Trigub, VP of business development at mobile advertising specialist Blue Bite. "That said, this will help advance the adoption and awareness of the technology as we are very excited about it. Likewise, given the growth of the mTAG and our NFC content delivery platform, this is something that we would ultimately want to integrate and offer through our network as well."

The news about Google Wallet broke last night after an internal memo from The Container Store was leaked on ThisIsMyNext.com and NFC company ViVoTech let slip the news as well to TechCrunch.

It looks like PayPal has mobile on the mind. Last week, parent company eBay bought the location-based media company Where and today, PayPal announced that it has acquired Fig Card.

PayPal has been working on a number of ways to enable mobile payments, from bumping iPhone together to using NFC chips, but this acquisition could focus on giving merchants the ability to accept mobile payments quickly, easily and cheaply.

PayPal doesn't make any mention of its plans for Fig Card, other than that founders Max Metral and Hasty Granbery will be joining the team, but it seems likely that this sort of technology could help ease mobile payments into the mainstream. While NFC is certainly on the way, it won't be ubiquitous for some time. According to a report by Juniper Research, one in five smartphones will have the technology by 2014, but how many point-of-sales systems will be NFC enabled? A low cost device, such as the one offered by Fig Card, could make the transition to mobile payments for vendors much easier.

Take a look at Fig Card demo video below:

Users will be able to send or receive money from their Serve accounts, which can be funded by a bank account, debit or credit card, or by money from another Serve account. With the new AmEx digital payment system, consumers will be able to make payments via the Serve website, via their mobile phones, and with merchants who accept American Express cards. Accounts will be accessible via Android and iPhone apps and through Facebook.

According to American Express' Dan Schulman, "We intend to quickly evolve the Serve platform by adding new features and functionality as we learn from consumer and merchant experiences. To encourage a broad cross-section of people to experience the benefits and convenience of Serve, we are working with a range of partners to integrate Serve as a payment method and deliver customized offers, and we will waive most consumer fees for the next six months."

Wooing Customers Away from PayPal

The lack of fees might be a good way to lure new customers, but AmEx says those fees won't be high after that initial six month period. Customers will be charged for putting money into their Serve accounts - 2/9% plus a $0.30 per load - and will be charged for ATM cash withdrawals - $2 after one free withdrawal per month.

The move of both Visa and American Express to start offering these P2P online payments is a clear indication that credit card companies are recognizing that online payments are reshaping financial transactions. As both of these giants gun for what has long been PayPal's market, it will be interesting to watch if the competition makes things better for consumers, who will now have more choices in how they can send and receive money online.

Along the way, PayPal has been experimenting with different types of technology, including everything from barcode scanning to NFC (near field communication).

In short, PayPal's vision for mobile is a "wallet in the cloud." Within this wallet, a customer could select any one of their payment instruments to make a purchase - a credit card, a debit card, a particular bank account, etc. But this vision isn't just for smartphones - PayPal wants to expand to every other Internet-connected device, too, including set-top boxes, TVs and even billboards. For example, PayPal would like to be a payment option embedded in the signage advertising a particular movie - just tap the sign and purchase tickets right there on its digital screen. It could also show up in signage related to local transit systems, too, so you could use PayPal to buy your train ticket or subway pass.

But PayPal knows that mobile payments aren't just a necessity for modern societies with smartphones and Web-connected TVs, it also has a place in the developing world. On this front, there have been recent initiatives to address this market, like Paypal's agreement with VIVO, the largest mobile phone service provider in Brazil and the southern hemisphere. Under the new agreement, subscribers can send in payments for airtime, goods and services using their mobile phones. The technology doesn't require an "app" to work, but instead uses USSD technology, which provides a menu directly on the phone where different payment choices can be made. (USSD is a protocol used by GSM devices for basic data communication.)

Technology Experimentation

When asked about NFC (near field communication), a short-range wireless technology for data exchanges between devices, and most often associated with digital wallet initiatives, Sisinni stressed that PayPal is not betting on just this one new technology. The company's goal is to be a "technology agnostic wallet in the cloud," he said. The service has to be ubiquitous. It has to work on any device, running any operating system.

That said, PayPal has been experimenting with NFC though its partnership with Bling Nation, an NFC-based startup where consumers stick "BlingTags" (NFC-enabled stickers) on their phones to pay for goods and services in the real world. When used at participating merchants, the money is deducted from the user's PayPal account just by tapping or waving their phone at checkout.

PayPal also acquired the popular barcode-scanning application RedLaser from Occipital last summer, and now provides that same technology to other mobile developers through a software development kit. This kit lets third-party developers build apps that use RedLaser's scanning technology in apps of their own creation.

Another experimentation was the integration of Bump into PayPal's mobile applications. With Bump's technology, users can tap their phones together to send money.

This sort of experimentation with new technology will continue over the next few years, Sisinni says. But at the end of the day, PayPal just wants to make sure it's a discoverable choice when there's an option to pay - whether with your computer, your phone, your tablet or whatever device comes next.