PayPal unveiled its first NFC (near-field communication) solution for Android today at the MobileBeat 2011 conference.Laura Chambers, senior director of PayPal Mobile, showed off how PayPal’s new NFC Android widget can be used to transfer money simply by tapping together two Nexus S phones.

How it works
You can either request to send, or request to receive, money via the new PayPal widget. Once the request is sent, you simply need to hold the phones together until they buzz, then enter your PayPal password or mobile PIN, to complete the transfer.

At the moment, the NFC transfers only work on the Nexus S since it’s the only Android phone with NFC capabilities.

PayPal’s NFC transfers rely on the technology’s peer-to-peer specification, Chambers told VentureBeat. The transaction takes place via an encrypted token between the devices, and it doesn’t touch the NFC secure element, a portion of the NFC chip for storing secure data like credit card information.