Samsung has announced a new NFC chip with flash memory, adding to the momentum around Near Field Communication (NFC) technology that will enable point-of-sale payments via mobile phone.

NFC is a short-range (up to 10cm or 4inches), high frequency wireless communication technology which allows devices such as smart phones to collect or transmit data to another NFC-enabled device without manual configuration to identify devices. In addition, NFC chip can play a role as a contactless smartcard in use for public transportation payments for bus and subway fares and mobile banking payments. It can also read RFID tags in retail stores or on outdoor billboards for convenient on-the-spot data access.

The announcement comes at about the same time as Google announced the Samsung-made Nexus S — the first phone to use the new Android OS called Gingerbread. The camera comes with built-in NFC technology, as well as a front and rear-facing camera to enable video conferencing.

“NFC is recognized throughout the industry as an easy and effective way to transmit encrypted information between mobile devices or between mobile devices and other stationary NFC-enabled devices such as kiosks,” said Tae-Hoon Kim, vice president of DDI and C&M marketing, System LSI Division, Samsung Electronics. “As momentum builds for adoption of NFC technology in next-generation/ upcoming smart phones, we look forward to securing a competitive footing in NFC-based solutions with our new NFC technology, offering powerful mobile characteristics such as low power design and advanced RF sensitivity.”

The Samsung NFC chip will be ready for mass production in Q1 2011.

Samsung is well established in releasing Android smartphones, and with Android smartphones now holding a 23% market share, Samsung seems well positioned to ride the wave toward NFC mobile payments.