PayPal today issued an update to its Android app that will enable people to make payments to each other via near field communications enabled smartphones. This does not include consumer to merchant payments but rather is a widget geared towards making payments with friends or other PayPal using people that happen to have NFC on their devices.

PayPal has shunned NFC to this point in its mobile payments push. The company's stance has been "it will not be a hard thing for us to implement if we find that it gains popularity." Really, this new NFC sharing widget for Android does not change that stance at all. Peer-to-peer payments in PayPal are a service, not a business vertical. Essentially, this update for PayPal does not affect how the company will approach mobile payments.

PayPal does not make any money from peer-to-peer transactions. It is a feature that the company offers more or less because it can. Really, the best thing that peer-to-peer does for PayPal is give it insights into how people transfer money between each other through the data generated by each transaction.

The way PayPal makes it sound in the update to the Android app is that the new NFC feature is no different. It is a "hey, why not?" type of feature. Yet, it could be the set up for quite a bit more.

If PayPal tracks the data on peer-to-peer for trends (location, time of day, how much is being transferred, how far away are they) then the NFC rollout could be the first steps to tracking where, when and how to implement a possible NFC solution for smartphones.

There will be a wave of Android devices in 2012 that are NFC enabled. Right now there are only a handful with the Samsung Nexus S the most prominent of the bunch. This is a way for PayPal to have some type of NFC offering in the mix for when consumers get NFC devices in their hands and do not have much of a reason to actually use the feature.

We can imagine a dozen scenarios where independent merchants could use NFC payments. It comes back down to our well-worn farmer's market scenario - a farmer could use a NFC phone to accept PayPal payments from other PayPal Android users with NFC. While that seems cool, think of the limiting factors - both parties need NFC, Android, PayPal and a desire to do business. Finding two matching parties with those particular attributes right now is a niche within a niche.

By instituting the completely non-threatening peer-to-peer feature, PayPal sets itself up to widen the set of functionality down the line. For a company that is moving horizontally through the mobile payments sector, that shows surprising foresight.