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As far I know NFC tags are quite simple. They contain small amount of data, from several bytes to few kilobytes. NFC / RFID readers receive that data. They can also write back some data to read it later.
I thought that NFC payments are more secure than traditional magnetic cards where whole security is based on one secret number.
So how do NFC payments are implemented? I am especially interested in implementations which we’ll have on Android devices. Please describe only high level algorithm.
On a bit lower level NFC works using so-called NDEF protocol (NFC data exchange format). Basically NDEF consisting message->record->payload. Payload where application specific information goes. It depends solely on application which kind of data/encryption will be in those payload.
So there’s no standard payment method implementation. Everything will depend on vendors. For example how Google and Visa guys will establish data exchange protocols and implement it.