What’s the News: Your phone can now be a credit card, thanks to Google Wallet, announced yesterday with great fanfare. With this system, when you swipe your phone over a sensor, a near-field communication (NFC) chip gives the merchant your credit card information. You punch in your PIN, and: cha-ching.

Google has partnered with 20,000 companies who will take payments this way, including Macy’s, American Eagle, and Subway.

How the Heck: The NFC chip, which is only available in Sprint’s Nexus S phone at the moment, can only be activated by a merchant’s sensor (which means that no one can extract the information from your phone without one), and it’s only active when the phone’s screen is on, which is intended to prevent you from purchasing a sandwich with your butt when you sit down.

What’s the Context: Other companies aren’t far behind. In fact, one of them says it has bone to pick with Google over this—PayPal has filed a suit against the search giant and two ex-employees who are now heading up the department that produced Wallet: The suit says that the ex-employees disclosed PayPal trade secrets to Google and major retailers.

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