The forthcoming Android 2.3 operating system will support near-field communication chips for mobile payments, leading to the launch of hundreds of mobile payment startups, according to Google CEO Eric Schmidt.

This could replace your credit card, said Schmidt in an interview at the Web 2.0 Summit in San Francisco on Monday, according to InformationWeek, a tech website.

Schmidt covered a wide range of topics with conference co-chairs Tim O'Reilly and John Battelle.

During the conference, Schmidt expressed optimism about the revenue potential of mobile devices and applications, particularly in the context of location-based services.

“The company's initial focus was establishing volume. It's fundamentally about the math of the platform, said Schmidt.

Asked about the aspects of Android that remain dissatisfactory, he said that Google plans to focus on improving the application layer.

Schmidt also differentiated Chrome OS from Android. Chrome OS is for devices with keyboards, he explained, while Android is for devices that respond to touch.

He could not deny the notion of competition between Google and Apple, Google and Facebook and Google and the TV industry.

People are obsessed about the competitive landscape when what they should really be focused on is how much bigger the market is getting, he said.