The first NFC-equipped device to take advantage of it will be Sprint's Nexus S 4G, with more to come, or you can use a special NFC sticker on the back of your phone, similar to the Bling Tag. Google will subsidize merchants to upgrade their POS equipment for taking NFC payments.
For the mobile payment backend Google Wallet is partnering with MasterCard's PayPass system for payment processing, which works for some of its cards with embedded chip to wave it in front of a terminal and pay. Citigroup is providing the banking services behind the project, and as far as retailers go, Google Wallet will be available at such stalwarts as Macy's, American Eagle, Subway, and The Container Store, among others.
As far as security is concerned, Google clarifies that Google Wallet acts as a virtual credit card, you can call and deactivate it, if your phone is lost or stolen. Still, you have to enter a PIN password for the payment to take place, as if you are paying with a debit card entering your PIN code, plus if your phone goes missing there won't be anything to call MasterCard with anyway.