Bump home page.
There is no better description then the one on their site
"Bump is a quick and easy way to connect two phones by simply bumping them together.
Exchange your phone number, photos, or compare friends with just a bump."
Here there is a review explaining how it works... I thought it was via bluetooth but it seems to be via internet.
On their website they have an open API for developers to create their own apps using the Bump to share whatever...
Paypal have a Bump-pay version!
In case you want to see it in action you can check several videos it on youtube.
or the official one
The app is available for both iPhone and Android!