Google, PayPal in Talks for Android Deal

Mountain View, Calif. (TheStreet) -- Google(GOOG) may be catching up to Apple(AAPL) in the mobile application market, but selling the apps has become a huge problem for Google's Android business.

Users hoping to purchase apps in Google's Android Market are confronted with the nuisance of having to enter credit card info or set up Google Checkout accounts. The hassle has created a hurdle not just for would-be buyers, but also for application developers looking for payback on their efforts.

Looking for help to ease the transaction friction in the Android Market, Google and eBay(EBAY) are said to be getting closer to a deal that would add PayPal to the checkout process, according to analysts monitoring the situation. Google's press office was not available for immediate comment.

Google and eBay were reported to be in talks over using PayPal on Android by Bloomberg last month.

The move highlights Google's effort to find a simple and comprehensive payment system that can compete with the popular Apple iTunes network. Google's own checkout effort has not taken hold among consumers, making PayPal a more attractive option.

There have also been reports that Amazon(AMZN) is working on its own Android tablet as part of its Kindle family. If true, the Amazon version will offer yet another Android Market payment system, likely to be seen as superior to Google's own checkout system.

Google's also been expected to arrange a carrier payment system that would let users add purchases to their Verizon(VZ), AT&T(T) or Sprint(S) phone bill.

"Having PayPal or another service will certainly help," said Nielsen analyst Roger Entner. And bringing the phone company in, said Entner, "will alleviate a lot of the problems and tie the carriers closer to their customers."

--Written by Scott Moritz in New York.

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