Google, PayPal Set on Android Deal

NEW YORK ( TheStreet) -- Google ( GOOG) has finally enlisted eBay's ( EBAY) PayPal service and is preparing to launch the payment system on its Android Market later this month.

The two Net giants had been moving closer to an agreement in recent weeks. Now, sources familiar with the situation say the deal is all but sealed, with an announcement coming as early as Oct. 26 during the PayPal developers' conference in San Francisco.
Android

The move would not only help smooth a bumpy checkout system on Android Market, it would also bring Google closer to the type of seamless payment process that Apple ( AAPL) manages at its iTunes and App Store.

Google declined to comment.

An easy payment system has been one of the missing pieces to Google's Android master plan. Some analysts suspect that Google has been waiting for a seamless checkout system so it could launch its music streaming and storage business.

As an online retailer, Google's Android Market has not been particularly painless for users -- both buyers and sellers alike.

Unlike Apple iTunes or Amazon ( AMZN), where millions of users purchase goods with just a click, Android shoppers, looking for a quick checkout, are instead required to enter credit card info or sign on to Google Checkout for payment. While not exactly daunting, it does require effort that users may choose to avoid.

The process is equally as challenging for developers who embraced the Android movement, but found numerous hitches to the payment system including an inability to accommodate foreign currencies.

TouchType, the London-based creator of SwiftKey, a predictive typing application for Android phones launched its product late last month. According to Joe Braidwood, TouchType's marketing chief, within the first four days the company had 40,000 orders for its SwiftKey app. But about 2,000 of those orders were declined or cancelled due to a hitch in the Google Checkout system.

Many people who tried to buy the app with currency other than the British pound were automatically declined. Neither the buyer nor TouchType were immediately aware of why the purchase was killed. And, in order to reverse the decline, TouchType had to manually reset the account, said Braidwood.

"It would be great if Google could sort out the commercial/paid apps infrastructure, as many developers will just look at the current track record and think, 'this is more effort that it's worth,'" Braidwood said.

Overall, Braidwood said he is happy with Google's Android operating system. As of Tuesday, SwiftKey was the No. 2 best-selling paid app on Android.

One key element to the PayPal approach: It converts the price to whatever local currency the buyer uses.

The deal with Google is also huge for PayPal. Eager to get better footing in mobile payments, the placement on Google's Android Market puts PayPal onboard one of the world's fastest growing mobile systems. PayPal has an iPhone app for Apple, but as far as iTunes, PayPal is listed a payment option but it requires a PayPal credit card.

"Economics" were said to be one of the trickier negotiation points between Google and PayPal as the talks dragged on, so it will be interesting to see if the Android Market checkout process is as smooth as many observers hoped.

--Written by Scott Moritz in New York.

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