Google Pushing Developers to Use Its Payment Service Google Wallet

NEW YORK | Friday, March 9th, 2012 6:11am EDT

Google has been pressuring app developers to use Google Wallet as opposed to alternatives from other companies.

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Reuters reports that Google is leaning on developers to use its payment processing service rather than rival offerings, though the company says that its policy has not changed. Photo: Google

Reuters is reporting this afternoon that at least some developers of applications in Google Play (née Android Market) are being forced to use Google Wallet (which nowencompasses Google Checkout’s functionality) exclusively — as opposed to competing services like PayPal — for in-app payments on threat of removal from the store.

Google warned several developers in recent months that if they continued to use other payment methods – such as PayPal, Zong and Boku – their apps would be removed from Android Market, now known as Google Play, according to developers, executives and investors in mobile gaming and payment sectors.

Though, according to CNET, Google says nothing is new. It’s always required developers to use its payment processing service, even if some tried to skirt the policy.

Developers say the Internet search giant is trying to simplify consumer payments, hoping apps-buying will rise and offset their higher costs. Google’s payment service charges a higher cut per transaction than some rivals’. But the move also suggests Google is using its powerful position in the mobile apps market to promote an in-house offering.

“Although this move by Google might seem high-handed, it reduces the friction for purchases inside Android apps and therefore makes users more valuable,” said Hugo Troche, chief executive of Appsperse, a cross-promotion network for app discovery.

In one email sent to a developer in late August, Google said the developer had 30 days to comply, otherwise the developer’s apps would be “suspended” from Android Market. Reuters obtained a copy of the email this week.

“They told people that if they used other payment services they would be breaking the terms of use,” said Si Shen, founder and chief executive of Papaya, a social gaming network on Android. “Whether it’s right or wrong, we have to follow the rules.”

But according to the Android Market Developer Program Policies, developers charging for their apps must use “an authorized Payment Processor.” Presumably, that payment processor is Google Wallet, though it’s unclear from the policy Web site if that’s so. Regardless, Google says there is nothing new in the payment processing requirements on developers.

The move would mirror Apple’s philosophy with the App Store, which has generally been very strict about requiring iOS developers to route in-app payments through iTunes — not even heavyweights like Amazon were left unscathed, which had to tweak its Kindle app to comply, tells The Verge.

In early 2011, Android platform manager Eric Chu told a conference that while the number of Android smartphone users was surging, the number of purchases of paid apps in the Android Market was not doing nearly as well, Forbes reported.

By pushing all app developers to use Google’s payment system, the experience should be simpler, increasing conversion.

“On Android it used to be laissez faire – you could use any payment provider you liked,” said Todd Hooper, chief executive of Zipline Games.

“It’s probably naive of developers to think they could keep choosing different payment providers,” he added. “If purchasing on Android is all over the place, that is worrying.”

Developers using Google Wallet typically have to pay Google a 30 percent cut of revenue from purchases – higher than the cut taken by rival third-party payment services.

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