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Android Payments Snarl Spurs Upstarts

(Clarifies relationship of companies in fourth paragraph.)

Lauren Azulay wants to help her customers flirt faster. Azulay is head of billing and payments for U.K.-based social-networking site Flirtomatic, used by 3 million people in Britain, the U.S., and Germany to meet others and purchase virtual goods online.

For the growing number of Web surfers who use the service via mobile phones, making payments on Apple's (AAPL) iPhone is a breeze, Azulay says. Not so when it comes to devices that run Google's (GOOG) Android operating system. "It's a huge frustration," Azulay says.

With the iPhone, it takes a single click, using a credit card linked to an iTunes account. On Android, purchasers have to enter a credit-card number directly on the phone, via Google's payment service, Google Checkout, or use account with eBay's PayPal (EBAY) , which requires entering a user name and password. "All of these options rely on the user having to enter too many details," Azulay says. "They create a funnel where they give up on the process because it takes too much time and effort."

Payment Issue Discourages Programmers

To make it easier for consumers to make payments via Android handsets, a small group of companies last week introduced technology that would bypass the payment methods Google has approved. Zong, a mobile-payments company, says it joined two other payment firms, Billing Revolution and AdKnowledge, to offer payment options for PapayaMobile, a Beijing-based developer of social networking and gaming applications, to offer software developers a set of payment options they can easily add to Android applications.

Numerous programmers lament the difficulty of building payments systems for Android. "Payments are a big problem on Android," says Sam Altman, chief executive officer of Loopt, a location-based social network that runs on several wireless phones. "It's not the biggest problem, but when you consider how you're going to spend your time and resources, it's certainly something you have to consider." And the more difficult it is to get paid for products or delivered via mobile apps, the less incentive some programmers have to write for Android.

"It's harder to make money on Android, and so people aren't rushing to support their applications," says Zong CEO David Marcus. "It's fairly straightforward for app developers to make money on the iPhone." Apple has about 300,000 apps available in its App Store, about three times the number on offer at the Android Marketplace.

Payment companies are jumping in

Google gets most of its revenue from ads sold on its Web search engine, so it may have less motivation to help Android programmers make money, says Peter Farago, vice-president at Flurry, a mobile-analytics firm based in San Francisco. "Google has less incentive to make developers happy," he says. "Apple knows that to win the wireless war, they need developers to make the iPhone do delightful things and in turn, sell more iPhones."

Randal Safara, a spokesman for Mountain View (Calif.)-based Google, declined to comment.

Additional payment companies are aiming to offer streamlined payments on Android. BOKU, with offices in London and San Francisco, announced plans to launch in-app payments on Android in June. Ron Hirson, BOKU's vice-president for marketing, said its system is still being tested by developers and that some will launch apps using it within the next few weeks.

Meantime, Google may make it easier for users to pay for applications. PayPal is in talks to add its payment service directly to Android smartphone software, three people familiar with the matter said in August.

Hesseldahl is a reporter for
With Carlos Bergfeld in Silicon Valley

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