PayPal Talking With Google About Handling Android Payments

EBay Inc.’s PayPal business is in talks to add its payment service to Google Inc.’s Android smartphone software, making it easier for users to pay for applications, three people familiar with the matter said.

Users of Android phones, such as Motorola Inc.’s Droid X and HTC Corp.’s Droid Incredible, may be able to pay for apps with PayPal as soon as this year, said the people, who declined to be named because the discussions aren’t public. Customers currently pay via credit card and Google’s Checkout service.

By adding PayPal, Google would give app developers another way to get paid, potentially making them more likely to create software for Android. While Android phones are beginning to outsell the iPhone, Apple Inc. still dominates in apps. There are more than 225,000 apps available for Apple devices, compared with about 70,000 for Android.

Apple iTunes users can buy apps with one touch because their payment information is already stored. Google offers similar features through its Checkout service, though it isn’t as popular as iTunes or PayPal, creating hassles for new users. By adopting PayPal, which has 87 million active accounts, Google may attract more paying customers.

Why Fight?

“It’s clear that PayPal has been making huge strides in mobile,” said Maribel Lopez, founder of San Francisco-based Lopez Research, which tracks the mobile industry. “From Google’s perspective, they just haven’t won the war on this. Why bother fighting it?”

Anuj Nayar, a PayPal spokesman, and Google spokeswoman Shari Yoder Doherty declined to comment.

The talks between the companies continue and may not lead to a deal, said the people familiar with the discussions.

PayPal added 1 million new accounts each month last quarter and made up 37 percent of EBay’s sales. Net revenue at PayPal rose 22 percent to $817 million in the period.

EBay, based in San Jose, California, fell 9 cents to $21.50 at 4 p.m. New York time on the Nasdaq Stock Market. Shares of Google, located in Mountain View, California, dropped $5.66 to $486.35.

Android has become the most popular smartphone software in the U.S., overtaking the iPhone and BlackBerry, research firm Gartner Inc. said yesterday. Worldwide, Android ranks third, behind Nokia Oyj’s Symbian and the BlackBerry, according to Gartner. Apple is in fourth place.

To contact the reporters on this story: Ari Levy in San Francisco at alevy5@bloomberg.net; Joseph Galante in San Francisco at jgalante3@bloomberg.net

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