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Google forcing Android developers to use Google Wallet for in-app payments, Reuters says (Google: same policy as before)

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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 now encompasses Google Checkout's functionality) exclusively — as opposed to competing services like PayPal — for in-app payments on threat of removal from the store. Papaya Mobile is cited as an example: "They told people that if they used other payment services they would be breaking the terms of use," CEO Si Shen says. Reuters also says it has obtained a copy of an email this week telling a developer that it had 30 days to comply with the order before its apps would be dropped from the Market.

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. What's odd is that Google has maintained an extraordinarily lackadaisical approach to policing the Market since its inception, so to threaten removal in an effort to establish ecosystem lock-in would be setting a new precedent for the company.

We've reached out to Google for comment.

Update: We've heard back from Google, which was able to provide us with a detailed explanation of what's going on (Reuters claims that Google "declined" to comment). In short, absolutely nothing has changed in Google's terms of service over in-app payments. There are two exceptions to the Google Wallet requirement — physical goods (eBay or Amazon purchases, for instance) and transferable digital goods like books, which explains why Amazon hasn't been required to retool its Android app the same way it's had to do on iOS.

It also seems that Google actively pursuing developers in violation of the policy is not new — a Google spokesman tells us that there have definitely been removals in the past resulting from in-app payment violations — so by all appearances, there is nothing to Reuters' claim whatsoever.