By Scott Moritz, TheStreet

 

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

 

The two Internet giants have 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.

 

The move would help smooth a bumpy checkout system on Android Market, and 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 Google has been waiting for a seamless checkout system so it could launch its music streaming and storage business.

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

 

Unlike at 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. Post continues after video:

The process is equally 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 canceled because of 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 was immediately aware of why the purchases were killed. In order to reverse the decline, TouchType had to reset the account manually, Braidwood said.

 

"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 second-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. With the company eager to get better footing in mobile payments, the placement on Google's Android Market puts PayPal on board one of the world's fastest-growing mobile systems. PayPal has an iPhone app for Apple, but as far as iTunes, PayPal is listed as a payment option but it requires a PayPal credit card.

 

Economics was 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 whether the Android Market checkout process is as smooth as many observers have hoped.

 

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