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Users of Google Android phones may soon be able to purchase mobile applications using PayPal, making it easier and quicker to add software to Android handsets. A deal between Google (s goog) and PayPal (s ebay) is expected to be announced at the PayPal Developers Conference in San Francisco later this month, says Scott Moritz at TheStreet. If Google does add PayPal integration to the Android Market, such a move would address one of main shortcomings of Google’s app store, making it almost as easy to use as Apple’s (s aapl).

Software purchases in the Android Market currently use Google Checkout, which I’ve personally found flaky on my Nexus One handset. In contrast, I’ve never had an issue with mobile transactions through Apple, nor with Amazon (s amzn) or PayPal, for that matter. Google may excel in many areas of the web, but the payment mechanism for mobile apps hasn’t been one of them. Adding PayPal integration will remove that deficiency and could help spur Android software sales, which in turn might offer more hope for Android developers who are betting that a positive Google future in the handset space will lead programmers to more profits.

PayPal integration would be a huge step forward for Google’s Android Market, but there’s still work to be done. Though finding apps is a chore (which is ironic, considering Google’s expertise in search technologies), this, along with installing apps, is slated to improve. At its developer conference earlier this year, Google showed off a web implementation of the Android Market. With it, users can find apps and with the click of a button, have the software wirelessly sent to an Android phone.

Even with such improvements, another Android Market issue continues to exist: Software is only offered in a very limited number of countries. Just last week, Google nearly doubled the number of markets that support paid applications on Android phones, but there are still many regions where Android handset owners are unable to take full advantage of the Market. Those folks may be waiting a bit yet, but if PayPal integration is added to Google’s mobile software store, they’ll be able to buy apps as quickly as they can tap the screen, once their region offers paid apps.

Although the Android Market is the obvious beneficiary of a PayPal partnership, I’m wondering if there’s more to this potential development than software. Whispers of Google selling content such as music and books have been making the rounds for months. Perhaps the Android Market is about to expand to a full-service store with PayPal checkouts. In addition to the software aisle, will there be virtual shelves for other digital content later this month?

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