Android application developers are being barred from using third-party payment systems in their software. As Google mandates the use of its own Google Wallet service for in-application purchases, software that doesn't comply with the new rule will be kicked out of the Android Market.

The move is part of a broader initiative by Google to consolidate and simplify purchases within the Android content ecosystem. The company recently converged its various content services into a unified storefront with consistent Google Play branding. As part of this transition, the Android Market is being renamed the Google Play Store.

The search giant has also been working to improve its in-app payment system, which is used by both Android and the Chrome Web Store. Google began expanding the service to additional countries in December and introduced support for currency conversion. The initial setup process for Google Wallet was also recently simplified to lower the barrier to entry for new users.

In addition to Android integration, Google's payment system also exposes its functionality through a generic Web API. Google is hoping that the service will be used ubiquitously across the Web to monetize content and services.

The rules prohibiting the use of third-party payment systems in Android applications that are sold through the Android Market were discussed in a recent Reuters report. The move is likely a competitive maneuver aimed at boosting developer adoption of Google's service, but it will also potentially make it easier for users to make in-app purchases. It will arguably help reduce fragmentation by eliminating the need for Android users to contend with an assortment of disparate payment processing services.

Some high-profile Android application developers rely on third-party payment services. In many cases, they implemented in-app payments on their own before Google supported the functionality itself. Angry Birds developer Rovio, for example, created its own payment service called Bad Piggy Bank in 2010 after expressing frustration with the limitations of existing solutions for in-app purchases.

By comparison, Apple also prohibits the use of third-party payment systems in applications sold through its iOS App Store. A key difference, however, is that Google offers exceptions for retailers of physical and virtual goods (including ebooks). It's also worth noting that Android's support for application sideloading and alternate distribution channels will mean Android application developers have the option of not complying with Google's new rules, assuming they are willing to sacrifice the advantages of having a presence in the platform's standard marketplace.

It's not yet clear if the ban on third-party payment processing on in-app purchases is a big enough issue for developers to abandon Google's store. One social gaming developer quoted by Reuters expressed disappointment about losing the ability to choose their own payment processor. The developer did say following Google's rules and maintaining a good relationship with the company was ultimately more important to their long-term business interests.

Although Google often touts the openness of its platform, the Android Market is one of several proprietary components controlled by the company. Google uses its unilateral control over the storefront as leverage over hardware manufacturers. Google has, however, historically taken a very relaxed approach to regulating the contents of the store.

Google has taken measures in the past to block malicious applications and software that is accused of intellectual property infringement. The company hasn't historically blocked applications on the basis of the technologies they use or the kind of functionality they provide.

In a statement to The Verge, Google has confirmed that it is banning applications from the Android Market for using third-party payment systems for in-app purchases. Google says, however, that the policy isn't new and is clearly explained in the Android Market terms of service. The company also says that the policy has previously been enforced. It's unclear if Google is becoming more fastidious about enforcing the policy or if the developers that spoke with Reuters were simply overlooked before.

Article was updated to reflect Google's response to The Verge.

Listing image by Photograph by Dan Klimke