Disturbing news out of Reuters’ business division: reports are coming in that Google is telling major Android Market/Google Play developers to adopt Google Wallet for in-app purchases, or be removed from Android’s official app distribution platform. Major developer Papaya Mobile told Reuters that Google sent them an email in August that they had to switch from their current payment system or be booted off the Android Market. Google declined to comment on the story.

If true, the restriction of payment options from PayPal and other competing services would severely limit developers’ ability to choose their own method of charging players and customers. An integrated system would mirror Apple’s policy, which only allows for in-app purchases through iTunes. It’s not just games that are affected: popular media delivery apps like ComiXology use non-Google systems for purchasing. Larger marketplaces like Kindle and Amazon MP3 jump out to the mobile browser to complete purchases, perhaps for this very reason.

While Papaya said that they’d comply with anything that Google asked, other developers may not be so accommodating – and the Google Play Store isn’t the only game in town. While the addition of tens of thousands of games and media apps to Google Wallet would certainly be a boon (especially considering the bad press they’ve gotten lately) I’ve got to say that this is a discouraging way to do it. We’ll be eagerly waiting a response from Google on this issue.

[via The Verge]