from Android Developer Blog:
After months of hard work by the Android Market team, I am extremely pleased to announce the arrival of In-app Billing on Android Market. This new service gives developers more ways to monetize their applications through new billing models including try-and-buy, virtual goods, upgrades, and more.
The In-app Billing service manages billing transactions between apps and users, providing a consistent purchasing experience with familiar forms of payment across all apps. At the same time, it gives you full control over how your digital goods are purchased and tracked. You can let Android Market manage and track the purchases for you or you can integrate with your own back-end service to verify and track purchases in the way that's best for your app.