According to the New York Times, Google last week made adjustments to its algorithms, thus booting sites like Mugshots and BustedMugshots off the front page of its search rankings. Meanwhile, companies like MasterCard and PayPal are moving to end payment support for the sites.

The move is good news for people whose pictures appear on the sites — even if they are never convicted of a crime — and suffer humiliation and career damage as a result. And paying to remove a picture from one site often leads to the image popping up on another site that likewise demands money.

The response by Google and the payment processors comes at a time when state lawmakers are struggling with how to deal with the mug shot sites: while the sites’ business model may amount to extortion, the pictures they show are taken from public records that are valuable to journalists, safety advocates and others.

Image by Rob Byron via Shutterstock.

The book, entitled “Iranian Living Room”, is a product of the Benetton Group’s Italian Fabrica facility (the same one that recently teamed up with Berg on the internet of things). It came out of a Fabrica project that saw 15 young Iranian photographers document domestic life at the time of the recent Iranian elections, in order to provide a counterpoint to the street imagery used by most international media organizations.

Late on Tuesday night, Fabrica’s Dan Hill posted an irate account of Fabrica’s abortive efforts to sell the book online. Orders appeared blocked, and it turned out that this was a result of PayPal’s internal “blacklist” – the word “Iranian” is on that list, due to the U.S.’s comprehensive economic embargo against Iran, so sales couldn’t go through. A PayPal account manager in Dublin apparently suggested changing the title of the book in the online shopping cart, until the item in question could be whitelisted (which has indeed since happened).

“Leaving aside the fact that of course we don’t want to change the name of our book in the shopping cart, I find this politically-motivated censorship, willingly if not actively carried out by a corporation, absolutely despicable,” Hill wrote. “I have no idea if the U.S. government actually enforces this on PayPal; the PayPal representative could not confirm or deny.”

I asked PayPal about the situation and they got back to me with the following mea culpa:

“PayPal makes every effort to comply with the laws and regulations in the countries in which we operate around the world. Our efforts include adhering to specific government sanctions involving designated countries. However, these sanctions were never intended to apply to books or written materials and we have worked to ensure that books are not impacted by our compliance with this policy.

“In this case, we obviously made a mistake. We are glad this error was corrected and brought to our attention. We regret this mistake and any inconvenience caused. We will work to avoid similar situations in the future.”

The Fabrica episode is, it must be said, a fairly minor incident as these things go, and quickly rectified at that. However, it does serve as a reminder of of the various choke points that can be activated in everyday online activity, whether deliberately or not, in the name of automated compliance.

Crowdfunding site Kickstarter also processes payments through Amazon, but has not been affected by the change.

Amazon told Unglue.it CEO Eric Hellman that it is not approving new crowdfunding accounts due to “regulatory burdens” and “contractual obligations.” Unglue.it has been “required to void all pending authorizations,” though the one book that has already been unlocked – Oral Literature in Africa, a title aimed primarily at academics and librarians that raised $7,578 from 259 supporters — is not affected.

While some commenters on Twitter suspect Amazon of trying to take down a smaller ebook company, another small company received a similar notice and Hellman told me “it sounded like they want to be able to reverse course once they figure out how to meet their obligations efficiently.” Amazon’s policy is likely to affect any company that wants to process crowdfunding payments through the site. Paypal has a recommended process for crowdfunding payments and crowdfunding sites like Indiegogo and Togather process their payments through Paypal. A Paypal company rep did not respond to my request for comment, but a Paypal developer on Quora notes that any site processing crowdfunding payments, as well as any business oriented around them, has to worry about anti-money laundering policies. Hellman told Library Journal blog The Digital Shift that Paypal is still processing Unglue.it’s application.

Update: An Amazon spokesman told me, “We support a wide variety of businesses, but we have regulatory obligations as a licensed money services business for how we operate. Unfortunately, Unglue.it’s model is not the same as some other crowdfunding services and at this time does not allow us to meet those obligations.”

My wife and I, both tech industry media professionals working for separate companies, were all set to descend upon Las Vegas two weeks ago for CES 2012 when her wallet was stolen from a San Francisco bar the night before she was scheduled to get on a plane and check into a hotel. We carry the financial ingredients for modern life– identification, access to cash and credit, and casino loyalty club cards–in our wallets, and finding ways to replace things that important and ripe for fraud when you’re about to go on the road is a nearly impossible task.

All worked out in the end–two weeks later–but multiple trips to a local Wells Fargo branch as well as several conversations with patient but harried customer-service representatives made it clear that the old system of cashless payments, however convenient and established, makes less and less sense every year.

Imagine if her wallet was also her phone, making it the only thing of interest in her purse to the jerk that was also at the bar that night. First of all, the initial likelihood of fraud decreases because current mobile-phone payment systems–offered by Google (NSDQ: GOOG) and PayPal, among others–require the holder of the phone to enter a personal identification number to complete the transaction.

The loss would still have to be reported quickly to the company managing the account, of course. But the identifying details regarding that account could be remotely wiped from the lost or stolen phone and transferred to a new phone in far less time than it takes to replace lost or stolen bank cards. Sure, you’d still need to make a quick decision on a phone (and it would probably have to be purchased in person at retail from your carrier or Apple (NSDQ: AAPL) for this all to work), but you just lost your phone: if you’re among the growing numbers of people who have come to depend on mobile access to the Internet, you’re a person who is not going to wait very long to replace that phone.

In other words, instead of visiting two separate Wells Fargo branches that happened to be open on a Saturday in Oakland with just hours to spare before her flight departed only to kick off a two-week process of phone calls and further visits, she could have headed over to our local Verizon store to assess her options. Verizon would have gleefully taken the opportunity to sell her another phone, of course, but again, she was going to have to replace that phone anyway. And maybe when your wallet is your phone, you start to think about insurance programs that could provide for a loaner phone in the event of theft until you’re ready to make a bigger decision.

Point being, she walks out of that Verizon store with a new device that would allow her to check into the hotel that night with the required credit card for incidentals, obtain cash, pay for meals and cabs, and all else that is part and parcel of modern business travel. The current system provides for a temporary ATM card that doesn’t function as a credit card and a two-day wait for expedited bank and credit cards that Wells Fargo, for some strange reason, did not seem too enthusiastic about shipping to a casino in Las Vegas.

I’ve been a mobile-payments skeptic in the past, wondering last year if Google Wallet was a solution to a problem that doesn’t exist. If you’re lucky enough to avoid theft and loss under the current payment system, then it’s not hard to doubt that the wheel needs reinventing just so a new wave of companies can obtain more data on consumer purchasing habits.

The problem surfaces when you have to move quickly to rebuild a personal payments system designed half a century ago. An awful lot needs to happen for the scenario outlined above to fall into place, and platform wars are probably a given considering what is at stake for traditional payment companies and those eagerly seeking to disrupt the old guard. And I still agree with what I said last fall: this is years away from falling into place on a mass level.

But the concept just makes too much sense. Your credit card is a data string, not a physical piece of plastic: why not enclose that data–and the privileges and responsibilities it unlocks–in a remotely accessible mobile container with an extensive system of checks and balances that has a much healthier respect for that data?

And if one of the companies working on this also finds a way to avoid a trip to the California Department of Motor Vehicles, they may really be onto something.

The report, from its IHS Screen Digest division, notes that in-app purchases accounted for about 39 percent of app revenues in 2011, and it predicts that in 2012 that proportion has gone up to 49 percent. By 2015 it will account for 64 percent of all revenues.

In terms of actual value, IHS says that in-app payments were worth $970 million in 2011, and will be worth $5.6 billion in 2015. (Sound too big to you? Please comment below.)

Update: More on why those revenues will be so big. Ian Fogg, head of mobile for IHS Screen Digest, pointed out to paidContent in an email that the $5.6-billion figure “is driven by the vast numbers of new smartphones that will ship over the next few years. As the number of smart devices is so great, the app market revenues will grow greatly, and hence so will the in-app revenues.” He also noted that many pay-to-download apps also feature in-app purchasing options; that will additionally contribute to the total size of in-app revenues. [original article continues]

This represents a big opportunity for app store operators like Apple (NSDQ: AAPL) and Google (NSDQ: GOOG), as well as mobile payments companies like Boku, Zong and PayPal to manage these payments.

And it also represents something of a success, too, considering how much opposition there was to in-app billing when it was first launched by Apple with requirements to pay it 30 percent of each transaction.

“Apple has nailed the mobile gaming and mobile app payment business,” noted Wilhelm Taht, marketing director for mobile social media service Flowd, earlier today. “It’s super frictionless.”

Strangely, the report does not take account of mobile advertising as a route to making money from an app. That could be because the only apps that can actually make any significant money from advertising are those that get the very highest amount of traffic — other long-tail apps that lack scale will face a challenge in trying to use advertising as their main business model.

Today, free apps already have significantly more traffic than paid apps: Nielsen last week noted that consumers mainly use a mixture of these, or a free-only selection of apps; those who only opt for paid apps account for low, single-figure percentages in different categories (around two-three percent). Ironically, paid apps today remain the main way that many of the most successful apps (such as games) are making money.

Free-to-download apps that come with in-app purchasing — so-called “freemium” apps — represented 45 percent of all top-grossing iPhone apps, and 31 percent of the highest-earning Android apps in the U.S.

IHS Screen Digest estimates that some 68 percent of all top-grossing apps had at least some form of “additional content or functionality” available through in-app purchase, which could mean features like extra levels in games, virtual currency to continue playing or extra editions of a publication.

Virtual currency, it says, is the most common form of in-app paid content available today, accounting for 63 percent of all revenues made from in-app purchases.

But while we hear a lot about newspapers and magazines, and increasingly video-based apps looking to in-app payments as a way of getting their users to buy mobile content, overall, this represents a very small part of revenues today: in the UK in Q3 2011, publications accounted for only five percent of in-app payment revenues (no figures for the U.S.), while video accounted for only two percent of in-app revenues in the U.S. and none in the UK.

Thompson, who officially starts his job on January 9, earlier today told investors in a call that his first priority will be to get to know the staff and culture that he will now be leading as he seeks to turn Yahoo around from a company that has lost its way back into a “great iconic brand.” Some have started to ask if he’ll have to take a crash course in Yahoo’s own business model, too:

Macquarie equity analysts were generally positive on the appointment, but they also took note of the fact that he is a specialist in payments, not advertising and media: still Yahoo’s stated main line of business.

“Yahoo should benefit from Thomspon’s leadership, but we must admit that we find the appointment somewhat surprising given Thompson’s background as a specialist in the online payments/technology space,” they wrote in a research note. “Yahoo has been in the midst of an identity crisis, unsure of its place on the Internet… All else equal, we would have preferred to see the Board hire a candidate with deeper experience in the online advertising/media space.”

They wonder, in fact, not whether he will master Yahoo’s business as it exists at the moment, but whether he will “surprise by defining and executing Yahoo’s vision in an unexpected way.”

Regardless, doing something unexpected was not the message being conveyed in today’s call, in which Thompson and Ray Bostock, the chairman of the board, sought to convey a balance between business as usual, and spring cleaning to unearth some hidden treasures.

Some of the questions asked by analysts on the call today:

Getting to know you: “The first thing is to meet the team as many as possible to understand more of the culture and the people,” Thompson said. He could be starting from a very blank slate indeed: Kara Swisher at AllThingsD alleges that Yahoo’s board, in fact, consulted “almost no one” in upper ranks about the appointment (but is that exactly standard?).

Who is Yahoo’s target customer? Is it you, the user? No, said Bostock: “Our customers are advertisers. Scott knows how to reach out to advertisers.”

Biggest lesson from PayPal to apply to Yahoo? “Balancing the consumer and merchant need,” said Thompson. “I feel strongly that we need that between the consumer and the content/advertising. [We need to make] this relevant to their business.”

What does Yahoo need to do next? Thompson mentioned user data, an area that could be one for privacy people to watch: “I only got a glimpse of [Yahoo's] data [but] I feel certain that the wealth of data is going to be exploitable [for] super competitive capabilities in our space in advertising and marketing.” Also some non-speicific references to the talent, engineering and otherwise, that remains at Yahoo that needs to be used more to “build great innovative products and put them inside customer experiences.”

Yahoo going private? Doesn’t sound like it… “I don’t expect Yahoo not to be a public company going forward,” noted Bostock. “If we thought to take it private we’d have one hell of a challenge.” Going private was one option being floated last year, with founder Jerry Yang supposedly interested in teaming up with PE houses to buy up the company. TechCrunch, in fact, cited one financial analyst who said this determination to remain public was the main reason the stock didn’t do so well today.

What about Asia? The negotiations around Yahoo’s assets in Asia and their JV partners Alibaba and Softbank continue as before. “This will not be a distraction for Scott,” said Bostock. “There is a team working on that. [Thompson] will be a part of the key decision making but given where we are there is no way that this will be a distrction as he works on the core business.”

What about all those executive departures at Yahoo, especially last year? All I can do is speak from my track record,” said Thompson. “People determine the success or failure of all these business and whether you win or lose in the market… I want to make sure [the staff] are all here tomorrow and a year from tomorrow.” Great talk, but up against a challenging reality: as Om Malik puts it, the talent exodus at Yahoo is a one-way street at the moment, and its leading to well-paying jobs at the still-ascendant Facebook and Google (NSDQ: GOOG).

And what about mobile? This is one area of common ground between Yahoo and PayPal: both started as non-mobile companies and both took a stab at the market, realising the role it would increasingly play with consumers.

The difference is that PayPal found a place for itself, which is still growing, while Yahoo has moved in mobile in fits and starts and certainly has not developed something as meaningful as what its competitor Google has created in terms of a portfolio of mobile services and its own platform. “Mobile is a really big question. Mobile is a wave that is bigger than people can even imagine it to be,” says Thompson. But where he sees Yahoo fitting into that has yet to be articulated but I suspect he will put a stronger emphasis on this than his predecessor, given his track record at PayPal.

Still, where Thompson sounded most vague of all was on questions of how to approach advertising and content, which remain the company’s big business areas. Whether that was out of caution or a lack of ideas so far is unclear.

Interestingly, even with a dip in the share price today, Yahoo still closed the day higher than it did on the day when Bartz was announced as CEO nearly three years ago on January 13, 2009, when it traded at around $12.

Yahoo! Stock Chart by YCharts

(As an endnote, the WSJ has an overview of some of the more uncanny similarities between the two appointment announcements. On its own, it doesn’t make for a very encouraging picture of change at a company that really needs it.)

The news was first put out into the ether by Kara Swisher at AllThingsD, who got the original tip from an anonymous source, which means that the information has not been confirmed by either eBay (NSDQ: EBAY) or Yahoo, but Swisher has been on top of (and accurate about) much of the executive-upheaval news at the internet portal.

Swisher describes Thompson as a bona-fide “Internet geek,” but he is actually something a little more specific: his background is in commerce and payments (prior to PayPal he worked for Visa). And most recently, his big emphasis has been in mobile commerce, an area where PayPal has grown and is growing its presence a lot.

That raises tantalizing questions about what could be Yahoo’s next strategic step. More effective ways of monetizing the traffic that passes through its advertising, search and portal networks? Possibly even looking at a new direction in transactions? That’s an area where companies like Google (NSDQ: GOOG) and Apple (NSDQ: AAPL) have established a strong base, largely through their mobile businesses.

Of course, a cynic might argue that a leopard cannot change its spots, and that Yahoo’s organizational issues may prove to challenge any new ideas. Once a leader in search, advertising and online information portals, Yahoo has in more recent years seen those businesses hit hard, particularly by competition from Google and increasingly Facebook (both now make more than Yahoo from display ads, an area where it was once king).

That has led to the company to try many different things over the past several years to turns things around — some meanderings in mobile, many executive changes, new products and services, and more recently an ad partnership with Microsoft (NSDQ: MSFT) and AOL (NYSE: AOL), two former arch competitors also hit by the Facebook/Google-naut. It actually beat analyst forecasts during its last quarterly earnings — but that seemed to be more due to lowered expectations.

After Bartz left the company in September 2011, Yahoo began to explore various options for itself, including the possible sale of part or all of the company. That has involved protracted negotiations with private equity firms, and also Softbank and Alibaba, who are shareholders and have respective JVs with Yahoo in Japan and China. These are still ongoing and could either result in the sale of those JVs, or, if you believe some reports, the outright sale of Yahoo to Alibaba.

The appointment of a CEO like Thompson, who could offer a new direction for Yahoo, could prove to be useful regardless of what the outcome is of those other negotiations.

The change, reported by the China-based blog Penn-Olson, will mean that users can pay for apps in the store using local bank cards from major Chinese banks.

In the past, users were only able to use credit cards that could process U.S. dollar transactions — that would have cut out many users who would have only be able to use free apps legally. And — not unlike one of the root causes of music piracy — in all likelihood the difficulties in paying would have contributed to a large black market for paid apps.

There have been a number of local players who have jumped into that void to make it easier for iPhone and iPad owners to get the apps that they want: most recently Tencent launched its own iTunes-alike to help users sync apps legit and pirated to their devices.

Now, users can either enter payment information from cards issued by supported banks, or they can top up their iTunes accounts with yuan, in increments of 50, 100, 300, and 500 renminbi, which then gets deducted as they purchase apps.

Penn Olson notes that accounts topped up rather than linked to credit or debit cards are a common route for paying for mobile services in the country. (We pointed out another use of the top-up here: China Mobile uses it as a way to offer WiFi access to its users.)

Apple (NSDQ: AAPL) is still not accepting third-party payment platforms like Alipay from Alibaba or PayPal, and it’s not clear if they will open iTunes to these competitors.

Recently, Apple ramped up its presence in the Chinese market with the launch of several new, shiny retail stores in key cities like Shanghai (which now has three). Apple has noted that its retail stores in China see the most traffic of any country’s retail operations.

The Asia Pacific region, which includes China in Apple’s reporting, is a close third in revenues for the company, behind the U.S. and Europe, but it is seeing by far the most growth. In its Q4 results reported in October, Apple said that Asia Pacific grew the most of any region both in terms of units sold and revenues. Respectively, they were up by 61 percent and 139 percent.

Within that Tim Cook, the CEO, noted that Greater China was growing at a “feverish” rate and now accounts for 16 percent of all of Apple’s revenues, or about $4.5 billion in the last quarter.

Apps are big business in China — as evidenced by the dozens of app stores that have sprung up from operators, handset makers and internet portals (a trend driven hugely by the boom in open-source Android devices — many of these app stores are geared at those users). Mobile app downloads in China are projected to reach 5.5 billion next year, according to ABI Research.

PayPal, the payments company owned by eBay (NSDQ: EBAY), has largely focused its attention up to now on mobile transactions made via the web or in apps: that is the basis for much of PayPal’s business today both online and in mobile, where the service is used for transferring money as well as paying for goods and services.

But a new “Shopping Showcase” set up by the company in New York, highlighting the use of PayPal in retail situations, points to where PayPal hopes to potentially play more in the future.

In a blog post on the installation, PayPal notes that it will show off its version of a digital wallet, where a user can keep electronic versions of loyalty cards and different payment methods in one place.

As GigaOm points out, one feature of that digital wallet will be a “tap phone” option to enable NFC payments.

This is not PayPal’s first demo of NFC on its platform. Back in July, the company showed off a service for NFC-equipped Android devices to transfer money to each other.

Neither of these demonstrations are firm commitments to NFC, but they are some of the first signs that this very large payments company will be getting behind the technology when and if it does start to become mainstream in devices.

Not so for a service out today from the mobile payments startup Square. Today the company — which first made its name with a square-shaped dongle used to make and take payments with Android and iOS devices — launched an updated verison of Card Case for iOS and Android, making it a contactless payment service that doesn’t go anywhere near NFC technology to work.

Card Case is a service that was first unveiled earlier this year as a way for users to store loyalty cards for different merchants within the Square app, as well as payment cards, and make payments (which it called “tabs”) at individual merchants that have signed up for the service.

Today’s development sees the service now working with geofencing technology. Now, when a user is within 100 meters of a participating merchant, and a user has enabled the app to work with that merchant (by indicating to “auto open” the tab), a user now only needs to give his or her name to process a payment, without taking out the device. The merchant, meanwhile, confirms the identity of a user based on a photo before approving the purchase.

There are now 20,000 merchants signed up to the Card Case service, out of the 800,000 merchants that have activated Square so far, according to this article in TechCrunch. A new service will also see the app directing users to the most popular Card Case retailers — a bit of promotion that might lead to more shops signing up for the service.

Computer scientists have been promising that reliable speech-recognition software is just a few years away for decades, and while progress has been made even the best software leaves a lot to be desired. Similar promises are being made these days around mobile payments, and a sizable number of people and companies believe that the smartphone can be a natural evolution of the credit card in just a few years.

“There has never been a more exciting time in payments,” said Dave Talach, vice president of global product management at Verifone, echoing during a panel discussion at GigaOm Mobilize what many in the payments industry have been saying alongside the launch of products like *Google* Wallet.

But it’s not going to happen this year, and it’s not going to happen next year, Talach and his fellow panelists agreed. It may not even happen the year after that, as extensive field trials have to be conducted to make sure phones with NFC (near-field communications) technology work properly with merchant terminals and back-end payment-processing systems before any of this can hit the mainstream. Oh, and somebody needs to convince the average consumer why paying with their phone is easier, safer or more rewarding than pulling out cash or a credit card.

Mobile payment backers like Google (NSDQ: GOOG) like to point to the use of NFC technology in lots of places already, such as gas stations and restaurants. But those strategies have actually been a disaster, according to Laura Chambers, senior director of PayPal Mobile.

“Merchants have been burnt by NFC,” she said, referring to the cost required to build out payment infrastructure to support credit cards with NFC, which are used in “less than 1 percent of transactions.” Such cards are used more widely in Europe and Asia, but have yet to really catch on in the U.S.

Square’s Keith Rabois, chief operating officer of a company that makes a mobile credit-card reader and iPhone application, unsurprisingly agrees with Chambers’ view.

“We don’t think NFC is going to resonate with mainstream consumers,” he said in a conversation with Om Malik of GigaOm before the mobile-payment panel. “It’s good cocktail-party chatter.”

Yet NFC technology is getting serious backing from Android phone makers as well as Research in Motion (NSDQ: RIMM), while everyone waits to see if Apple (NSDQ: AAPL) decided to include the technology in the iPhone 5. Paypal is actually planning to release an app later this year that lets users of NFC phones pay each other, Chambers said, implying that Paypal will hedge its bets as it goes.

The real problem isn’t technology or tricky partnerships like Isis, a mobile-payments consortium backed by archrivals AT&T (NYSE: T) and Verizon. (“A joint venture between competitors is tough to execute on,” said Brad Greene, senior business leader at Visa, which is actually a member of Isis.)

It’s convincing people why they need or want this technology, said Ken Miller, vice president of strategic risk services at Intuit.

“The entrenched leader right now is cash or plastic, which takes two seconds. You have to come up with something that is as good or better, plus perks, to get mass consumer and merchant adoption,” he said.

There are definitely some areas to exploit. Verifone’s Talach brought up the good point that mobile-payments technologies eliminate paper from the payments equation, such as paper coupons or paper receipts.

Chambers agreed, citing a study that Paypal did examining what people carried around in their wallets. “The digitalization of coupons and loyalty cards, there’s tremendous value in that. Any solution that’s just trying to change payments is not going to be successful,” she said.

And Visa’s Barnes noted that while there is a need for extra promotion in countries where payments systems already work pretty well, there are plenty of places in the developing world where credit-card systems are poor or nonexistent, people use mobile phones constantly and distrust of banks is high. Mobile payments would be competing with cash in those areas, and could actually be seen as far more convenient and safer than walking around with a wallet full of cash.

So despite all the hype in 2011, even those working hard to promote mobile payments as a more convenient (and data-rich) method of payment for goods and services are urging caution.

“The 2010s are the decade for mobile payments,” said Intuit’s Miller, dismissing suggestions that 2012 might be the year of mobile payments. “To me it’s analogous to the Goodyear tire coming out when everyone has a horse and buggy.”