Apple expands e-commerce on iPhone

Apple has begun allowing in-app transactions for free applications on its iPhone and iPod Touch handsets.

The company said that developers would be allowed to perform transactions within free applications offered through the company's App Store service. Previously transactions had been only available in paid applications.

The addition of free apps to the payment service will allow developers to create one version of an App which the user can then pay to update to a premium version. Previously, developers had been forced to create separate free "lite" versions and paid "premium" versions.

The company also suggested to developers in a mass email that by using a single version, studios can eliminate both user and developer hassle associated with migrating over to a separate version of an application.

In addition to allowing users to purchase different versions of a game from a free download, the new feature can also allow developers to find new ways to monetize their applications.

Apple suggested that premium features such as content subscriptions, in-game upgrades and additional content could now be offered on an App that is an otherwise free download.