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I've been doing the bulk of my purchases on Kobo through the Android app for the past year or two. What I can tell you is that they seem to flip their billing system on a whim every few months. Right now, it's going through the Google Play billing system (meaning it would charge a credit card you have stored in your Google wallet). But that seems to have flipped back in the past couple weeks--prior to that, it was using Kobo's native billing system. During that time you could have used your balance to pay for the book.
I don't particularly mind using the Google Play billing system, because it means that Kobo doesn't store any of my credit info. If I have a balance that I need to apply, I simply open Kobo in the browser on my phone or laptop instead.
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