AT&T is rolling out a trial of direct carrier billing with Zong, BilltoMobile and Boku. The trial represents the biggest push to date for direct mobile billing, which allows a consumer to buy a product and bill it directly to their wireless bill.


Fresh from PayPal’s renewed push this week to win over Internet and mobile payments, AT&T is rolling out a trial of direct carrier billing with Zong, BilltoMobile and Boku. The trial represents the biggest push to date in the U.S. for direct mobile billing, which allows a consumer to buy a product and have it added directly to their wireless bill. Verizon Wireless rolled out a partnership with BilltoMobile earlier this year, but now AT&T may help accelerate the adoption of direct billing by extending the service through some of the biggest names in mobile payments.

This could be a major turning point in helping accelerate the growth of mobile payments, a market that could be worth an estimated $633.4 billion by 2014. Consumers have already been able to pay by phone using services like Zong and Boku, but most of those transactions in the U.S. are through premium SMS (simple message services). Premium SMS billing has had limited appeal with merchants, however, because it often requires fees from the carriers of up to 50 percent of the total transaction.

Direct billing, which both Zong and Boku offer overseas, would bring those fees down to somewhere in the teens — well under 20 percent. Mobile-payment leaders are hoping that by connecting directly into an operator billing system to bring down the fees, they’ll be able to spur adoption among merchants, who may be attracted by the simplicity and relatively frictionless process of billing to a carrier, and also among consumers. A user would simply enter in their phone number when they want to purchase a product and then get a text message confirming the purchase before the transaction is posted to their wireless bill. It’s still more expensive than credit cards or the 5 percent plus 5 cents that PayPal said it will charge for digital goods this week. Mobile payment companies hope the ease of use will help trigger impulse transactions that might have been held up by the lack of a PayPal account or credit card.

“We’re not trying to cannibalize credit cards or an other payment options; it’s incremental,” said Jim Greenwell, CEO of BilltoMobile. “There’s no registration, no friction. Just input the phone number and get a text message confirmation. That’s as safe as you can get if you’re doing an impulse purchase.”

BilltoMobile, in partnership with its largest shareholder Danal Co. of South Korea, is among the leaders in direct carrier billing, which is much bigger in Asia and Europe than in North America. Greenwell said Danal has processed $3 billion since the company launched ten years ago. While most of the purchases are for online digital goods, 20 percent of transactions in South Korea are for non-digital products and services such as movie tickets and dating sites. Zong has also built a strong direct carrier billing business and said now 60 percent of its payment volume is processed through direct carrier integration.

It’s unclear how long the AT&T trial will take, but coupled with PayPal’s pledge to compete for mobile, we may be seeing the start of a mobile payments boom in the U.S. With so much money at stake, it’s surprising that it’s taken this long.

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  1. Typical carrier effort. Get involved late and then charge too much…..Fail. Could it work for some class of product with high margins??

  2. Question for BilltoMobile: Why not try to cannibalize credit cards and other payment options? Instead of being satisfied with incremental, impulse purchases, could you not significantly lower your fees and take some market share from credit cards and other payment options? CEO Greenwell may be posturing, or more likely, I may be missing something, but I do not understand why these upstarts would be satisfied with high fees on a sliver of the pie when their total take and growth might be much higher with lower fees on a big piece of the pie. Maybe that’s where they go long term after first establishing themselves.

    1. Unfortunately, any attempt to cannibalize other payment options would be met with much disdain by the financial institutions, who believe that in the area of patments, they own the customer (especially here in the US). Bottom line, in the area of mobile payments, the carriers and financial institutions need each other. These carriers cannot afford (yet) to start taking away money that FIs believe belong to them. As for the huigh rates, carriers are looking for new revenue streams, and they will take as much of the pie as they can before those start to erode.

  3. Good article up to that last line. “It’s surprising it’s taken this long” says “I don’t know very much about payments.” There are a host of reasons why payment methods that work in Korea or Japan haven’t been adopted here and almost all of them stem from consumers. When you look at how Americans like to pay for things, and how they’re not asking merchants for a new payment method, it’s not surprising at all. This service has been tried dozens of times in the US and has always failed because it’s filling a need no one has.

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  5. Guys, I think you will find this “direct Billing” has been available for about 5 years.

    Bango activated this back in 2005 and it has since been deployed on Sprint and T-Mobile

    refers to the deal with Cingular which then rolled out on AT&T in 2006.

    Companies like Fox, WWE, Thumbplay, Dada, BlinkoGold etc have been using it for years.

    What is new is that AT&T will be offering higher outpayments for certain types of service billed to mobile.

  6. [...] is trying out direct carrier billing with Zong, BilltoMobile and Boku, according to GigaOm. "This could be a major turning point in helping accelerate the growth of mobile payments, a [...]

  7. [...] and AT&T have also have already rolled out their own carrier billing systems through BilltoMobile and other payment platforms like Zong and Boku. And while that can be used to [...]

  8. [...] to have to take a smaller cut of Bad Piggy Bank transactions. We’ve seen that operators are trying more carrier billing options and appear to be willing to take a smaller percentage of transactions compared to premium SMS [...]

  9. [...] BilltoMobile deal provides more momentum for carrier billing in the U.S. Last October, AT&T announced trials of carrier billing with BilltoMobile, Boku and Zong. It’s likely Boku will also try to secure its own direct deals with Verizon and other carriers. [...]

  10. [...] deal with a major carrier, which it did with Verizon in March of last year. It later secured a trial with AT&T in October along with Zong and [...]


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