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.

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PayPal hosted a partner event for retailers yesterday and began explaining how they’ll be able to implement its tools for in-store payments. The big reveal will happen next month at PayPal’s developer conference in San Francisco, but the company showed a glimpse of how it’s marshaling its resources. It’s important for PayPal to step up with a compelling offering because the mobile payments market is getting crowded with options like Square, Google Wallet and upcoming services like Isis from the cellular carriers and digital wallets from credit card companies.

Scott Thompson, president of PayPal, said in a blog post the company is looking to be a one-stop shop for merchants to help them address every part of the shopping lifecycle. OK, that’s a bit of jargon, but it means PayPal is going to help push out targeted advertising, help with in-store discovery and improve transactions with a handful of options.

In a video provided by PayPal, it shows how users will be able to walk into a store and check in to a location to unlock discounts and coupons. When a consumer goes to check out, he’ll be able to pay by entering his phone number. That leverages eBay’s purchase of Zong and its carrier billing capabilities, though it’s not clear how much easier or more convenient that is for consumers who pay with a credit card swipe. But it does open up the option to use carrier billing for physical goods in-store, which is good for people without a card, though the question of how large the transactions fees will be is important. Right now, carrier billing fees are still much higher than credit card fees, which might deter some merchants.

Users will also be able to scan items in-store and pay for them with PayPal without having to get in line. Customers can just flash their phone to an employee who will confirm the purchase. This is very much like AisleBuyer and it sounds like PayPal is looking to bring this to restaurant bills as well, something Thompson hinted at in his blog post. This is a cool step that makes sense for people who want to get in and out quickly.

Customers will be able to apparently pay ahead for coffee ahead of time and pick it up. Users will also be able to choose how they pay for something after the purchase with PayPal Credit, which seems to leverage eBay’s BillMeLater. All of this appears to work through PayPal’s mobile application and doesn’t seem to require any new investments by merchants. That’s a big concern for mobile payments built on near field communication, which requires many businesses to upgrade their point-of-sale terminals to handle contactless payments.

The new mobile payment tools don’t appear to include NFC payments. PayPal recently introduced person-to-person payments using NFC on Android devices, but the company told me at the time it was just focusing NFC on P2P payments. It sounds like PayPal is trying to work around the hardware constraints of NFC payments at point of sale.

Other shopping features on display included the ability to get push notifications for discounts that can be shared, which appears to build off eBay’s acquisition of WHERE. Consumers will also be able to scan an item in store and find inventory at other locations, something eBay got from its RedLaser and Milo pick-ups.

It’s unclear how soon all of this will come together and how many merchants will sign on. But providing a complete service for retailers and businesses to not only push out offers and discounts but also complete the transactions makes sense. Merchants can close the loop on transactions and understand how their marketing is doing. This is essentially what Google is trying to do with Google Wallet and Offers though it’s focusing primarily on facilitating targeted marketing, rather than taking a cut of transactions.

PayPal’s payment initiative is part of eBay’s broader commerce platform called X.commerce, which it’s building off the acquisition of Magento.

But there’s also a lot of questions to be answered. For instance, will consumers find this more convenient than a card swipe? Will PayPal make it any easier for people to set-up and manage accounts? Do all of these parts work well together in one solution? And how aggressive will PayPal be in selling this to merchants and consumers? I’ll be interested to hear more and I think PayPal can be a big contender if it gets its execution right. This is going to be a big market but it will require not only great tools but a lot of smart selling to consumers and merchants.

To hear more about mobile payments, check out our GigaOM Mobilize conference Sept. 26 and 27 in San Francisco.

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Zong, which was backed by Matrix Partners, Advent Venture Partners and Newbury Ventures, works with 250 carriers around the world to enable transactions that are placed on an operator bill. The systems is used to facilitate payments for digital goods and services in 45 countries.

The pickup signals how PayPal is bulking up to take on the mobile payments market. It recently said it expects to do $3 billion in mobile transactions this year and has hit 100 million accounts. It said it has more than 8 million customers making purchases on their mobile phones through PayPal, with $10 million in mobile payments a day.

“Commerce is changing. With mobile phones, we walk around with a mall in our pockets. PayPal helps to make money work better for customers in this new commerce reality — no matter how they want to pay or what device they’re using,” said Scott Thompson, president of PayPal. “We believe that Zong will strengthen this value by helping us reach the more than 4 billion people who have mobile phones, giving them more choice and security when they pay.”

EBay has been on a buying spree as it sharpens its mobile and local ambitions. It recently bought Magento to launch to a commerce platform. And it previously bought WHERE, GSI, RedLaser, Milo and others to help the company move into local commerce. It shows that e-commerce is increasingly turning into mobile commerce and that the big opportunity is in tying together online and offline actions and purchases. While online commerce is big, the larger market by far is real-world transactions. Those are increasingly influenced by smartphone-wielding consumers, and now the next step is to facilitate more transactions through the phone. It’s a market that Google, Square, the carriers and a host of others are vying for.

The purchase of Zong suggests that we’ll see more acquisitions and mergers as the mobile payments market heats up. Juniper Research just predicted that mobile payments will be a $670 billion market by 2015. Others competitors like Boku could be ripe for acquisitions as companies look to prepare for the boom in mobile payments. The Zong acquisition is expected to close in the third quarter of this year.

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That means developers will be able to include payments in many more applications, giving them another way to make money through in-app purchases. Zong has already enabled this on Android and HTML, but the expansion positions its well for other mobile, web and TV platforms. Developers just need to get a user’s mobile phone number and then they send them a text message confirming a purchase, which is billed to their mobile phone.

Zong has found success helping developers sell virtual goods. But over time, it sees mobile payments handling a lot more transactions, including, eventually, physical items. Gaming consoles make a lot of sense because developers are already selling virtual items in-game. By expanding to Flash, it enables a community of some 3 million developers to include more payment options. Unity is one of the top mobile game development platforms, known for providing developer tools for building 3-D games. And by expanding to interactive TV, Zong hopes it can be a payment option as TV apps emerge.

“Mobile payments are gaining traction on all platforms and devices because the convenience is unrivaled,” said Zong CEO David Marcus.  ”Zong’s new platform enables merchants and developers to integrate mobile payment in virtually any environment, be it on a PC, a mobile phone, a tablet or a television.”

Zong also announced that its one-touch payment system for Android is now ready for Android 3.0 Honeycomb tablets. As we’ve talked about, mobile payments through carrier billing is emerging as a viable option for many digital purchases. It offers a quick way to pay for items using an existing phone account, which is convenient for consumers. The problem has been higher fees associated with mobile payments, which have traditionally been through premium SMS. But as Zong and others enable more direct carrier billing, the fees are dropping below 20 percent, opening up the potential for transactions of more products.

It makes sense for Zong to expand and equip more developers with the tools for mobile payments. It will work more for digital goods right now because of the higher fees, compared to credit cards. But those fees will likely come down even more, opening the potential for more sales. But what opposition might Zong face from platform owners, who are increasingly looking to own the purchase process because they can take a cut of the transaction? That could be one thing that slows down mobile payment providers if it becomes tough or impossible to keep offering payments on some platforms.

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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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Papaya Mobile, a Chinese social game maker with more than 3 million users, will support Zong’s one-click payment system, which enables users to buy virtual goods and currency and have their purchases added to their carrier bill. Papaya Mobile said developers who use its virtual currency system will also be able to utilize Billing Revolution for one-click credit card purchases.

The Zong announcement opens a new era for Android developers, who have been waiting for in-app purchase solutions. It’s been one of the reasons why some developers have been slow to write for Android because it was harder to monetize than the iPhone, which has had in-app purchases for more than a year.

This appears to be the first of several options on the way. We wrote back in June about Zong and Boku both trialing in-app payment purchase systems for Android. PayPay also announced earlier this year it would support in-app purchases for Android and was reportedly also in talks with Google to become an alternative payment system for Android Market. Combined with Google’s moves to expand the number of countries whose consumers can purchase Android Apps, and the pieces are falling into place for more dollars for Android developers.

Android Market has grown to 90,000 apps, with more than half of them free, which is sort of fitting for Android’s open source roots. But as Android looks to compete with the iPhone, RIM and come-back candidate Windows Phone 7, it needs to expand its developer base by accommodating app makers who want to make money from their apps. The deal with Zong is the first of many that should get Google to this goal.

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Post and thumbnail photos courtesy of Flickr user Marcin Wichary

What panelists disagreed upon was how to do it, and who would win. One key tension was around near-field communication, or NFC, the use of short-range wireless to exchange data that has never really gained traction. Geoff Iddison, who leads e-commerce and mobile for MasterCard, is a huge NFC proponent — which is kind of counterintuitive, considering NFC would replace physical credit cards. Iddison pointed to Nokia’s inclusion of NFC in all its phones, indications that Apple and Google are getting in on the game, and reports from NFC manufacturers that they have a backlog of orders. MasterCard has been actively working on NFC standards, he said, adding that mainstream use of the technology should happen within six to nine months. The benefit of NFC will be bringing dynamic redemption of coupons and security to the point of sale, things that credit cards can’t do, Iddison said.

Tapping a phone at the point of sale to pay for something is hardly more convenient than swiping a credit card, said Osama Bedier, the VP of platform, mobile and new ventures for PayPal. While NFC might be useful for things like checking into a social service a la Foursquare, one of the big benefits of mobile payments is getting around the physical point-of-sale transaction bottleneck, he said. So PayPal is working on ways to make money digital like allowing customers to deposit a check by taking a picture of it, bypassing banks.

Zong CEO David Marcus is also ambivalent about NFC, saying it’s already a good experience to buy a cup of coffee at Starbucks with a credit card. The opportunity is to innovate around customer relationship management, offers and other functions associated with payments, he said. Zong primarily offers mobile payments for virtual goods, but Marcus sees that as a sort of gateway drug to familiarize users with the mobile payment function online and then move that to the offline world.

Boku co-founder Ron Hirson nailed down a few actual predictions for when this all will happen. Remote mobile payments will grow this year. Next year, the competitive landscape will become clear with AT&T, T-Mobile, Discover and others’ “Project Mercury” mobile payments joint venture. And in 2012, he believes the market will consolidate. Borrowing the company names of the panelists on either side of him, Hirson proposed the combined entity might be called “MasterPaloku.”

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