Fresh from PayPal’s (s ebay) renewed push this week to win over Internet and mobile payments, AT&T (s 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 (s vz) 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.5 percent plus 5 cents that PayPal
“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.
Related content from GigaOM Pro (subscription req’d):