AT&T Tests Out Direct Mobile Billing as a Credit Card Replacement

Mobile payments have long been one of the most promising payment methods on Facebook. Mobile has also been a double-edged sword for developers, though, since American carriers have traditionally charged a huge fee (relative to what is often a small bill of only a few dollars) for SMS transactions, which are the only method available.

That charge is a holdover from an earlier period, when carriers made big money on ringtones. Today AT&T is signaling that it may be ready to try a new model, with a trial of direct mobile billing using the customer’s phone number and charging a low, percentage-based fee for transactions.

You may see announcements out this morning claiming that AT&T has partnered with a specific company for the trial, but the carrier is actually being promiscuous — it’s testing out BilltoMobile, Boku and Zong all at once. The payment trial may also be a test of the three startups, which have been fighting for the mobile payment market worldwide.

Notably, none of the companies appear to be talking about how large AT&T’s cut is with direct billing. To be competitive with credit cards and other payment methods, though, AT&T will have to charge a percentage fee that approaches the single-digit cut that credit cards use.

The payment screen is about as simple as it gets. Here’s an example from Boku:

In the first screen, the user enters their mobile number. They’ll then receive a confirmation text, to which a reply of “y” completes the transaction.

While any movement from the US carriers towards acceptance of online payments, whether for virtual or real goods, is a positive sign for the Facebook game development industry, the AT&T trial is just the first step.

Earlier this month, we found in an Inside Facebook Gold survey that the vast majority of users still prefer to pay with familiar names like Visa and Paypal over Zong and other startups. That sentiment may shift with time, but it’s not likely to move quickly.