Mobile-payment companies have moved away from this model to direct-to-mobile billing, whose transaction-billing rate falls between 10% and 20% of the sale.

The rate is not where it needs to be, but more merchants are willing to accept it, one mobile-company executive tells PaymentsSource.

However, such rates will prevent the direct-to-mobile billing model from becoming mainstream, Todd Ablowitz, president of Double Diamond Group, a Centennial, Colo.-based consulting firm, tells PaymentsSource.

“I’m very skeptical that [billing model] is going to have a huge amount of success,” Ablowitz says.
Another flaw to the system is how long it would take Rovio to receive funds from the transaction, he adds. “[The mobile-payment company] doesn’t see any money until after the carrier gets paid.”

Despite the flaws, companies and investors involved with direct-to-mobile billing view the model as a payments trend, Ablowitz adds.

Payments Source, December 23, 2010