“Consumers will always choose the option that is easier for them,” said Todd Ablowitz, president of Double Diamond Group LLC. “If consumers are buying something online or on their mobile phone, the fewer keys they have to press, the more likely they are to complete the purchase.”

The fees vary by carrier but usually are between 10% and 40% of the sale, Ferguson said. By comparison, merchants may pay up to 3% of the sale to accept credit and debit cards, Ablowitz said.

Despite some merchants’ willingness to pay higher transaction fees, others remain hesitant to support direct carrier billing because of the slower settlement time and possible spending caps, Ablowitz said.

Moreover, unless the consumer has a prepaid phone account, merchants and carriers do not get paid until after the consumer pays, which may take a few weeks, Ablowitz said. Many merchants may not want to wait that long, he said.

American Banker, April 13, 2011
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