Mopay Inc., a Germany-based mobile-payments company, anticipates that the fees charged for purchases applied to mobile-phone bills will decrease significantly by the end of the year.
Typically, merchants using Mopay’s payment platform, which enables consumers to charge virtual, digital or physical goods to their mobile-phone bills, pay carriers 40% of each sale, Kolja Reiss, Mopay director, tells PaymentsSource. Comparatively, they can pay as much as 5% per credit card transaction and 3% to 5% for debit card purchases, he notes.
Many carriers charge such high fees because “they do not see themselves as a card company like Visa Inc. or MasterCard Worldwide, so they do not have to follow the same rules,” Reiss says.
The mobile-payments industry is working with network operators to prepare their platforms for third-party transactions, which could lead to them lowering their fees, Reiss says. “As the platforms evolve, operating costs will decrease, … allowing for lower transaction fees,” he explains.
By the end of the year, Mopay estimates fees will decrease to 20% of the sale, Reiss says. The ultimate goal is to lower the fees to 5% by 2012, he adds.
Most transactions applied to mobile-phone bills through platforms such as Mopay’s average about $10, so merchants naturally want to lower the rates, Bart Narter, a senior vice president with marketing research firm Celent, tells PaymentsSource. But it is somewhat surprising that many merchants allow consumers to apply purchases to their mobile-phone bills because the processing fees are so high, Narter says.
But if that is the only way merchants can earn money for their services, then they may just have to accept it, he notes.
Indeed, “Mopay is on the right track to get these fees lowered, but the question is how Mopay will ultimately get carriers to agree,” Narter contends.
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