UK operator O2 has teamed up with billing company MACH to enable direct operator billing on its new Charge to Mobile platform.

Charge to Mobile is a new way for O2 customers to buy digital goods, such as apps and music, using a mobile phone. If the customer is on Pay & Go the cost of the item will be taken from their credit, and if they are on Pay Monthly it will go on their mobile bill.

Unlike traditional operator billing methods such as Premium SMS or WAP billing, which are often regarded as cumbersome, MACH's Direct Billing Gateway provides a real time charging process, which reduces drop-off rates and increases the likelihood of customers continuing through to purchase.

It also allows users to buy apps regardless of whether they have a credit card or are on a pre- or post-paid contract. This significantly increases the market for apps purchases, further driving revenue growth for merchants and operators.

“There is little doubting that apps and online content represents an important revenue stream for us and our partners and we are now confident that we have a best-practice approach to monetising this exciting area of mobile communications,” said Danny Barclay, Head of Interactive Sales at O2.

App stores and merchants will also be able to benefit from features such as flexible pricing and direct refund capabilities on the O2 UK network.

“We are excited to see direct operator billing gain further currency within the industry,” said Michael De Jongh, global head of sales for Mobile Billing and Payments at MACH.

Back in october, O2 announced that it was increasing pay-out rates to merchants, in order to help drive adoption of mobile billing. The aim is to drive costs down to the point where selling digital goods through operator billing becomes commercially viable.

The operator has already secured global framework agreements with with Facebook, Google, Microsoft and BlackBerry maker Research In Motion (RIM) to enable customers to purchase digital goods using their mobile phones.