By Katie Marsal

Published: 01:00 PM EST

O2 has removed one of the barriers to wider iPhone 3G adoption in Britain with news on Monday of when and how it will offer its Pay & Go prepaid service for Apple's cellphone.

The official pricing for the unsubsidized phones is now much higher than for the devices on contract and will require £350 ($631) for an 8GB iPhone 3G and £400 ($721) for the 16GB version.

The service itself expectedly drops the regular monthly subscription fees but offers a certain amount of benefits depending on the money put into the account each month. Paying between £10 and £14 ($18 to $25) each month nets a bonus 500 minutes of call time to any UK home phone or O2 cellphone; paying between £15 and £29 adds 1,000 minutes under the same terms, while £30 or more provides unlimited calls.

Unlimited Internet access within the UK, including 3G and O2 Wi-Fi, is free for the first year of service but will cost £10 per month afterwards. Text messages aren't included with the plan, however, and cost 10p each inside the UK. Calls past the prepaid amount cost 5p per minute.

O2 also cautions possible customers that the iPhone's signature Visual Voicemail and on-the-fly call merging also aren't available through the Pay & Go plan.

Prepaid phones will be available on September 16th from both O2 itself as well as Apple retail stores and Carphone Warehouse.

The move represents a significant scaling back from briefly revealed rates in June and steer customers towards O2's more profitable contract plans, which typically sell an 8GB iPhone for just £99 ($178) but make up for the subsidized price by requiring a minimum £30 per month for service over the next 18 months. More frequent users also receive the iPhone for free with some premium subscription plans.

Pay-as-you-go service is nonetheless widely seen as necessary for the UK, where prepaid devices are more popular for customers traveling to mainland Europe.