Pre-payment

There is a great system called pre-payment for purchasing items such as mobile phones whose use requires the ongoing payment of subscription charges. Even pre-paid paper envelopes which come with things such as magazine subscription offers and bills are a good idea. They are useful for the sender because they are pre-paid and pre-addressed and efficient for the recipient as they encourage replies and are often colour-coded depending on the type of query for easier processing.

It used to be the case that if you wanted to buy a mobile phone, you had to sign up for a fixed minimum contract of at least 12 months duration, sign a contract to that effect, be credit checked to make sure you could pay the charges, face a disconnection fee if you wanted to cancel service or change networks before then, give notice, receive monthly bills, and face unavoidable dealings with incompetent personnel from telephone bill generating companies.

Instead, pre-payment turns this proposition on its head with no contract, no credit check, no bills, no monthly network access charge and no minimum contract period. Instead the phone owner simply renews their airtime credit periodically (and preferably electronically) when they have nearly used it up. The individual is no longer locked into a particular network or contract.

Whilst the traditional one year contract is (just) within an individual’s planning sphere, pre-payment gives us greater ability to control and end mobile phone spend, protecting against open ended high telephone bills.

Pre-payment is not only advantageous to the customer, but also to the mobile phone networks. It guards against the occurrence of bad debt because customers pay to use the network in advance. It also reduces the incidence of so-called "churn" which is nothing to do with butter but instead describes customers who return their phones before the minimum contract period because they can’t afford them, don’t need or like them or for whatever reason.

Some network operators persist in falsely positioning pre-payment merely as a sort of second class cellular service aimed at poor people. It is the option which is offered so as not to lose a potential customer in the case that they fail the credit check (as typically one-third of applicants do). In fact, pre-payment is a better way of buying and selling cellular service.

Gain the advance advantage. Refresh. Pre-pay.

Author: Simon Buckingham

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To make a comment to the author, send e-mail to simon@unorgan.com

 

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