Prepaid Mobile Phone - Overview of The Prepaid Service

Overview of The Prepaid Service

A prepaid mobile phone has access to most if not all of the services offered by a mobile phone operator, although the charges for these services may differ from customers with the same operator who have a postpaid contract.

In addition, a prepaid phone has a balance which can be queried at any time, and also topped up periodically. Examples of ways in which the balance can be topped up are the following:

• a credit card or debit card
• direct from a bank account using an ATM
• in a retail store by purchasing a "top-up" or "refill" card at retail. These cards are stamped with a unique code (often under a scratch-off panel) which must be entered into the phone in order to add the credit onto the balance.
• in a retail store using a swipe card where the balance is credited automatically to the phone after the retailer accepts payment.
• from other mobile phones on certain networks which provide international top-up services, where the initiator of the top up is often a migrant worker wanting to add minutes to the prepaid mobile phone of a family member back home.
• direct from some open-loop prepaid cards featuring a mobile refill service.
• through electronic reloading where a specially designed SIM card (Retailer's SIM card as used to define in the Philippines and India) is used to reload a mobile phone by entering the mobile number and choosing the amount to be loaded. This process is widely implemented in the Philippines and India so that any person can be a prepaid load retailer creating a nationwide availability of reloading stations, even in remote areas.

Credit purchased for a prepaid mobile phone may have a time limit, for example 90 days from the date the last credit was added. In these cases, customers who do not add more credit before expiration will lose their remaining balance.

There is no compulsion on a prepaid mobile phone user to top up their balance. To maintain revenues, some operators have devised reward schemes designed to encourage frequent top ups. For example, an operator may offer some free SMS to use next month if a user tops up by a certain amount this month.

Unlike postpaid phones where subscribers have to terminate their contracts, it is not easy for an operator to know when a prepaid subscriber has left the network. To free up resources on the network for new customers, an operator will periodically delete prepaid SIM cards which have not been used for some time, at which point their service (and its associated phone number) is discontinued. The rules for when this deletion happens varies from operator to operator, but may typically occur after 6 months of non-use.

By 2003 the number of prepaid accounts grew past contract accounts, and by 2007, two thirds of all mobile phone accounts worldwide were prepaid accounts.