Prepaid
Encyclopedia
Prepaid refers to services paid for in advance. Examples include postage stamp
s, tolls, transit cards like the Greater London
Oyster card
, pay as you go cell phones, and stored-value card
s such as gift card
s and preloaded credit card
s like American Express. Prepaid accounts are assets, and they are increased by debiting the account(s).
Prepaid services and goods are sometimes targeted to marginal customers by retail
ers. Prepaid options can have substantial cost reductions over postpaid
counterparts because they allow customers to monitor and budget usage in advance.
Unlike postpaid
or contract
based services, prepaid accounts can be obtained with cash. As a result, they can be established by people who have minimal identification
or poor credit rating
s. Minor
s, immigrants, student
s, defaulters, and those on low incomes are typical prepaid customers.
provider TMN
, while researching for a means to increase penetration of mobile technology by allowing anyone to buy a fully working (usually requiring a quick and simple activation process) mobile phone on any supermarket or electronics store. By removing the complications inherent to the contract system, this allowed the mobile communications user base to grow incredibly fast. In many countries this type of service became the predominant one, shortly after introduction, by providing both consumers and service providers with considerable advantages over the traditional method. In some countries, such as Italy or Mexico, market share of prepaid can be as high as 90%. In other countries, such as Finland or South Korea, the figure drops to about 2%.
A Prepaid Call (or even Calling Card) is actually established through two calls, and the first is either through an 800 Toll Free Number, and even some from the big telephone companies have them available with international toll free numbers , or you will find many that offer calling through a local phone number, usually printed on the back that offer cheaper rates but the first call costs are passed on to you, the consumer.
You place this first call to get to the providers platform, and once connected you are authenticated via a PIN or as seen in Europe or around other parts of the world the card may have an electronic chip on it, like you may have seen on the American Express Blue card. If you use the local number provided from your home or cell phone you pay for the cost of the first call, you can see this on your bills even if you don't get connected. The reason that 800 toll free is more expensive is because the Prepaid Calling Card Company pays for the attempts and even when you just call to check your balance, you only pay when you are actually connected. Many Local Telephone Companies don't show local usage so you may not see that you are paying for a local call every time you make an attempt. This is not true when you call a toll free number from a land line but with Cell phones you do use air time. With most local phone companies you can get call detail to support this.
Once you are authenticated you are usually presented with your balance then prompted for your destination number (the second call), and usually given the time left on your card based on the number you just dialed. Then you are connected.
With smaller companies beware the hidden charges when the rates are too low to be true. They mave have hidden fees or poorly advertised fees, like 3 minute rounding, connection fees, monthly, weekly, daily, or even maintenance fees. Look around when you buy these smaller name brands to make sure you know what you are buying.
The pseudonymity
enabled by prepaid services has recently become a concern with law enforcement agencies that consider it a safe haven for criminals and terrorists. As a result, a number of countries including Australia, Germany, Indonesia, Japan, Malaysia, Mozambique
, Norway, Singapore, South Africa
, Switzerland, and Thailand have passed laws to require that all prepaid customers register their personal information with their mobile carrier.
In some countries the law requires that customers notify their mobile carrier when transferring ownership of a prepaid phone or SIM card.
In Australia, the prepaid registration policy is part of a larger law enforcement initiative that includes the creation and maintenance of an Integrated Public Number Database.
refers to the purchase of an insurance policy holder from an insurer in order for the insurer to promise that losses sustained to a specific property of the policy holder (usually a person or group of people) will be compensated back to the holder by the insurer. The act of prepaying to the insurer and purchasing the terms and conditions under which the insurer will compensate the policy holder makes insurance a prepaid service.
Postage stamp
A postage stamp is a small piece of paper that is purchased and displayed on an item of mail as evidence of payment of postage. Typically, stamps are made from special paper, with a national designation and denomination on the face, and a gum adhesive on the reverse side...
s, tolls, transit cards like the Greater London
Greater London
Greater London is the top-level administrative division of England covering London. It was created in 1965 and spans the City of London, including Middle Temple and Inner Temple, and the 32 London boroughs. This territory is coterminate with the London Government Office Region and the London...
Oyster card
Oyster card
The Oyster card is a form of electronic ticketing used on public transport services within the Greater London area of the United Kingdom. It is promoted by Transport for London and is valid on a number of different travel systems across London including London Underground, buses, the Docklands...
, pay as you go cell phones, and stored-value card
Stored-value card
A stored-value card refers to monetary value on a card not in an externally recorded account and differs from prepaid cards where money is on deposit with the issuer similar to a debit card...
s such as gift card
Gift card
A gift card is a restricted monetary equivalent or scrip that is issued byretailers or banks to be used as an alternative to a non-monetary gift....
s and preloaded credit card
Credit card
A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services...
s like American Express. Prepaid accounts are assets, and they are increased by debiting the account(s).
Prepaid services and goods are sometimes targeted to marginal customers by retail
Retail
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be...
ers. Prepaid options can have substantial cost reductions over postpaid
Postpaid
Post Paid: A model of cellular service whereby the customer is charged for usage in the prior month , and hence does not feature any limitations on volume of service used...
counterparts because they allow customers to monitor and budget usage in advance.
Unlike postpaid
Postpaid
Post Paid: A model of cellular service whereby the customer is charged for usage in the prior month , and hence does not feature any limitations on volume of service used...
or contract
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
based services, prepaid accounts can be obtained with cash. As a result, they can be established by people who have minimal identification
Identity document
An identity document is any document which may be used to verify aspects of a person's personal identity. If issued in the form of a small, mostly standard-sized card, it is usually called an identity card...
or poor credit rating
Credit rating
A credit rating evaluates the credit worthiness of an issuer of specific types of debt, specifically, debt issued by a business enterprise such as a corporation or a government. It is an evaluation made by a credit rating agency of the debt issuers likelihood of default. Credit ratings are...
s. Minor
Minor (law)
In law, a minor is a person under a certain age — the age of majority — which legally demarcates childhood from adulthood; the age depends upon jurisdiction and application, but is typically 18...
s, immigrants, student
Student
A student is a learner, or someone who attends an educational institution. In some nations, the English term is reserved for those who attend university, while a schoolchild under the age of eighteen is called a pupil in English...
s, defaulters, and those on low incomes are typical prepaid customers.
Prepaid mobile phones
Recent statistics (OECD Communications Outlook 2005) indicate that 40% of the total mobile phone market in the OECD region consists of prepaid accounts. This service was invented by PortuguesePortugal
Portugal , officially the Portuguese Republic is a country situated in southwestern Europe on the Iberian Peninsula. Portugal is the westernmost country of Europe, and is bordered by the Atlantic Ocean to the West and South and by Spain to the North and East. The Atlantic archipelagos of the...
provider TMN
Telecomunicações Móveis Nacionais
TMN – Telecomunicações Móveis Nacionais, S.A., headquartered in Lisbon, is Portugal's first mobile communications company, both chronologically and in market share.-Chronology:1991...
, while researching for a means to increase penetration of mobile technology by allowing anyone to buy a fully working (usually requiring a quick and simple activation process) mobile phone on any supermarket or electronics store. By removing the complications inherent to the contract system, this allowed the mobile communications user base to grow incredibly fast. In many countries this type of service became the predominant one, shortly after introduction, by providing both consumers and service providers with considerable advantages over the traditional method. In some countries, such as Italy or Mexico, market share of prepaid can be as high as 90%. In other countries, such as Finland or South Korea, the figure drops to about 2%.
A Prepaid Call (or even Calling Card) is actually established through two calls, and the first is either through an 800 Toll Free Number, and even some from the big telephone companies have them available with international toll free numbers , or you will find many that offer calling through a local phone number, usually printed on the back that offer cheaper rates but the first call costs are passed on to you, the consumer.
You place this first call to get to the providers platform, and once connected you are authenticated via a PIN or as seen in Europe or around other parts of the world the card may have an electronic chip on it, like you may have seen on the American Express Blue card. If you use the local number provided from your home or cell phone you pay for the cost of the first call, you can see this on your bills even if you don't get connected. The reason that 800 toll free is more expensive is because the Prepaid Calling Card Company pays for the attempts and even when you just call to check your balance, you only pay when you are actually connected. Many Local Telephone Companies don't show local usage so you may not see that you are paying for a local call every time you make an attempt. This is not true when you call a toll free number from a land line but with Cell phones you do use air time. With most local phone companies you can get call detail to support this.
Once you are authenticated you are usually presented with your balance then prompted for your destination number (the second call), and usually given the time left on your card based on the number you just dialed. Then you are connected.
With smaller companies beware the hidden charges when the rates are too low to be true. They mave have hidden fees or poorly advertised fees, like 3 minute rounding, connection fees, monthly, weekly, daily, or even maintenance fees. Look around when you buy these smaller name brands to make sure you know what you are buying.
The pseudonymity
Pseudonymity
Pseudonymity is a word derived from pseudonym, meaning 'false name', and anonymity, meaning unknown or undeclared source, describing a state of disguised identity. The pseudonym identifies a holder, that is, one or more human beings who possess but do not disclose their true names...
enabled by prepaid services has recently become a concern with law enforcement agencies that consider it a safe haven for criminals and terrorists. As a result, a number of countries including Australia, Germany, Indonesia, Japan, Malaysia, Mozambique
Mozambique
Mozambique, officially the Republic of Mozambique , is a country in southeastern Africa bordered by the Indian Ocean to the east, Tanzania to the north, Malawi and Zambia to the northwest, Zimbabwe to the west and Swaziland and South Africa to the southwest...
, Norway, Singapore, South Africa
South Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
, Switzerland, and Thailand have passed laws to require that all prepaid customers register their personal information with their mobile carrier.
In some countries the law requires that customers notify their mobile carrier when transferring ownership of a prepaid phone or SIM card.
In Australia, the prepaid registration policy is part of a larger law enforcement initiative that includes the creation and maintenance of an Integrated Public Number Database.
Energy
In 1999, Texas deregulated the energy industry by allowing third-party affiliates to offer electricity services. As a result, a handful of Texas companies are offering the ability to prepay your electricity, with the balance going toward the posted kilowatt hours rate.Relation to insurance
InsuranceInsurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
refers to the purchase of an insurance policy holder from an insurer in order for the insurer to promise that losses sustained to a specific property of the policy holder (usually a person or group of people) will be compensated back to the holder by the insurer. The act of prepaying to the insurer and purchasing the terms and conditions under which the insurer will compensate the policy holder makes insurance a prepaid service.