We where previously discussing prepay versus subscription in the cellular network business. Now we want to go into prepaid electricity supply. Niti Bhan is reporting about the benefits of prepaying by example of John Lumbe out of Blantyre, Malawi. I spent myself 3 month down in Blantyre, and a was not a friend of topping up my electricity counter. As i grew up in Austria, electricity was always there. You just plug a device in, and it is lighting up and working. Prepaying therefor is just overhead. Why should you prepay, when you have electricity at almost no cost and the supplying company is just charging your account?

In lesser developed countries the situation is different. Companies don’t trust their customers. They want the money in advance. The consumption behavior is different. People want to spend small amounts of money to services and want to get a short experience. E.g. people spent this affordable small amount of money to plug in their TV an watch the news 5 minutes a day. On the other hand business owners can benefit from the prepaid system:

– No writing off of bad debts
– Cost decrease
– Simplifying management information
– Help companies to cope with uncertainty

[bullets taken from here]