A prepaid mobile phone (also commonly referred to as pay-as-you-go, pay-as-you-talk, pay and go, or prepaid wireless) is a mobile phone for which credit is purchased in advance of service use. The purchased credit is used to pay for mobile phone services at the point the service is accessed or consumed. If there is no available credit, then access to the requested service is denied by the mobile phone network. Users are able to top up their credit at any time using a variety of payment mechanisms.
The alternative billing method (and what is commonly referred to as a mobile phone contract) is the postpaid mobile phone, where a user enters into a long-term (generally lasting 12, 18, or 24 months) or short-term (also commonly referred to as a rolling contract or a 30-day contract) billing arrangement with a mobile network operator or carriage service provider (CSP).
"Pay-as-you-go", "PAYG", and similar terms are also used for other non-telephone services paid for in the same way.
The history of the prepaid mobile phone begins in the 1990s, when larger markets were being sought after by the mobile phone operators. Before this date, all mobile phone services were offered on a post-paid basis, which excluded people with a poor credit rating.
One of the first pre-paid card was called "Mimo" and was launched by TMN the Mobile Phone Operator of Portugal Telecom in September 1995.In 2006 Swisscom celebrated a ten-year's success story with its product and service "NATEL(R) easy" which also holds a patent on the topic "Prepaid mobile subscriber identification card and method implemented thereby".
In the early years, prepaid mobile phones could only be used within the operator's network from whom the customer purchased the phone. It was not possible to roam onto other GSM networks when using the phone abroad. This was because the operator had no way to bill calls in real time from another network.
However, most prepaid phones now offer roaming using one of the following methods:
The prepaid mobile phone user dials a "trigger" number from the foreign location using a USSD message which is not charged for while roaming. Upon receipt of the USSD, the customer's operator will then return the call. When the service calls back, the user is being charged for the cost of the service from the credit available in the home network. The service will then prompt the user to enter the dialed number of the party to be called. The disadvantage of this method of roaming is that the user will not be able to dial numbers directly from the handset. The advantage is that it works in almost all locations around the world since USSD is ubiquitous and free.
The user can direct dial from their handset if the network they are roaming in supports CAMEL (Customized Applications for Mobile networks Enhanced Logic). This allows real time billing by the home operator without having to dial the customer back. The advantage is that it is more natural and works seamlessly. The disadvantage is that not all networks support CAMEL so the list of countries where a prepaid customer can use their phone abroad is smaller than for postpaid mobile phones.
In an effort to differentiate the prepaid from post-paid service for their customers, CSPs have branded prepaid services differently from the post-paid services. A variant of post-paid service has emerged in recent years that comes closer to the prepaid service, by offering a "pay monthly" contract.
Usage of prepaid cellphone service is common in most parts of the world. Around 70% of customers in Western Europe and China use prepaid phones with the figure rising to over 90% for customers in India and Africa. 23% of cellphone users in the United States were using prepaid service as of 2011, a share that's expected to rise to 29% by 2016. Prepaid SIM cards are also becoming a variation of the traditional prepaid cellphone plans. Rather than needing to purchase an entirely new phone, existing phones can be used by simply replacing the SIM card within the device.
The alternative billing method (and what is commonly referred to as a mobile phone contract) is the postpaid mobile phone, where a user enters into a long-term (generally lasting 12, 18, or 24 months) or short-term (also commonly referred to as a rolling contract or a 30-day contract) billing arrangement with a mobile network operator or carriage service provider (CSP).
"Pay-as-you-go", "PAYG", and similar terms are also used for other non-telephone services paid for in the same way.
The history of the prepaid mobile phone begins in the 1990s, when larger markets were being sought after by the mobile phone operators. Before this date, all mobile phone services were offered on a post-paid basis, which excluded people with a poor credit rating.
One of the first pre-paid card was called "Mimo" and was launched by TMN the Mobile Phone Operator of Portugal Telecom in September 1995.In 2006 Swisscom celebrated a ten-year's success story with its product and service "NATEL(R) easy" which also holds a patent on the topic "Prepaid mobile subscriber identification card and method implemented thereby".
In the early years, prepaid mobile phones could only be used within the operator's network from whom the customer purchased the phone. It was not possible to roam onto other GSM networks when using the phone abroad. This was because the operator had no way to bill calls in real time from another network.
However, most prepaid phones now offer roaming using one of the following methods:
The prepaid mobile phone user dials a "trigger" number from the foreign location using a USSD message which is not charged for while roaming. Upon receipt of the USSD, the customer's operator will then return the call. When the service calls back, the user is being charged for the cost of the service from the credit available in the home network. The service will then prompt the user to enter the dialed number of the party to be called. The disadvantage of this method of roaming is that the user will not be able to dial numbers directly from the handset. The advantage is that it works in almost all locations around the world since USSD is ubiquitous and free.
The user can direct dial from their handset if the network they are roaming in supports CAMEL (Customized Applications for Mobile networks Enhanced Logic). This allows real time billing by the home operator without having to dial the customer back. The advantage is that it is more natural and works seamlessly. The disadvantage is that not all networks support CAMEL so the list of countries where a prepaid customer can use their phone abroad is smaller than for postpaid mobile phones.
In an effort to differentiate the prepaid from post-paid service for their customers, CSPs have branded prepaid services differently from the post-paid services. A variant of post-paid service has emerged in recent years that comes closer to the prepaid service, by offering a "pay monthly" contract.
Usage of prepaid cellphone service is common in most parts of the world. Around 70% of customers in Western Europe and China use prepaid phones with the figure rising to over 90% for customers in India and Africa. 23% of cellphone users in the United States were using prepaid service as of 2011, a share that's expected to rise to 29% by 2016. Prepaid SIM cards are also becoming a variation of the traditional prepaid cellphone plans. Rather than needing to purchase an entirely new phone, existing phones can be used by simply replacing the SIM card within the device.
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