Prepayment empowers customers, increases efficiency

Don Hsieh, VeriFone

Deregulation, privatization and increased competition have created an exceptionally challenging business environment for utilities. Consumers are demanding improved convenience and higher-quality service, or they will take their business elsewhere. This means that utilities must look to new solutions, new partnerships and expanded retail points-of-presence to increase efficiency and to attract and retain customers. Utilities are looking to prepayment to significantly reduce costs, strengthen customer relations and improve the customer experience.

New technologies, including smart cards and electronic meters, are enabling utilities to obtain richer consumer usage information and apply it to solutions such as prepayment that can help understand and serve customers better. In addition, detailed time-of-use information makes it possible to develop variable-pricing schemes and to virtually eliminate costly theft and fraud that eat into rapidly narrowing profit margins.

With the right e-payment technology, utilities can achieve a practical, economical way to provide customers with prepaid service-efficiently, effectively and affordably. These prepayment solutions provide desired convenience, control and privacy for consumers, while they greatly accelerate cash flow, cut billing and collection expenses, eliminate manual meter reading, and help fight fraud for utilities.

Take a closer look at the benefits the right e-payment technology offers consumers considering prepayment:

  • Unprecedented flexibility. Consumers can purchase the amount of service they want, whenever they want it.
  • Improved energy management and budgeting. Customers have complete control over their usage. Instant feedback in the form of usage data viewed on the in-home display allows residents to make changes to optimize energy consumption. In turn, utilities can expect to enjoy better relationships with these satisfied customers.
  • Welcome convenience. There are no bills, security deposits, disconnect/reconnect charges, or late fees. If service is disrupted for a period of time, it can be re-initiated immediately when the consumer can afford to add credits. Further, emergency credit can be easily offered to prevent hardships during severe weather conditions or at times when it may not be convenient to leave the residence to purchase credits.
  • Increased privacy. Meter reading, col-lection calls and embarrassing visits to shut off or turn on service are no longer necessary.

While consumers enjoy the convenience and control of pay-as-you-go service, utilities will find a long list of reasons for implementing prepayment solutions. Among these are:

  • Up-front payment. Utilities receive payments 45 to 60 days earlier than with conventional billing. This greatly enhances cash flow. Further, because the consumer pays in advance for service, write-offs are virtually non-existent.
  • Elimination of billing and collections. Utilities no longer have to invest the time and money needed to print and mail statements or try to collect late or unpaid bills. Prepayment solutions can also help to decrease call center volume by reducing the number of calls about billing and payment extensions.
  • Fewer field visits. With automated metering, manual meter reading is no longer necessary. Prepayment ends the complaints associated with traditional time-saving practices such as estimated billing. Because service can be activated or discontinued without a visit to the residence, pay-as-you-go solutions are ideal for high-turnover accounts such as student and rental housing. This also frees up field personnel for assignment to other, more profitable projects.
  • Sources of information. Prepayment solutions have the added benefit of providing utilities with invaluable sources of usage information. In addition to measuring consumption, electronic meters can provide time-of-use data (which makes it possible to add surcharges, if desired, for periods of peak demand), historical usage and self-diagnostics for troubleshooting before problems arise.
  • Protection against fraud. With their ability to produce detailed exception reports, prepayment solutions can be a highly-effective deterrent against fraud.
  • Platform for value added services. Finally, prepayment solutions that feature a dial-up connection between the home and the utility provide a versatile platform for the delivery of value-added, information-driven services. These services can generate significant additional revenue for utility companies.

One prepayment solution that delivers all of these benefits is the VeriFlex Utility Sol-ution, a fully integrated, end-to-end prepayment solution that enables utilities to economically develop and deliver pay-as-you-go service to their customers worldwide.

There are several versions of the VeriFlex prepayment solution, designed to meet the needs of different markets. One solution consists of an intelligent electronic meter supplied by a third-party partner, and a VeriFone Personal ATM (PATM), which can be plugged into any electrical outlet in a customer’s residence. The smart meter tracks utility usage, sending the data to the PATM over the home’s electrical wiring using Power Line Carrier (PLC) technology. No additional internal or exterior wiring is required.

Another version is designed for contactless smart cards. In this option, a contactless smart card reader is built right into the electronic meter, eliminating the need for a separate PATM and providing a less-expensive prepayment solution.

Customers are issued either contact or contactless smart cards that are used to add value to the meter. Credits can be obtained by visiting a local utility office, kiosk or one of a wide variety of participating retailers with payment terminals such as the Omni 3350; or by using the PATM’s dial-up capability without leaving the residence. Value can be securely loaded onto the card, then transferred through the consumer’s in-home PATM (or directly to the electronic meter, in the case of the contactless smart card option) to add service credits to the system.

Working closely with its partners and utility customers, and drawing upon its experience acquired through the development and implementation of more than 9 million e-payment systems worldwide, VeriFone provides complete, turnkey prepayment solutions.


Hsieh is utility market manager for VeriFone, a division of Hewlett-Packard. Visit the Web site at www.verifone.hp.com. Hsieh can be reached at don_hsieh@hp.com.

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