Prepaid: An Attractive Payment Solution for Smart Meters, Says Frost & Sullivan

Prepaid service options have become an attractive payment solution allowing users to better manage their energy consumption and optimise their budget allocation.

Sponsored by Inside Secure, Frost & Sullivan has recently published a White Paper entitled “Are you ready for the prepaid meter evolution?”, which discusses smart metering payment functionalities with a focus on prepaid options. In this white paper Research Manager, Smart Cards, Jean-Noel Georges, talks about market participants with Inside Secure as a leader in providing secured products in the NFC sector, and recognises a new market approach and best practices for prepaid.

“Consumers are increasingly budget conscious, therefore more often requesting a prepayment meter from their energy suppliers ,” he says. “On the other hand, utility providers have to develop innovative ways to ensure that they receive payment from all customers, regardless of income levels.”

The concept “pay- as you- go” is a new marketing strategy based on real time consumption and on total control of the usage by consumer and provider. The strategy leads to a “win-win” solution. The consumer pays for exactly what he has used and can adapt budget by monitoring energy usage; the utility provider is paid in advance for future consumption.

The success of a technology is often directly linked with mass adoption. In terms of volume, the meter market is a promising opportunity as most countries have already planned to migrate to smart meters. In Europe, the smart meter market unit shipment Compound Annual Growth Rate (CAGR) reaches 23 per cent between 2011 and 2017.

“To meet client expectations, the first essential requirement is the ease of use. Smart cards are an excellent compromise for prepaid meters, as most consumers are using this payment solution in their daily life and feel confident with the security level,” advices Jean-Noel Georges.

It is also important to have a device able to be easily integrated into the actual infrastructure. International guidelines or standards —such as ANSI C12.2 for the North American market or the IEC 62053 for the rest of the world—are required to be able to easily use the plug-and-play capabilities of the meter.

What might restrain market development is the payment infrastructure, as the prepaid payment would require a bank account, an ATM or a dedicated machine and/or shops to reload the credit. A good option is to use an existing network. “In Africa, where the Global System for Mobile Communication network is developed, SMS prepayment, and later NFC, via a smartphone should be relevant,” explains Mr. Georges.

NFC is already available in emerging countries, like India, Malaysia and Brasil, which have better smartphone penetration. This year, Inside Secure and Freescale provided the first NFC-based prepaid meter to the market. The reliable solution assures a high-level of security, continues Frost & Sullivan Research Manager.

There is a plethora of possibilities how to pay for energy consumption, and a payment solution is directly linked with the meter’s capabilities. Among the payment solutions used globally are coins, tokens, pins, barcodes, memory cards and smart cards. The ability to use a mobile phone to interact with the prepayment platform is likely to feature in the next phase of development. Near-Field Communication technology will deliver a more secure way to pay and a better user interface for friendly usage.

“Prepaid systems constitute a flexible way to pay, with the option of employing different payment solutions and, above all, without extra cost,” summarises Mr. Georges. “To be sure to reach high levels of consumer satisfaction, the cost of the service/energy should be lower or at least on par with standard prices. The consumer, after the cost impact of the device itself, will benefit from promotional and lower tariffs.”