Prepaid Utility Plans Are Becoming More Common as Providers Are Realizing the Benefits
Many consumers already pay in advance for plenty of products, such as cell phone service and cable television, so why not electric and water? Traditionally, utility accounts are billed on a credit-based system – consumers use electricity and water for a set period, and then they are billed for their usage and the end of the cycle. This process is still the most common, but is it still the best?
Prepaid utility accounts, while commonplace in many other parts of the world, have been slow to take off here in the United States. Lately, however, programs that allow consumers to pay in advance are catching on fast as utility providers begin to recognize the benefits.
Utility companies have a lot to gain by offering their customers the option of a prepaid plan. Studies have shown that providers who implement a prepaid account program experience lower demand on customer service representatives, reductions in bad debt and write-offs, more efficient use of service personnel, and reduced printing expenses, all of which add up to lower operating costs and increased profits.
Offering prepaid accounts also greatly reduces the financial risk of credit-based systems, which eliminates the need for utilities to charge consumers deposits, late fees, and disconnect or reconnect fees. This system allows lower-income households access to utility service without requiring a credit check and a potentially high deposit that they may not be able to afford – they simply prepay for what they use as they go.
Arguably one of the most impactful and promising features of prepaid plans is the ability for consumers to track their usage in real-time, on a daily basis. This immediate, on-going awareness of energy usage ultimately leads to a reduction in consumption of up to 14% compared to consumers on a credit-based system. A permanent reduction in energy consumption benefits the environment, decreases demand, and lowers prices – a win-win situation for everyone.
Bill2Pay plans on adding prepaid account options to the comprehensive portfolio of existing services we offer to our clients. Contact us if you would like to learn more about the benefits of launching a prepaid utility program for your customers at minimal cost and minimal risk to your organization.