A prepaid mobile device, also known as a pay-as-you-go (PAYG), pay-as-you-talk, pay and go, go-phone, or prepay, is a mobile device such as a phone for which credit is purchased in advance of service use. The purchased credit is used to pay for telecommunications services at the point the service is accessed or consumed. If there is no credit, then access is denied by the cellular network or Intelligent Network. Users can top up their credit at any time using a variety of payment mechanisms such as the pay-as-you-go (PAYG). In 2020, 155 countries had the mandatory SIM registration laws for the prepaid mobile SIM cards such as the mandatory know your customer (KYC) or other type of legal identification verification at the point of sale to prevent the anonymous use of unregistered prepaid mobile which facilitates criminal or terrorist activities. A burner phone is a prepaid phone number specifically purchased without the know your customer (KYC) or other type of legal identification verification at the point of sale with the purpose of using it briefly and then replacing it, thus making this phone more suitable for criminal use. The alternative billing method (and what is commonly referred to as a mobile contract) is the postpaid mobile phone, where a user enters into a long-term contract (lasting 12, 18, or 24 months) or short-term contract (also commonly referred to as a rolling contract or a 30-day contract) and billing arrangement with a mobile phone operator (mobile virtual network operator or mobile network operator).
Overview A prepaid mobile phone provides most of the services offered by a mobile phone operator. The main difference is that with prepaid phones, payment for service is made before use. As calls and texts are made, and as data is used, deductions are made against the prepaid balance amount until no funds remain (at which time services stop functioning). A user may avoid interruptions in service by making payments to increase the remaining balance. Methods of payment:
Credit card, debit card, or online payment processors. Direct draw from bank account using an ATM Retail store purchase with a "top-up" or "refill" card at retail. These cards are stamped with a unique code (often under a scratch-off panel) which must be entered into the phone in order to add the credit onto the balance. Retail store purchase using a swipe card where the balance is credited automatically to the phone after the retailer accepts payment. Retail store or online purchase: a person can top-up a prepaid phone in another country by asking for "international top-up". Often, migrant workers will send prepaid top-up internationally as a form of support. Other mobile phones on certain networks which provide international top-up services, where the initiator of the top up is often a migrant worker wanting to add minutes to the prepaid mobile phone of a family member back home. Direct from some open-loop prepaid cards featuring a mobile refill service. Through electronic reloading where a specially designed SIM card is used to reload a mobile phone by entering the mobile number and choosing the amount to be loaded. This process is widely implemented in the Philippines and India so that any person can be a prepaid load retailer, creating a nationwide availability of reloading stations, even in remote areas. Credit purchased for a prepaid mobile phone may have a time limit – for example, 120 days from the date the last credit was added. In these cases, customers who do not add more credit before expiration will have their remaining balance depleted through expiration of the credits. There is no compulsion on a prepaid mobile phone user to top up their balance. To maintain revenues, some operators have devised reward schemes designed to encourage frequent top-ups. For example, an operator may offer some free SMS to use next month if a user tops up by a certain amount this month. Unlike postpaid phones, where subscribers have to terminate their contracts, it is not easy for an operator to know when a prepaid subscriber has left the network. To free up resources on the network for new customers, an operator will periodically delete prepaid SIM cards which have not been used for some time, at which point, their service (and its associated phone number) is discontinued. The rules for when this deletion happens vary from operator to operator, but may typically occur after six months to a year of non-use. By 2003, the number of prepaid accounts grew past contract accounts, and by 2007, two-thirds of all mobile phone accounts worldwide were prepaid accounts.
History
The history of prepaid mobile phones 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 poor credit. Prepaid mobile service was invented by Subscriber Computing, Inc., an Orange County company, (1986–1998), founded and directed by Arlene Harris. The patents covering this invention are:
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