As the use of cash and physical currency becomes increasingly rare as a direct response to the global pandemic, the convenience and power of the prepaid economy is enjoying a growing appetite; especially amongst regions with low banking penetration.
This, alongside elements of how users around the globe are interacting with the notion of prepaid, is discussed here by Rupert Shaw, Chief Commercial Officer at Ding; the global forerunner in mobile top-up services.
Ding has been keeping its customers connected since its founding in 2006, the year it launched its first-of-a-kind service. Today, Ding’s users have successfully sent over 450 million top-ups globally, via the app, online at Ding.com, and in-store at over 600,000+ retail outlets worldwide.
The prepaid mobile phone is perhaps one of the most revolutionary developments in the history of the telecoms industry. The mobile has been through many iterations since it was first unveiled in 1973, moving from a status symbol for the high-powered world of finance in the 80’s through to the 90’s, where the elite status began to drop away as did the price of handsets making this means of communication more accessible to the masses.
This reduction in the cost of mobile phones also saw the introduction of prepaid contracts making mobile connectivity an attainable reality for much of the world’s population. This was perhaps the biggest democratising force the telecoms industry enacted, and it brought new kinds of technology to the masses. In some ways, it could be said that the prepaid mobile was one of the earliest forms of financial inclusion, giving access to connectivity to those without bank accounts or credit cards.
The simple act of topping up our mobile phones or sending credit to a loved one belies a sophisticated infrastructure that has become fertile ground for life-changing innovation. If we look at how this technology has advanced over time, it is remarkable, not only can we just top up mobile phones, there are now virtual prepaid cards and debit cards. Gone is the time where we must stand in line at the bank to pay for our utility bills or other services, now the power to do these tasks just lies in our pocket and is completed with the click of a button.
The preference for prepaid is particularly visible in regions with low banking penetrations, where large numbers of expat workers still sit outside of the financial system – for them, prepaid is the only way they can communicate with their families, or pay for other services and bills beyond cash. The preference for prepaid has also become more pronounced during the pandemic with many consumers forced online to transact – prepaid cards have given them the option to continue to buy goods as cash becomes harder to use as bricks and mortar stores remain closed.
Our recent inaugural Ding Global Prepaid Index has really given us greater insights into the growth and appetite for prepaid products at this time. We asked 7000 people from around the globe about their use of prepaid services, and the outcome of this survey has validated our belief in the importance of prepaid in modern times. The Index found that eight out of ten people are actively engaging in the prepaid economy, with consumer confidence remaining high among these users despite the pandemic. With the mantras of ‘stop the spread’ and ‘social distancing’, people can be less inclined to use cash as a payment method for the fear of the virus. Also, a number of organisations are reluctant to accept cash as a form of payment, making options such as prepaid cards and vouchers all the more appealing.
This report is telling; 79% of respondents use at least one prepaid service, while 45% use two or more; prepaid is seen as a more flexible way to engage the services they need and want rather than bill pay, or post-pay, options. Prepaid mobile bills account for the highest usage (61%), followed by prepaid utility bills (31%), prepaid vouchers and gift cards (19%), and prepaid financial products such as prepaid Visa cards (17%).
Interest in prepaid products is growing across the world. Amid the uncertainty caused by the pandemic, prepaid has become a preferred choice to budget and control expenses for some while also enabling wider forms of inclusivity. The democratising force that prepaid has brought to telecoms will permeate other sectors, all underpinned by the ability to pay upfront. With travel restricted and people not getting to visit close family and friends, prepaid is such a valuable resource for those who need to help their loved ones with things that they are not able to do, such as topping up their phone, paying for upcoming bills or ordering their weekly groceries. Prepaid options allow us to still support our families even from afar.
We live in a world where there is a large financial gap and this past year has demonstrated the adversities this can inflict on societies. Those with the means – that is access to the internet and financial products and services – have been better placed to weather the uncertainties that came with the pandemic. Those who lost their jobs, or those who fall into the unbanked or underbanked category have struggled and continue to do so. For them, prepaid has become a tool to maintain access, both to communications and financial services, it has also become a way to take control of their budget and expenses. The opportunities in the prepaid market are not driven merely by consumption, but rather a human need that enables us to communicate, share loving moments, and support friends and family whether by sending mobile credit or paying off their bills.