In emerging markets, Prepaid is King
Understanding the reason behind the pervasiveness of prepaid mobile subscription versus postpaid lines in Southeast Asian emerging countries
If you live in a country like the Philippines, Indonesia, or Myanmar, you already know the concept of the prepaid mobile phone. After all, it is in these markets where prepaid subscription dominates over postpaid plans at a rate of up to 99%. It is also in these countries where there are more mobile SIM cards than there are people.
I never realised how foreign “prepaid mobile” could sound to someone from Europe or America until I started talking to people in those regions about XONIO and how we plan to leverage on prepaid airtime’s pervasiveness to achieve mass adoption of blockchain technology.
Okay, for the benefit of our friends and followers who have never seen what “prepaid” is, here’s a crash course.
What is a prepaid mobile phone?
A prepaid mobile phone is just like any cell phone, but instead of being tied up to a contract and paying for your bill at the end of each month, users need to pre-pay or “top up” a certain amount of airtime minutes or credits in advance.
Users normally buy a prepaid SIM card from a convenience store or kiosk. Many bamboo hut and “mom-and-pop” shops scattered around the country also sell prepaid SIM cards for less than USD 1, and each new pack comes with free minutes + mobile data to get you started.
Consuming airtime credits
As you use your phone to call, send an SMS, surf the internet, or buy digital goods like music or games, the individual charges slowly eat up your free minutes and mobile data credits. If you don’t monitor your balance (which you do by calling a 4-digit number or sending a balance inquiry command via SMS), you’ll find out that you run out of credits via several ways:
Topping up via prepaid card
Once your initial free minutes run out, you can “top up” or “reload” credits into your prepaid mobile phone by buying a prepaid card from a store (in the Philippines, you can buy prepaid credits anywhere you can find candy).
These cards have instructions at the back and a code hidden under some protective layer that conceals a unique series of numbers (think: scratchy lottery). Some cards have 2 sets of numbers: card number and PIN. Others just have a PIN. It is important that you read and follow instructions at the back of the card as the steps vary per telco.
Most of the time, you need to dial a 3 or 4-digit number indicated in the instructions on the card and listen to some automated voice command. Some will ask you to dial a 3 or 4 digit number plus the PIN in the card. After doing so, listen on as the voice confirms and declares that you have successfully “topped up” or “loaded” your prepaid credits.
Topping up via kiosks
A more practical and widely used method of topping up credits in the Philippines is to just simply provide your mobile number together with money (as if paying for candy) to the storekeeper or cashier. Using the store’s mobile phone, this person will send an SMS that indicates your mobile number and the amount you paid for. Both you and the storekeeper or cashier should receive a confirmation SMS stating the timestamp, amount of credits, and the mobile number that was topped up.
Other topping up options: online, ATM, mobile money
You can also top up via your telco’s website, bank partner counters, and ATM machines. Yup! you heard it right — aside from balance inquiry and cash withdrawal, some ATMs give you an option to reload your phone. If your telco offers mobile money, you can most likely top up using that as well.
Benefits of being on prepaid
What’s great about being a prepaid user is that you only have to top up the amount you can afford, on a time when you have money, and when it is most convenient for you.
If you’re on a really tight budget (like when you’re literally down to a choice between spending your last money on lunch or on prepaid credits), here’s a hack that some people I know do:
Since a prepaid mobile SIM card can stay active for a few months without the need to be topped up at all, some users only reload their credits right before reaching the “inactive” status (some telcos allow up to 2 months of no credits before deactivating a SIM card, some allow a longer grace period).
During this whole time, subscribers can still receive calls and text messages — regardless of the remaining airtime credits in their account. If they want to reply or send messages to their contacts for free, they can do so by connecting to a free public wifi (offered in malls, coffee shops and restaurants) then use messaging apps and social media sites to send their messages.
Many say they can maintain a budget of as low as USD 0.40 per month for prepaid airtime credits, which is just the bare minimum top up amount that can keep their mobile numbers active and connected.
Food or airtime credits?
Communication has somehow evolved its way into man’s current list of basic needs, and in countries where most people live on hand-to-mouth existence, getting the most bang for their buck is imperative.
Each day, most prepaid mobile users are faced with hard decisions on which basic necessity to prioritize with the small budget that they have. Do they allocate it all for food, or just scrimp on a meal in exchange for other stuff they want like prepaid credits?
Various market research surveys reveal that FMCG companies no longer consider other players in the same category as their only competitors. Many brands see mobile prepaid credits, particularly call & text bundled products, as a threat to their share of wallet.
No strings attached
In emerging markets, most people do not want to be tied down to a contract that will require them to pay USD 10 to USD 20 every month just to stay connected. This amount could be spent on more important needs of the household — like food, utility bills, rent, school tuition fees, etc, so it has become a cultural staple for a huge segment of the population to stay away from post-paid plans.
With a prepaid SIM card, you only have to put money in when you need to and when you can afford to. This is why PREPAID is KING!
And this is exactly why XONIO has chosen to leverage on prepaid airtime credits as a means to achieve adoption of blockchain technology. For over 19 years, our team has been in the business of developing digital services with emerging market consumers in mind. Our goal is launch a product that can help bridge millions of prepaid mobile consumers to the revolutionary blockchain technology.
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