A mobile device as we all know needs an active SIM card to function. An active connection or SIM allows the customer to use his mobile phone to talk, to send and receive short text messages or multimedia messages as well as access internet and get online to stay connected with friends and family, check emails, play games, make purchase, carry out online transactions etc.
SIM connections are of two types – the prepaid and the postpaid connection. In the prepaid format, the customer needs to recharge on a regular basis to keep his connection active. Whereas in the postpaid the customer makes payment at the end of a service cycle against a bill generated by the service provider.
As per data available, the number of prepaid subscribers in India in the first half of 2010 was 93% as compared to the postpaid ones who constituted merely 7% of the population. In a country like UK, the percentage was 48% of postpaid users to 52% of prepaid ones. In the much developed USA, the percentage of prepaid mobile users was only 19% vis-à-vis 81% of postpaid ones. This study was conducted for people above 25 years.
Almost half a decade later, the statistics remain very much the same especially for a growing economy like India. Almost 95% of the total mobile users in the country today use the prepaid connection and only about 5% of the users have a postpaid connection on their mobile.
Why is the prepaid connection preferred than the postpaid in India?
There are reasons why in a country like India people prefer to buy the prepaid connection. The reasons are:-
- Prepaid connections are suitable for people from the lower socio-economic group of the society because of lower earning and spending capabilities. With prepaid connection, one is able to recharge as per one’s spending capacity.
- The user knows the upper limit and exactly how much he can spend before his connection goes inactive. Hence he is able to track his spend properly and has more control over his spending. Indian customers generally are of the mindset that with the postpaid connection they would indulge in uncontrolled spending which is an extravagance.
- With Vodafone online recharge plans available at as low as Rs. 10, the recharging system is definitely more economical. The prepaid recharge plans and tariffs are much cheaper and more affordable and hence more mass friendly as compared to the postpaid ones.
- It has also been noticed that the call rates under the postpaid connection are higher as compared to the prepaid connection. Postpaid customers are required to pay additional GST which is not the case with prepaid coupons as they are inclusive of all taxes.
- The other shortcoming with the postpaid connection is that the user is liable to pay late fees in case of delayed bill payment. This is not the case with recharge coupons and top-ups.
- Lastly in case of bill payments one needs to understand the different sub-heads against which charges are levied. Not so in the case of mobile recharges.