Prepaid cellphone

A prepay mobile device (also commonly referred to as pay-as-you-go, pay-as-you-talk, pay and go, go-phone or prepaid) 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 mobile network. Users can top up their credit at any time using a variety of payment mechanisms. 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 (lasting 12, 18 or 24 months) or short-term (also commonly referred to as a rolling contract or a 30-day contract) billing arrangement with a mobile network operator or carriage service provider (CSP). "Pay-as-you-go", "PAYG", and similar terms are also used for other non-telecommunications services paid for in the same way.

A prepay mobile phone provides most of the services offered by a mobile phone operator. The big difference is that with prepay 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 there are no funds remaining (at which time, service is no longer available). A user may avoid such a break in service by making payments to increase the remaining balance.

Methods of payment:

Credit purchased for a prepay 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 said credits.

There is no compulsion on a prepay 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 prepay 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.

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Wikipedia