1. Prepayment Systems Practical Implications KeyPad vs. SmartCard Eng. Khalid Tubaileh

2. MEM2005 What is Pre payment ? “ Pay as you go ” electricity sales system Revenue collected in advance - eliminating the complete billing system It is not a new system Newer administrative techniques are evolving Over 5 million installations worldwide

3. MEM2005 What is pre payment ? Purchase and consume Consumption restricted to payment Automatic disconnection on credit expiry Buy as and when you can

4. MEM2005 Why Pre payment ? Utility ’ s View point A solution that improves the revenue cycle. Improved financial management Lower overheads. Improves management of fraud Better customer services. Better load management.

5. MEM2005 Why Pre payment ? Consumer ’ s Viewpoint Improved budgeting Convenience of payment  Avoid long Q ’ s  Choose when to pay Confidence in the system No billing errors Improved quality of supply

6. MEM2005 Pre payment technologies Coin operated meters Magnetic cards Smart cards Key pad meters

7. MEM2005 Traditional Prepayment Coin Inexpensive  Money easily stolen  Easy to tamper or fraud  Expensive to maintain  Requires access to banking system  Errors subject to change with time

8. MEM2005 Current Prepayment Systems Simple Electric $ 100 Magnetic Card Relatively inexpensive  Acceptance problems  Not always erased  Cards often lost or damaged  Cards could be copied  Accountancy backup needed

9. MEM2005 Current Prepayment Systems Secure  Tokens expensive  Vending hardware expensive  Acceptance problems - contacts wear or become contaminated  Requires access port in meter smart card Smart card

10. MEM2005 smart card Reusable Token No money in meter Additional data can be transferred The Pros and Cons of Smart Token Systems Tokens are expensive > $ 1 each Prone to acceptance problems Convenient for consumers Up 25% a year require replacing

11. MEM2005 Dispensing Unit Meter $ £ $ smart card $ Token is additional component. Increases complexity of system. Reduces reliability. Token acceptor required. Token or token acceptor could fail before or during programming. $ Token acceptor required. Permits fraud. Meter could reject token. Token can fail, be lost or stolen. $ $

12. MEM2005 smart card If a token can get into a meter So can anyone else! Further Disadvantage Of Token Based Systems Is That They Require An Aperture Into The Meter

13. MEM2005 Traditional Token Vending PayPoint Post Office De La Rue A N Other smart card What happens if the token fails or is lost? How long before it is replaced? Who pays for its replacement? How does the consumer stay on supply? Reconciliation if in reality the consumer is attempting a fraud?

14. MEM2005 Unfortunately Plastic Cards Are Now Seen As Cheap Throwaway Gimmicks

15. “ On Average Fraudsters Are Taking 6 Months to Defeat Each New Step in Smart Card Security. ” David Cooke, Editor Fraud Watch The International Newsletter Covering Fraud in Financial Services

16. MEM2005 Innovative Prepayment Systems No tokens - reduced costs No aperture - no token acceptance problem Codes easily reproducible if lost Codes can be vended from many sources  Vend Code comprises 16-20 digits Keypad

17. MEM2005 Comparing The technologies smart card Token Based Keypad Inexpensive Paper based token  Expensive token ( encapsulated ASIC ) Reproducible at any outlet if lost  Token must be replaced by supplier No token acceptor in meter  Meter requires token acceptor No token acceptor in vend outlet  Vend outlet requires token acceptor Telephone vending possible  Telephone vending not possible Internet vending possible  Internet vending not possible  16-20 Digit code Convenient way to transfer credit

18. MEM2005 Keypad Vending Vending Stations AVM’s 24 hr Call Centre The Internet

19. MEM2005 Comparing The Technologies 1

20. MEM2005 Comparing The Technologies 2

21. MEM2005 Comparing The Technologies 3

22. MEM2005 Comparing The Technologies 4

23. MEM2005 Prepayment Running Costs

24. MEM2005 Questions?

25. MEM2005 Cost Benefit Analysis  Costs Cost of PPM - $120. Vs. Cost of conventional meter $10 Cost of incremental Investment of $110 @ 18% p.a. is $ 20  Benefits For a 100 unit consumer @ $ 1/ unit; Bill = $ 100 p.m. Saving in interest cost due to faster cash flow for 3 months @ 18% p.a.; Saving = $ 54 Saving on cost of meter reading 4 times a year @ $ 10 per reading; Saving = $ 40 Saving in Stationery and Postage and Billing infrastructure, 4 bills @ $ 1.5 per bill;Saving = $ 6 Improvement in revenue because of better quality of meters, @ 3%;Increased Revenue = $ 3 Total Benefits = $103 per annum