A monthly cell phone bill can be full of surprises: hidden fees, roaming costs, taxes and unexpected service charges can raise the monthly cost exponentially. While this is frustrating for anyone, it can be financially debilitating for someone on a strict budget. Both the unpredictable charges and the credit requirements can make phone plans impractical for underbanked consumers, including new immigrants.
Prepaid phones, which have long been the standard in developing countries, are a financially inclusive option for people who prefer up-front costs to future bills.
Everyone Needs a Mobile Phone
Having a cellular phone is no longer considered optional: residential landlines have become unusual and pay phones are almost impossible to find. In the United States, households with only a landline dropped from 92.7% in 2004 to 43.8% in 2017 and those with only cell phones rose from 5% to 52.5% over the same time period. Mobile phone user penetration rate is more than 90% in the United States and between 70% and 80% in Latin American countries. The majority of mobile users in the U.S. have postpaid plans, whereas in Latin America, the majority are prepaid.
A concern for choosing prepaid over a plan is the fear of running out of credit and not being able to add more when needed. Uulala offers international mobile top-up, which allows app users to add mobile credit directly through the app to almost any prepaid phone, domestically or internationally, at any time.
Prepaid vs. Postpaid Mobile Service
Postpaid service works on credit, with the month’s service billed after use. This allows the consumer to use services beyond those included in their package. Contracts are locked in to a minimum time (often 2 years), and usually include a pro-rated phone. To terminate a contract, there is a fee, both to buy out the time remaining on the contract, and to pay off the phone itself. Month-to-month plans are also billed after use, but can be terminated at any time, and the phone must be bought outright. Both types of plan require a credit card and valid I.D. to set up.
Prepaid mobile service requires payment up front for all service, such as calling minutes, text messaging, and mobile data. Phones must be purchased outright, and users can add credit as needed, with no credit card or contract. Once the pre-purchased amount has been consumed, more credit must be added in order to continue using the services.
Are Prepaid Phones the Way Forward?
Southeast Asia, Latin America, Africa and the Middle East first adopted cellular technology later, but then at a faster pace than North America or Western Europe, largely because the infrastructure for landlines lagged behind the West.
In these regions, prepaid mobile phones entered and permeated the telecommunications market before landlines had gained a real foothold. With low initial costs, and no credit requirements, they were fastest way to promote ownership and make the technology available to the most people, and they remain the most common type of mobile service in these regions.
Mobile owners in the U.S. who use prepaid phone cards rose from 19.2 million in 2008 to 49.4 million in 2017, indicating a significant trend towards prepaid phone service, likely in the interest of controlling expenditures.
Buying and Using Prepaid Credit
In Central and South America, to top up a mobile pay-as-you go phone, customers can purchase saldo (credit) from a local store or individual who contracts with the mobile companies. The saldo is then loaded onto a phone number via mobile phone code. There are now monthly plans available, but the majority use prepaid.
Once the saldo has been loaded, the user can choose flexible data, call, and text packages with the available credit and incoming calls are free.
In the U.S. and Canada, unlike in Central and South America, credit is needed for all calls, so it is necessary to have credit not just to both make and receive calls. With Uulala’s mobile top-up option, users can top up mobile credit for someone else, making sure they stay reachable or can reach out.
Domestic and International Top-Up through the Uulala Network
The Uulala mobile airtime system works with hundreds of mobile networks in more than 90 countries and has over 175,000 participating retail locations worldwide. This flexibility ensures that users can add credit to almost any phone worldwide and the user also earns in-app rewards for making the top-up.
This is especially relevant for immigrants with family and friends at home, making it even easier to stay in touch.
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