Prepayment SystemsPractical ImplicationsKeyPad vs. SmartCard

Eng. Khalid Tubaileh

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

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What is pre payment? Purchase and consume Consumption restricted to

payment Automatic disconnection on credit

expiry Buy as and when you can

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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.

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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

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Pre payment technologies

Coin operated meters Magnetic cards Smart cards Key pad meters

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Traditional Prepayment

Coin

InexpensiveMoney easily stolenEasy to tamper or fraudExpensive to maintainRequires access to banking systemErrors subject to change with time

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Current Prepayment SystemsSimple Electric

$ 100Magnetic Card

Relatively inexpensiveAcceptance problemsNot always erasedCards often lost or damagedCards could be copiedAccountancy backup needed

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Current Prepayment Systems

SecureTokens expensiveVending hardware expensiveAcceptance problems - contacts

wear or become contaminated Requires access port in meter

smart cardSmart card

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smart cardReusable 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

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Dispensing Unit Meter

$£$

smart card

$Token is additional

component. Increasescomplexity of system.

Reduces reliability.

Token acceptor required.Token or token acceptor

could fail before orduring programming.

$

Token acceptor required.Permits fraud.

Meter could reject token.Token can fail, be lost

or stolen.

$

$

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smart card

If a token canget into a meter

So can anyone else!

Further Disadvantage Of Token Based SystemsIs That They Require An Aperture Into The Meter

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Traditional Token Vending

PayPointPost OfficeDe La RueA N Other

smart card

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?

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Unfortunately Plastic Cards Are Now Seen As Cheap Throwaway Gimmicks

“On Average FraudstersAre Taking 6 Months toDefeat Each New Step inSmart Card Security.”

David Cooke, Editor Fraud WatchThe International Newsletter Covering Fraud in Financial Services

MEM2005

Innovative Prepayment Systems

No tokens - reduced costsNo aperture - no token acceptance

problemCodes easily reproducible if lostCodes can be vended from many

sourcesVend Code comprises 16-20 digits

Keypad

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Comparing The technologies

smart card

Token BasedKeypad

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

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Keypad Vending

Vending Stations

AVM’s24 hr Call Centre

The Internet

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Comparing The Technologies 1 Keypad

Smart Card

Ofgem Approved Yes Yes Supports Time-of-Use Tariffs Yes Yes Supports Step (Slab) Tariffs Yes Yes Supports Seasonal Tariffs Yes Yes Credit Transfer Transaction Yes Yes Negative Credit Transaction Yes Yes Price Change Transaction Yes Yes Tariff Change Transaction Yes Yes Debt Transaction Yes Yes Emergency Credit Yes Yes End Of Tenancy Yes Yes

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Comparing The Technologies 2 Keypad

Smart Card

Change Limits via Transaction Yes No Load Limiting Yes No Overload Protection Yes No Demand Side Management Yes No Multi Utility Yes No Differential Billing Yes No Historical Data Yes No

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Comparing The Technologies 3 Keypad

Smart Card

Physical Token Required No Yes Vending Possible if Token Lost Yes No Repeat of Lost Vend Possible Yes No Agency Vending Yes Yes 24 hr Call Center Vending Yes No Internet Vending Yes No Meter readings brought back Yes Yes

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Comparing The Technologies 4 Keypad

Smart Card

Detects Reverse Energy Yes Yes Detects Bypass Yes No Detects Neutral Interference Yes No Detects Switch Weld / Failure Yes No

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Prepayment Running Costs

Keypad Per 100,000

Smart Card Per 100,000

Meter Purchase Similar Similar

Token Purchase $0 $300,000

Token Replacement (Per annum)

$0 $75,000

Customer Visits $40,000* $400,000**

* 1% at $40 per visit (other issue, poor training etc.) ** 10% at $40 per visit (token related issues – lost, not working etc.)

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Questions?

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Cost Benefit AnalysisCosts

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