Dean Villet Imraan Mohamed - Smart Energy International · Imraan Mohamed Marketing Manager Itron South Africa 2 USING ONLINE PREPAYMENT TECHNOLOGY TO INCREASE UTILITY REVENUES 3

Dean VilletProfessional Services ManagerItron South Africa

Imraan MohamedMarketing ManagerItron South Africa

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USING ONLINE PREPAYMENT TECHNOLOGY TO INCREASE

UTILITY REVENUES

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The Evolution of Prepayment Vending In South Africa

Pre - 1990

Post-Paid Billing

Post-Paid Billing

•Low collection ratios

•Bill Reconciliation Problems

•Accumulation of Outstanding Debts

•Meter reading costs

•High Fraud Risks•Increasing Revenue losses

•Up-front payments

•Debt Recovery “built in”

•Different Fraud Risk (Under Banking, Ghost Vending)

•Complex Reconciliation

•Revenue losses

Tradition-al Credit Vending

Tradition-al Credit Vending

1990’s

•Up-front Banking (Vendors)•Reduced Financial Risk exposure•Easier Reconciliation process

•Ghost Vending

Up-Front Vending

Up-Front Vending

2002

Online Vending

Online Vending

2006 Onwards

•Significant benefits realised by utilities

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On-Line Vending Market Overview

ON-LINE Prepayment Vending (>300K Consumer base)

Predominantly OFF-Line

NO Prepayment

� All African Utilities >300,000

prepayment installed consumer base

have moved to on-line vending(STS)

� Many smaller utilities/municipalities

also have on-line implementations.

� ± 7.5 million Prepaid Consumers in

South Africa

� More than 70,000 active Point of

Sale footprint.

� Only 1% of estimate €1.6 billion

annual turnover processed through

mobile channels.

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The Challenges of Off-line Vending• Typically numerous databases in the field

• Replication and synchronization issues

• Significant IT staff overhead to keep all databases in Synch

• Significant utility owned hardware and secure modules in the field

• Proliferation of ghost vending stations

• SA Standard NRS047:

• a vending station within 5km of every customer

• at least one vending station for every 2 000 customers

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The Solution: Implementation of Online Prepaid

Vending

• Immediate increase in vending footprint, but:

• No utility owned hardware in the field• No secure modules in the field• Debt recovery immediately enabled

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Distribution Channels

Self-Service

PoS & ATM

Cellphone /

Smartphone

Internet

Retail

Point-of-Sale

Mobile

Banking

ConsumerVending Technology

Utility

Hosted

Supplier

Hosted

3rd Party

Online Vending ArchitectureSwitching Technology

Cellphone Airtime &

Bill Payment Supply

Banks

EFT

Switch

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The Utility Value Proposition: Benefits Realised by the Utility..1

• Improved utility customer service • Increased sales channels like retailers, ATMs, websites

• Significantly increased footprint• Shorter transaction times, shorter queues

• Significant financial risk avoided• Vendors own vending hardware• No secure modules in the field• Robust financial control

• Simplified credit management and recovery of outstanding post paid debts

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The Utility Value Proposition: Benefits Realised by the Utility..2

• Simplified credit management and recovery of outstanding post paid debts

• Flexible payment options possible

• Reduced IT field staff required• Reduced propensity to steal credit dispensing units

• Reduced electricity theft due to more accessible vending points

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The Utility Value Proposition: Benefits Realised by the Utility..3

• Reduced working capital due to upfront funds

• Improved data quality due to centralised data management

• Improved revenue protection due to improved data availability

• Increased Revenue with lower cost base, + better customer service!

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Pitfalls to be Aware of

• Connectivity to outlying areas• Communication network uptime essential to success

• Ensure solutions comply with messaging standards

• Ensure business resilience and disaster recovery plans in place (Fail-over for key vending sites)

• Ensure reputable technology and vending partners

• Monitoring is always necessary (meter tampering, vendor theft, consumer trend, etc)

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The next evolutionary step

• Online smart prepayment:• Bringing the meter on-line• Two-way communication• In house credit purchase• Real-time data collection• Real-time revenue protection• Real-time demand response• This brings immense benefit but has its challenges that come with it for all stakeholders.

*** Validate whether there is a business case for full two way solution to your entire residential consumer base or only a sub-segment.

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Questions ?