Economics & Finance / Industry & Sectors / Energy & Resources

Prepaid Meters Made South Africa's Poor Profitable for Power Companies

Most people think prepaid meters are just a way to get paid faster. But a massive study of 4,246 households in Cape Town, South Africa, reveals something shocking: switching from postpaid to prepaid electricity cut consumption by 12-15%—and the poor, not the rich, actually became more profitable for the utility. The study, led by researchers analyzing a randomized control trial, shows that prepaid meters slashed bad debts, saved $1.74 per household per month in billing costs, and eliminated expensive disconnection fees. But here's the twist: for wealthy, creditworthy customers, prepaid meters actually hurt utility profits because they reduced consumption too much. The real win? Prepaid tech closed the profitability gap between rich and poor neighborhoods, making it financially viable to expand the grid to underserved areas. This isn't just about meters—it's about how technology can reshape who gets access to power. Watch to see how a simple change in payment timing can transform an entire energy system.