The out of credit conundrum….and the challenges of the prepaid user


This quarter, Ding Dispatch takes a look at the challenge of keeping a prepaid phone in credit and we take a closer look at the habits of prepaid mobile users in the Philippines.

It is widely accepted that mobile phones improve the lives of people, and their communities in emerging economies – by providing access to the digital economy and all it has to offer. However, this is only true if the mobile is topped-up and in credit. In many instances, people in these countries cannot afford to keep their phones topped up – or affordability aside, are unaware of their remaining balance, or cannot easily access top-up for their phones. The result is that on average one quarter of mobile phones are out of credit at any time, and therefore unusable.

As mobile penetration continues to increase dramatically – 8.8 billion and growing according to the latest GSMA figures – in many cases these new owners are unable to benefit from advancements in technology because their mobile phones are simply out of credit.

In the quest to understand our users better and look more closely at the challenge of keeping a phone in credit, Ding undertook some research with its users looking at how often they are out of credit.

Also this quarter, our researchers hit the road and headed to Manila to get to know users in the Philippines a little better - where a whopping 96% of users are on prepaid phones, with three operators and 119 million existing mobile connections, according GSMA data.

Out of credit - at a glance

Recent research undertaken by Ding with a cross section of users, shows that about 60% of users are out of credit at least once a month, with more than 25% out of credit as regularly as once or twice a week. Furthermore, almost 45% of those polled said they are out of credit for up to 10 days a month in total.

The reasons for being out of credit are varied but largely centre around affordability, and access issues. However, for many users the issue is compounded by the fact they have poor visibility over the status of their credit i.e. what they have left and when they are out.

Timing is everything

"....almost 50% of those surveyed only top-up when they run out of credit, and 40% when they are almost out."

Our research also looked at when they top-up. We found that almost 50% of those surveyed only top-up when they run out of credit, and 40% when they are almost out.

We also asked users what is the trigger for when they give or receive top-up when they are out of credit. In terms of how our users are alerting those who send them top-up, almost 50% of our senders are alerted of the need to send top-up when their loved one is already out of credit, and just over a quarter are alerted just before the person they top-up runs out of credit.

A quarter, send without being prompted in order to keep loved ones in credit as often as possible.


Case study – The Philippines

Our team touched down in Manila in July in order to get face to face with our users and carry out some indepth exploratory research with a group of receivers of top-up. The aim was to do a deep dive into their lives to try to understand better what receiving a top-up, and keeping their phones connected means to these people.

Why people use their phone seems to be the one constant around the world – namely to connect with loved ones and stay in touch – how much they are spending and the awareness of this, however, can differ greatly from country to country.

"The pecking order in terms of budget is overwhelmingly bills, food, top-up – in that order."

A case in point is the Philippines. In the Philippines for example, the importance of top-up or ‘load’ as it is known, in the monthly budget is given priority. In fact, many of those surveyed described how they would regularly choose purchasing top-up over material items such as toys or clothes. The pecking order in terms of budget is overwhelmingly bills, food, top-up – in that order.

This is a phenomenon reported by Unicef as far back as 2015, namely that people in developing markets spend as much as 10-15% of their income on keeping their phones in credit as it is a key consideration for them.

That said, given the importance placed on mobile access, our research shows that users in the Philippines, and elsewhere, don’t have a clear picture of how much they spend on top-up, as it is purchased so regularly and in small amounts. This leads to less or little control over their access and the need to rely heavily on promotions to keep phones topped-up when away from Wifi areas.


The art of promotion

Such is their relationship with their phones that users in the Philippines, top-up their phones with significant frequency. They do this in a number of ways including at local Sari-sari stores, and also via a more common way of simply asking someone close to them to transfer ‘load’, which is done by a mobile app, phone to phone.

Unlike receiving an international top-up – which is viewed as a gift – this is seen as a loan to be repaid and so there is little hesitation with requesting this from relatives. In this way ‘load’ passes with frequency between relatives and is a vital way to keeping phones in credit.

Promotions are also an integral part of how they consume top-up. The majority of those surveyed cited using promotions at all times. There are a variety of promotions available at all times, varying from one day to a number of weeks. In general more value is gleaned when promotions are bought in bundles i.e. a promotion lasting three days, represents better value than one lasting just one day. The reliance on promotions and the frequency that users avail of them make it difficult for users to be aware of how much they are spending on top-up each month.

Interestingly, it is consumed in such small amounts, in many cases they do not appear to account for it appropriately or feel the need to include it in the monthly budget.

Similarly, to their western world counterparts, people in the Philippines are avid users of their smartphones, using them throughout the day - for entertainment and for keeping in contact with their loved ones predominantly. It is not surprising that many people identified the area nearest the Wifi connection as their favourite place to spend time at home.  

While our environments may differ greatly, as well as our billing method, one constant we are witnessing in the markets we visit is our growing reliance on mobile technology around the world.