Let’s unpack prepaid transactions to help you understand the various components that make up your purchase. Very often we receive a call from an end user that asks this very question; what am I being charged? This amount I see on my receipt does not make sense!

Going back to source, one of the key responsibilities of a Municipality is to provide infrastructure and services to the properties within its boundary, more specifically electricity and water and for that, the property owners whether residential or commercial must pay for it. Not only does the municipality charge for the units consumed but they also include other charges to cover demand, maintenance and administration of the network.

Very often these properties especially where there are multiple occupants have prepaid sub meters installed.

When a prepaid meter is purchased and installed on the property the service provider who is hosting and managing the prepaid meter transactions opens up a meter account for that prepaid meter where all the information concerning the purchases, ownership and tokens are stored.

A prepaid transaction usually consists of 4 to 5 components depending on the status of the meter account at the time of purchasing the token. These components include:

1. Purchase amount – this is the monetary value that the end user pays to the vendor to purchase a token
2. Channel fee – your vending service provider subscribes to a variety of different buying channels to make it as convenient as possible for an end user to purchase their token, for example shops and garages, banks and virtual credit card systems, but, this service comes at a cost which is paid for by the end user. This fee is normally expressed as a percentage.
3. Tariff – when calculating the number of units to issue on the token, the system will look at the tariff that’s loaded on the meter account. The tariff is the rate that is applied to each unit of measurement. For electricity that would be per kilowatt hour or for water per kilo litre. (see article on Different tariff types)
4. Arrears Fee – this may or may not be applicable to the end user as it will depend on the status of the meter account. For example, the property owner could have loaded additional fees onto the meter account like a municipal service fee etc. These may be a recurring monthly fee or once off. It is also possible that the end user did not purchase any tokens for a lengthy period of time, so the meter account has accumulated unpaid fees in arrears.
5. Management fees are a monthly fee that is collected by way of the channel fees that are charged on each transaction. This is not in addition to but part of, so if no vending is taking place this fee is then added to the arrear account to be collected separately on the next vend.
6. Vat – the channel fee being charged as well as the tariff that is applied to the utility being purchased is subject to Vat so before any units can be calculated the system first has to deduct the vat. (see article on How to calculate your fees )

The system will first deduct the channel fee then arrears if applicable, then vat before applying the set tariff to calculate the number of units for the token.

In summary:

There are 2 types of metering, primary or municipal and secondary also called sub metering. In sub-metering there will be fee charges for customers to be able to vend and you should understand your fees and tariffs if you wish to make sense of how much you are paying.