Prepaid Wireless Fees Revealed!
We customers hate paying fees! We especially hate when we
think our plan will cost a certain amount, then realize (after it's too
late!) how much it's going to cost after taxes, surcharges, and fees!
The objective of
take you through two basic elements. First,
that you, the customer will encounter in the prepaid wireless payment
These will be the most near and dear to your heart!
Second, are those that wireless carriers, technology
distributors/retailers either pay or receive in the course of taking
your payments. This second part greatly affects the charges
ultimately pay, and it also provides a deeper knowledge of the
marketplace that you'll either find interesting, enlightening, or
Customer Facing Fees
These fall into two general categories, and while they can differ from
carrier to carrier, this is a good rule of thumb:
- Generally, these plan types are not subject to any customer
payment/reload charges. So if you want $50 on your account,
pay $50 (plus sales tax depending on where you live).
Essentially, you'll walk out of the store with a $50 card,
electronic PIN, or real time topup. HOWEVER, there are still
carriers that DO charge payment fees! So while they're not
common, they still do exist, so please watch out!
- Whether additional payment fees are charged varies widely
between carriers. It used to be quite common for stores to
charge between $1 to $5 for you to add money to your account.
However, there was a pretty large backlash from customers
who increasingly found it difficult to swallow why we have to pay a fee
for the "pleasure" of paying our bill!
So why the difference?
And if there's no charge, how do stores make money?
- While some carriers chose to mandate these charges,
others leave it to the marketplace (i.e. the retailers and
dealers/stores) to decide how much to charge. For example, a
may sell you a $10 topup for a $1 charge, while they may sell you a $50
topup for a $3 charge. Also note that some unscrupulous
wireless dealers will charge fees that have nothing to do with the
wireless provider; they're simply gouging customers because they can.
This is an interesting topic, and has changed over the
past years as unlimited plans have rolled out.
the classic "no charge" approach is based on a margin model.
example of this is general consumer products, like Apple for example.
Apple will sell a $1,000 Mac book to a store for $750, and
store will sell it to you for $1,000 (note that the actual
here are completely made up; I have no idea how much Apple sells its
Mac books for to stores!). In this example, the
margin is 25%
($250/$1,000 times 100%). The same idea holds true for a $50
where the wireless carrier will sell it to the distributor at a
discount (i.e. a margin), and the distributor will then sell it to a
dealer. The dealer may then sell it to a smaller store, who
then sell it to you.
Many people wonder how much these margins are. So how much
distributor actually pay for a $50 card. Well, it depends on
the wireless carrier negotiates with the distributor. And how
much the dealer buys it
from the distributor for depends on what
negotiate, and so on. All I can really say is that margins
to range from 1% to 12% or more depending on the deal, at
level you're talking about, and the size of the prepaid wireless
company. But it's fair to say that the
wireless replenishment business is much tighter than other industries
where margins can range from 50% to 500% and more! Also keep
in mind that when prepaid was in its infancy, replenishment margins
were at 25%, so dealers/stores have been getting squeezed considerably
as the market has grown!
For unlimited plans where you're charged a convenience/service
charge, typically the margin paid to stores is much lower and often
What this means is that the $1 or $5 fee that you pay gets
between the store, the dealer, the distributor, and sometimes even the
wireless carrier! It's definitely a volume type of business.
In other words, people don't make money selling the
payment product like they would if they were selling designer purses.
They really count on you, the customer, coming back over and
again, and they count on a LOT of customers. So, it's fair to
that the larger the wireless carrier, the lower margins and payment
charges they tend to support because they can offer stores the
promise of much
And let's not forget....
The last fee type that I haven't mentioned yet is the
processing charge. Think about real time payments as an
You walk into a store that has this capability and give the
your phone number. They input your number into a terminal or
website, enter in the amount you want to add to your account, and the
money magically appears on your phone. Well, the magic isn't
really magic at all. There is a technology
that's connecting the store to your wireless company in order to add
the money in real time. This technoloogy vendor receives a
transaction fee (and sometimes a cut of the margin or both!) for the
use of their technology and "pipe." Although this example
makes it sound
easy, the technology partners actually offer a significantly valuable
service. Afterall, they have to maintain 24x7 servers,
traffic, deal with problems or outages, not to mention maintain
relationships with the wireless carriers and retailers.
you me, it's no small task.
Note, however, that the money these processors
receive doesn't impact you, the customer, at all.
One last thing to avoid
No not stealing! There's actually a
legitimate way to
avoid paying additional replenishment charges for companies
still have them. Most prepaid wireless providers
programs (i.e. Credit
), and they typically don't charge any fees for using
these payment products. So
while you'll pay
$3 (for example) for a $50 payment in a store, if you use your credit
card, there won't be a fee. Note that this isnt'
use your credit card in the store. This is when you go
to your wireless provider by calling them or going to their website.
The only exception here is that you may get
a service charge
for making a payment from your checking account (i.e. electronic
check). lastly, many carriers offer incentives to get you
using a credit card on monthly automatic payment (ex. $5 discount per
month), so definitely keep your eyes open for these discount programs
to save money.