Prepaid Wireless Fees Revealed!
The subject of fees for prepaid wireless service is a pretty
generic topic to
discuss. The objective of
section is to 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
Please note that this discussion includes charges related to making
payments in general, and does not cover specific service or feature
related charges. For example, a daily $0.50 charge for
does not fall into this particular discussion. So, when
this section, consider that regardless of what prepaid wireless plan
you're on, you want to put a certain amount of money (ex. $50) on your
prepaid account balance.
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 topup. HOWEVER, there are still prepaid
carriers that DO charge payment fees! So while they're not
common, they still do exist, so please watch out!
- Generally, these plan types ARE subject to a payment/reload
The amount varies from carrier to carrier, and from store to
store, but generally, think about these ranging from $1 to $5 for an
average replenshment. For example, if you want to add $50 to
account, you'll pay $53 dollars in the store: $50 for the
replenishment, and $3 for the convenience/service charge.
So why the difference?
And if there's no charge, how do stores make money?
- While some carriers will 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 these payment fees
been eliminated by a lot of prepaid wireless carriers in recent years.
Ultimately, all of these fees will be eliminated, however, it
will be awhile before that occurs.
This is an interesting topic, and has changed over the
past years as unlimited plans have rollout 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 sell a $100 iPOD to a store for $75, and the
store will sell it to you for $100 (note that the actual costs
here are completely made up; I have no idea how much Apple sells its
iPODs for to stores!). In this example, the margin is 25%
($25/$100 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 25% 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!
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 LOTS of customers. So, it's fair to
that the larger the wireless carrier, the lower margins and payment
can support because they can offer stores the promise of much
So why the difference with unlimited plans? Well, it
comes down to the fact that these plans are so rich, and cost the
wireless providers so much to support, that paying backend margins to
distributors is just too expensive. The fee model allows
distributors, dealers, and stores to get paid from the
convenience/service fee that you pay. So what does this mean
you? Well, all it really means is that when considering the
of a particular prepaid plan/offer, keep in mind whether there are
payment fees, because an extra $5 a month can certainly make a big
difference. And don't forget, these extra fees, even on
unlimited plans are also quickly disappearing!
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 afterall. 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 each
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 don'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 fee 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 doesn't mean that
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). Definitely an option worth checking out if you have a
plan that typically charges a extra fee when you go to your local store.