What is Prepaid Wireless?What is prepaid wireless? The answer to this question might seem obvious for those already familiar with the prepaid wireless industry, however, it's certainly still far from mainstream. I still find it very common for friends and family who, although they are familiar with the terminology, don't specifically understand how it works. I believe that over time prepaid wireless will be the dominant way that customers interact with wireless phones, however, at least for now, this is still not a well understood market for many. To explain "what is prepaid wireless," this section focuses on the primary difference between prepaid and postpaid plans, which is the payment method. To learn about the benefits and advantages of prepaid wireless, you can check out the Why Prepaid Wireless? section, which goes into a lot of detail that may be of interest to you. I like to think of prepaid wireless as a payment option. So when you think about the question "what is prepaid wireless," think about paying for services before you use them, or pay-as-you-go. You could easily think of prepaid wireless as being similar to a gift card, and comparing it to a credit card, which in this case would be the counterpart to a postpaid plan. In other words, when using credit card, you make the purchase first (ex. buy some groceries), and at the end of the month you receive a bill for what you spent in the previous month. Then you've got a couple of weeks to pay your bill before you start incurring interest and/or penalties. So, at the heart of it, you don't need to have the money at the time of purchase; you can pay for it later. On the flip side, when using a gift card, in order to pay for your groceries, you have to have enough money available on the gift card at the time of purchase. In other words, you don't receive a bill. This is very similar to how a debit card works, however, with features like overdraft protection, and other such tools, the example becomes a little less black and white. So essentially, before you can make a call, download a ring tone, buy a wallpaper, or consume any other service, you have to have the funds available on you phone. The money that's on your phone is often referred to as your prepaid account balance. So with a postpaid plan, if you make an international call, or go over your minutes, you'll you'll be charged on your next month's bill. With prepaid wireless, you must have those funds available at the time of use. If you don't, your call will be cut off when you run out of funds, or you won't be able to make the call at all if your prepaid account balance is at zero. Although this does have its disadvantages (i.e. getting cut off), you don't have to worry about large, unexpected bills at the end of the month. Check out Why Prepaid Wireless? for more details about the benefits of prepaid wireless. There are a number of ways to conveniently add money to your prepaid account balance. Check out the Adding Money section for all the details. You should now feel comfortable explaining to your friends "what is prepaid wireless." If there is anything at all that is unclear, or any questions that you have that I can help with, please don't hesitate to contact me. An Interesting Paradox One thing that I've always found interesting about postpaid plans in the U.S. is that the base plan amount actually is prepaid! What do I mean? Well, when you first buy a postpaid plan you'll immediately get a bill for the upcoming month. So, in essence, the monthly base plan amount (ex. $50 plan) is prepaid. It's the overages, the extras that will show up on your next bill. To contrast this, in Canada, if you sign up for a postpaid plan today, you won't get a bill for at least a month. So, you're really post-paying for the services you used in the previous month. At least that was the case when I last lived in Canada. In theory then, while a postpaid plan in Canada is truly all postpaid, in the U.S. the base plan amount is really prepaid for its postpaid plans...how ironic...?! Hopefully this doesn't cause confusion when answering the question "what is prepaid wireless."...!
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