In line with various legislative and management requirements, the trend in the water sector has been towards providing every connection with a flow measuring device or meter. Unmetered connections, for which revenue may or may not have been recovered, are being replaced with metered connections as a matter of course.

The importance, therefore, of metering consumption has received attention at the highest levels of government and system operators. Customer metering serves two important purposes: first, and most obviously, it is there to generate revenue for the water services provider. Secondly, it is there as a management tool, both from a financial and operations point of view.

It is in this environment that prepaid systems have developed. The ever-increasing trend of running water distribution systems as businesses has resulted in tighter financial control over costs and increased efforts to balance the bottom line in terms of operating cost against revenues. What better way to do this than to ensure, up front, that some or all of your customers pay for the service in advance?


Although prepayment devices have been around in the water sector for the last 10 to 15 years, they are still very much in an emerging phase. Since the introduction of prepayment, technology and management systems have steadily improved and adapted to meet the challenges of water service providers, and as such are becoming more popular.

The original reason for selecting prepayment as the ‘solution’ in service delivery was that prepayment ensures cost recovery. This is still the primary reason for using prepayment as a customer management tool, but prepayment has also evolved into a flexible tool to manage multi-tariff applications as well as volume control. The advantages of these systems assist water service providers to provide water within their sometimes rapidly changing environments.


Prepaid metering devices can be described as either electronic or mechanical in nature, and can be defined as being volume-dispensing devices operated by encoded smart card, SMS, electronic token or plastic token that has some (programmable) form of credit,  predetermined by a customer, for the purposes of accessing potable water, which is measured through a flow meter.

The basic components of any prepayment system are as follows:

• Customer interface unit (CIU) mounted outside the consumer’s premises
• Vending unit or point-of-sale unit, located at different, convenient locations in an area of supply
• Master station, normally situated at the water operator’s premises.

The CIU consists of a number of components – flow meter, latching valve, electronic control circuit and battery. The unit can be keypad-operated, smart card-operated or text/SMS-operated using a GSM mobile phone.

All pipework for individual domestic connections is normally 15mm diameter and can easily be connected to any reticulation or distribution network. The flow meter is normally a Class B or Class C meter that provides a pulse output. This pulse output represents volume which is controlled by the prepayment device. It is important to remember that, for customer billing purposes, the accuracy rating of the flow meter in itself is not sufficient when an operator is faced with a consumption query – the device as a whole must be tested and approved to operate within a prescribed accuracy.

The latching valve is normally solenoid operated, opening or closing depending on the instruction relayed to it by the prepayment device.

The same or similar technology can also be applied on a far larger scale. An increasingly popular version of prepayment technology is bulk prepayment. This is typically applied to large areas of supply rather than individual connections – for example, a bulk water supplier that sells water to a smaller water authority or water supply zone. In this instance, a water services provider would allow only a certain volume to enter into a storage reservoir or distribution network, provided that sufficient credit was retained to allow the supply of water. (See Figure 1).

 Bulk water prepayment device

Figure 1 - Bulk water prepayment device  



There are a number of convenient features built into current prepayment devices. A common feature is a tamper switch that alerts the operator to potential theft of water. Some prepayment devices will  automatically close if tampered with.

The consumer can also be alerted to a leak on his property by a prepayment device that records continuous flow over a 24-hour period. If continuous consumption is recorded over off-peak periods, this may be indicative of a leak on the customer side of the meter. In this scenario, the accuracy and capability of the flow meter under low-flow conditions must be proven before using it in the field.

Liquid crystal displays (LCDs) are almost standard on current customer interface units, with the following information readily and easily displayed to the consumer:

• Prepayment credit/remaining credit in monetary terms
• Accumulated consumption
• Current tariff applied
• Supply valve status (open/closed)
• Lifeline (free basic water) water supply status
• Battery warning
• Leak warning
• Tamper status.

 Components of a prepayment management system

Figure 2 - Components of a prepayment management system  



Water prepayment technology must be viewed as a management system for both the operator and consumer, not merely as a device. The management systems of early prepayment water schemes were limited in their practical application, but have evolved into advanced management tools, accommodating the following features:

• Transfer of consumer information to the operator. This includes the consumer’s total or average consumption to date (date- or time-stamped to allow for demand profiling and monitoring), device tampering, private property leaks.
• Awareness of system failures. This includes notification of possible consumer reticulation leaks, meter malfunction, valve malfunction, battery failure, etc.
• Integration with existing financial systems (such as billing databases, etc) with ability to handle multiple tariff levels.
• Water loss management. Meters can be given specific identification tags that allow them to be grouped according to reservoir supply area, water supply zones or districts. Collective analysis of flows and/or consumption data in areas improves water loss analysis calculations.
• Generation of management reports such as individual consumption, sales figures, zone usage reports, abnormally high or low consumption, defective products, free basic water allocation, and minimum night flow determination.

The management system forms the foundation on which the devices operate and is arguably the single most important feature to any prepayment scheme. Integration of the prepayment management system into an operator’s existing system, training of administrative personnel, ease of operation and the efficiency of operation perceived by the consumer are all aspects that need to be addressed by the operator prior to implementation of a successful, sustainable prepayment system.

Providing information for water loss management, or a water service audit and water balance, is becoming increasingly important. Using accepted international best practice, such as endorsed by the International Water Association (IWA) in the form of a standard water balance, prepayment devices can assist in determining a number of water balance components.

The components that can be accurately provided by a prepayment management system have been illustrated in the IWA standard water balance presented in Figure 2.


Water prepayment systems have come a long way in the last few years, but they still have a long way to go. Acceptance of the technology has to be won on two fronts – acceptance by the operator and also by the consumer or end-user. Both of these involve education: the emphasis in operator education will be on technology and reliability, with consumers needing to know about social acceptability and practical use.

Even educating the operator can be difficult, as there are often three different factions at work within an operator organisation: councillors, engineers and accountants.

Manufacturers need to take more responsibility for the application of their product in the field. If prepayment technology is doomed to failure in certain project areas, manufacturers should possibly be advising clients against the use of their products, in order to meet their client’s best interests and assure a sustainable solution. Although this may result in the loss of a sale, it will enhance and protect the industry’s reputation.


The true cost of any prepayment system includes product cost, installation cost, infrastructure cost, management system cost and hidden costs such as training, manpower and administration on. Potential clients need to be made aware of them and take them into account when evaluating prepayment systems and their alternatives.

Cost-to-benefit analyses are often not carefully carried out prior to implementation, as operators may not have access to the necessary information and indicative costs, or are pressured into making premature decisions.

On the other hand, operator savings are often not fully quantified and used in advocating the technology. Both tangible and intangible benefits such as more efficient administration, reduced operating costs, reduced finance costs (debt, etc) and improved cash flow and customer relations need to be more fully investigated prior to making implementation decisions.

The acceptance of prepayment is still walking a fine line between success and failure, and a lot depends on the manufacturers themselves in deciding their future. Careful consideration, and identification, of the target market must be undertaken to ensure that prepayment is welcomed and accepted as a sustainable and economically viable system.