We caught up with Rudolf Das, CEO of digital prepayment solutions provider Ponsfacio, to find out how the Netherlands is shaping up as a hot-spot for smart pay-as-you-go utility services.
Growing demand for smart prepayment solutions
Last year, one of the newest Dutch retail energy entrants, EnergieFlex, took the market by storm by launching the country’s first smart meter based prepaid service.
According to Das, other energy suppliers could soon follow. “There is certainly real interest in prepayment here. It’s taking a long time, but now it looks like there are pilots coming and more energy retailers who are very interested in this solution,” he said.
Spurring this interest is the nation’s smart metering programme, which targets putting smart meters in all homes by 2020. Suppliers can take advantage of this new technology to implement a digital solution for energy prepayment, although they are under no obligation to do so.
Das concedes there’s a degree of wait-and-see among the energy companies at the moment, with many of the players considering prepayment while at the same time waiting for their competitors to take the initiative. But, added Das, that could all change as soon as one of the market leaders makes a move.
“If one of the bigger incumbents decides to do prepay, then the market will certainly grow very, very quickly,” he said. “Then it’s a completely different ball-game, and I think a lot of energy companies will operate some type of prepayment solution, on their own or in conjunction with grid companies as part of poverty protection programmes.”
It’s altogether possible that the Dutch prepaid market could open up sooner rather than later, if things go well for Ponsfacio. The vendor is currently in advanced discussions with several energy companies who want to launch smart prepay for their customers from as early as next spring.
Initial focus on late payers
According to Das, what’s driving the large incumbent players to look at introducing digital prepayment is primarily the issues they are having with late payment among certain customer groups. So, at least initially, their aim would be to address the substantial base of customers who always pay their invoices late and try to work with them to avoid extra costs such as second and third reminder costs, as well as disconnection and connections costs.
A prepayment arrangement could really benefit those who are struggling to pay their bills and have run into debt, continued Das. “If with prepayment you can pay off your old debt and don’t get into new debt, that’s giving customers so much peace and helping them to get back in control. At the same time, as prepayment introduces awareness of what you are spending and where you use the energy, it becomes a “game” to make the credit balance last longer and then customers at the same time save energy and pay less,” he added.
In the future, Das sees PAYG utility service being extended to many other customer groups, including parents who want to pay for children’s energy use in student housing, people who own holiday homes, and those who just want to manage their energy costs better. “It’s not that they can’t pay or that they struggle with payment, but they don’t want to go into debt and they want to be in full control,” said Das.
“For every other service it is common to pay for exactly what you buy, except for energy,” he continued. “The entire system of paying monthly instalments based on an annual estimate and hoping at the end of the year there is no negative (or positive) surprise is old-fashioned and, with the introduction of prepay energy, customers can and will pay for exactly what they consume and know their balance at all times.”
FIA – Ponsfacio’s state-of-the-art digital platform
Ponsfacio’s all-digital prepayment platform, called FIA, provides energy retailers with an out-of-the-box solution for launching smart prepaid service. The solution leverages a field-proven, flexible, robust and scalable back-end billing system from US software vendor Nexant. This is complemented by a front-end enterprise service bus that supports a wide range of functionality, including remote connection / disconnection of supply, real-time payment handling, a customer self-service portal, market connection, and full support for business processes through an intuitive user interface. Ponsfacio can support traditional postpaid billing, too, for energy retailers wanting an all-in-one solution for both postpaid and prepaid services.
FIA is offered on a software-as-a-service basis, so that it can be deployed rapidly while minimising the impact on the supplier’s legacy IT infrastructure, including the commonly deployed utility billing systems from SAP and Oracle.
Das believes that, for most utilities, implementing a third-party digital prepayment solution like Ponsfacio’s will be the only viable way forward. The alternatives – adapting inflexible legacy systems for prepaid or building a customised solution – are, he suggests, far too costly and too time consuming to make good business sense.
Ponsfacio will certainly hope that, as a result, it can take advantage of the growing demand for prepayment solutions that is being engendered by the mass smart meter roll-out in its home market. The Dutch grid operators have so far installed more than 1.5 million smart meters in a programme that will eventually connect over 7.5 million homes. Any customers who choose a prepaid service will get a priority smart meter installation, normally within just a couple of weeks, Das explained.
For now, Das is focusing on the Benelux region, but he expects Ponsfacio to target other international markets in future. “There’ll be a moment when we’ll look at other countries too, where they are looking for a 100% digital solution for prepaid.”