Both Eskom and Municipalities distribute Pre-Paid Electricity
tokens via Third Party Vendors.
South Africa is rapidly moving from “post-paid” electricity
to the pre-paid Electricity model due to the fact that there is
better control and a huge reduction in unpaid billings. Major success
has been achieved by rolling out pre-paid meters in the entire Western
Cape, much of Ekurhuleni and other Municipalities by utilising pre-paid
metering for payment of electricity consumption.
The labour and cost intensive demands of post-paid electricity systems
for municipalities’ e.g. accounting, infrastructure is a huge
burden and most South Africans have difficulty accessing payment
facilities. Consequently there are settlement delays and losses.
Logistically, it is difficult and expensive to maintain post-paid
meter reading procedures. There is also substantial fraud and tampering
with conventional meter reading.
There is also a lack of skilled regional and rural management at
the utilities. Consequently, bad debt and lack of accurate credit
management has incurred huge financial losses for local government
and Eskom. Further to that there are misconceptions that “post-paid”
consumers? accounts are sometimes used to contribute towards losses
incurred by non-paying consumers.
The 8-Point Distribution System Overview
The distribution methodology is divided into 4 main steps:
• Merchant Request for Token
• Merchant Information Confirmation
• Token Request
• End user (consumer) receives PIN
1. Token request from end user/resident
Handing over the required cash, with a uniquely numbered magnetic
swipe card (for their home pre-paid electricity meter provided by
the Utility), end users or consumers request purchase of pre-paid
electricity vouchers from any retail outlet, such as a petrol station,
that has our EPOS terminal available. The merchant/ cashier swipes
the card through the terminal reader from which secure, pre-paid
electricity vouchers may be sold.
2. Merchant credit check
The merchant has a virtual credit account with PayPoint managed
by our billing system and switch, that our EPOS terminal at the
merchant’s site in turn links to via GPRS.
When our merchant deposits money in a PayPoint bank account, our
automated system (monitored by financial staff) credits the relevant
virtual merchant account utilising a unique reference number. This
enables the merchant to draw against that account, each time his
outlet requests a virtual pre-paid voucher, until such time as that
credit is consumed.
The terminal will first check whether the merchant has sufficient
credit with us, by connecting to the central back office billing
system and should their credit be sufficient the terminal will request
confirmation to purchase a token “PIN” for a specified
3. PayPoint Credit Check on Supplier Server
PayPoint?s back office switch subsequently communicates via a VPN
(secure virtual private network) linked to the ESKOM back office
server that checks whether PayPoint has sufficient credit deposited
with ESKOM (as would any other Utility server, such as a Municipality).
If PayPoint’s credit is verified as sufficient, the Utility
back office server continues the transaction.
4. Info Confirmation
The consumer’s ‘swipe card’ has the following
information on the magnetic stripe in electronic format:
o Home meter number
This is to save ‘punching’ the Pre-Paid meter number
into the Terminal before connecting to the back office Server. There
the server has the Consumer’s ‘profile’ with such
o Consumer name and address
o Account info
o Any Arrears
o If so, percentage or amounts to be deducted from pre-payment vouchers
requested. [This is loaded on the consumer’s profile at the
Utility back office server, usually negotiated by the consumer/
When the merchant’s cashier swipes a consumer’s card,
the EPOS terminal collects the meter number with the voucher value
requested and sends it up to the Utility back office server.
The Utility server will verify information received from the terminal,
add the ‘profile’ information and return it for confirmation
by the consumer.
As the consumer verifies their information and requested transaction,
the terminal sends confirmation to the Utility to proceed with the
generation and transmission of a token PIN.
5. PayPoint Credit Reduction at ESKOM or Utility (Municipal)
The Utility Back Office Server and Billing System receives the customer’s
home meter number and requested token value, debits PayPoint’s
account held with the Utility, and builds a unique, secure, encrypted
13-digit recharge PIN in “real time, on-line” which
is relayed back to the merchant POS terminal for printing on a pre-paid
recharge voucher token.
6. Merchant Credit Reduction from PayPoint Back Office
The same transaction value, less a small discount is deducted from
the merchant account profile on PayPoint?s Back Office and Billing
7. End user receives receipt
The terminal prints the prescribed transaction voucher incorporating
the encrypted 13-digit recharge PIN number there-on, which is handed
over to the consumer.
8. Consumer Inserts Token Voucher PIN for Home Meter
The consumer or end user ‘punches’ the voucher “PIN”
on the home pre-paid meter keypad, thus enabling an electricity
recharge equivalent to the amount purchased.
Every recharge “PIN” generated at the Utility is unique
and can only activate a specified home meter.
This procedure is required as every pre-paid meter has a dedicated
unique serial number for security and monitoring reasons.
The system can also collect on arrears. For example; should the
consumer owe the municipality any outstanding monies (for Rates,
Taxes or, a previous post paid Electricity account), the system
will deduct a small portion of that monetary value from the Pre-paid
token and re-allocate it against the arrears e.g. the consumer purchases
a R100 token but only receives R80 value as R20 may be allocated
to an arrears account (usually by arrangement) towards settlement
of the debt.