Customers pre-pay for the amount they will need and when their credit runs out, the light, gas, or water turns off, reminding them to make another payment.
PAYG customers have access to a product or service which is installed in their home, and companies turn it on or off like a utility. Expanding Existing Technologies to Support New Products In addition, there are opportunities to work with existing PAYG companies to expand their customer base, and create more possibilities for cross-sector collaboration.
Now is the time for companies and other organizations to engage by expanding existing PAYG technologies to support new products and services. The good news is that some PAYG business models are beginning to cross-pollinate. In Nairobi, Kenya, Sanergy is bringing PAYG to sanitation with a pay-per-use toilet system that currently services 90,000 urban customers a day, and Envirofit has launched a smart-metering technology that enables low-income families to pay for gas as they cook. Jibu offers home delivery of clean water for as little as $1 for 20 liters-about 3 days of water use-and has successfully sold 96 million liters of water through 75 local franchises. Meanwhile, companies like Jibu have profitably made clean water access convenient and affordable for low-income families in Rwanda and Uganda. These have been the biggest contributor to sales for each brand across Africa. Starting in 2002, for example, companies such as Unilever and Nestle began developing single-serving versions of essential sanitation products like soap and shampoo to make them affordable and accessible, even in rural remote areas. It’s important to emphasize that the concept of PAYG not only isn’t unique to solar lighting, but also doesn’t need to involve highly engineered, digital technologies to work. Its adoption is expanding rapidly to other industries, and now is the time to jump on the band wagon. Yet the biggest opportunity for PAYG is yet to come. Solar lighting companies using PAYG-including M-KOPA, Greenlight Planet, Angaza, Fenix, and BBOXX-have provided new products or services to more than 8 million people who otherwise wouldn’t have access. Customers can repay loans in amounts as small as 50 cents from their mobile phone when they have the cash to do so. PAYG business models enable “ nanofinancing”-products and services in exchange for small, daily sums of money-in cases where traditional financing and even microfinancing is too expensive or difficult to implement. This is most evident in the pay-as-you-go (PAYG) solar lighting sector. However, some corporations and social enterprises have adapted their solutions to match these spending patterns and thus overcome affordability barriers that previously prevented the scale of new technologies with higher price points, such as clean cookstoves and solar lighting products. Most families living at the base of the economic pyramid (those earning less than $2.50 a day) remain dependent on day labor, and both earn and spend their wages daily. Within the past decade, greater alignment between international development solutions and consumer earning and spending habits has revolutionized access to essential goods and services in emerging markets.
THE NEXT BIG THING IN BUSINESS HOW TO
A SmartGas delivery technician visits a customer’s home in Nairobi, Kenya, to exchange her propane cylinder, show her how to add credit using her mobile phone, and walk her through a safety check.
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