What is a Prepayment Meter? Explore Working, Types, Recharge Method, Benefits, and Cons

A prepayment meter, also called a prepaid electricity meter, lets you pay for electricity in advance. Instead of getting a monthly bill like with a postpaid meter, you buy credits before using power. This is very similar to how prepaid mobile phones work. You top up the balance, and the electric prepayment meter uses those credits to supply electricity to your home.

This pay-as-you-go model means you can buy electricity whenever you need it. If your balance is low, the meter sends a warning. Once the credit is over, it will cut off the electricity supply until you recharge again. As soon as you top up the prepaid meter, power is restored automatically.

The main benefits of using prepaid electricity include paying only for the electricity units you consume, not paying electricity bills if you’re travelling somewhere and won’t need power, complete control over expenditure on electricity, and eliminating surprise bills. 

Some prepayment meters can also be a type of smart electricity meter. However, not all prepaid meters are smart meters. They’re beneficial for utility companies because customers pay first, which reduces unpaid bills and makes revenue collection easier. Some prepaid metres can also lower electricity theft compared to normal energy meters.

In this blog, we’ll cover what a prepayment meter is, how to recharge it, its benefits and drawbacks, and the different types available. We’ll also explain why installing rooftop solar panel systems for homes, housing societies, and commercial buildings is the best way to take control of how much you spend on those hefty utility bills, because rooftop solar reduces electricity bills by 90% or more. 

TL;DR Summary Box: What Happens if You Run Out of Electricity on a Prepaid Meter?

Modern prepaid electricity meters usually have an emergency credit feature. It acts like a small loan of electricity that keeps your supply running even after your main balance is over. Once you recharge again, the emergency credit that was used is automatically deducted from your next recharge.

In simple terms, even if you run out of electricity due to low credits, emergency credits still remain and keep your appliances running. 

Here’s how emergency credits help:

• They provide backup credit when the main balance ends.
• They ensure that electricity is not disconnected at night. 
• They might work as extended credits during weekends and holidays.

Please note: Emergency credits are not free. They are always recovered from your next top-up.

Here are the main topics covered in this blog in detail.

What is a Prepayment Meter?

Prepayment meters are types of electricity meters that require you to pay for electricity before you use it. You recharge the meter with credit, and then consume electricity until that credit runs out. This system helps you keep better track of your energy usage and avoid unexpected bills. 

Simply put, unlike traditional postpaid electricity meters, electric prepayment meters operate on a credit-based mechanism. You first add money, and then consume electricity until the balance is depleted.

Here are the key aspects you should know about prepayment meters before you learn how to use them:

• No surprise bills: Since you pay in advance, there are no monthly bills piling up or hidden charges to be paid later. You only use what you’ve already paid for.
• Better budget control: The meter shows your remaining balance in real time. So, you can plan your energy use and spending more effectively.
• Multiple recharge methods available: Depending on your electricity provider, you can recharge the meter through mobile apps, online portals, pay points, or physical recharge cards/vouchers.
• They’re useful in specific situations: They are especially practical for rental properties, small businesses, households seeking to control energy spending, or areas where bill collection and payment delays are common.
• Emergency credit available: Many modern prepaid metres come with emergency credits that prevent disconnection during nights, weekends, or holidays.

How Do Prepayment Meters Work? 

Prepayment meters operate on a pay-as-you-go credit system, mandating you to pay for electricity before using it. The process is built around buying credit, using it as you consume power, and topping up when your balance runs low.

Let’s check out how this works step-by-step:

• Step 1 – You buy credits in advance: You purchase electricity credits through mobile apps, online portals, pay points, vouchers, or authorized stores. Depending on your utility company, you may receive a unique recharge code, a token, or a smart card that updates your meter balance.
• Step 2 – Meter tracks usage in real time: As you use electrical appliances, the prepayment meter calculates the units of electricity consumed and deducts the matching cost from your prepaid balance automatically.
• Step 3 – Balance and usage are shown on screen: Most modern prepaid meters have a display showing your remaining balance, current usage, and sometimes extra details like emergency credits available.
• Step 4 – The meter displays low balance alerts: When your balance drops below a set threshold, the prepayment meter gives alerts. These alerts can be in the form of screen messages, warning lights, sounds, or app notifications, depending on the type of meter.
• Step 5 – If credits finish, the prepayment meter cuts off power supply: If your balance reaches zero, the meter disconnects the electricity supply to stop debt from building up. Many prepaid electricity meters have emergency credits that prevent sudden disconnection at night, on holidays, and at weekends.
• Step 6 – You need to recharge to restore the electricity supply: After a successful recharge, the prepayment meter detects the new credit and automatically restores the electricity supply without requiring any technician visit or manual intervention. If emergency credits were used, they are deducted from the new credit balance. 

How to Make a Prepaid Meter Payment?

The process of prepaid meter payment is extremely convenient, as you can recharge your meter both online and offline. For online recharge, you can use mobile apps, net banking, payment gateways, digital wallets, and credit and debit cards. You can also visit offline recharge centers. 

Here’s a simple step-by-step guide on how you can make a prepaid meter payment easily:

• Step 1 – Choose a recharge method: Depending on what your electricity provider supports, you can top up your prepaid meter through mobile apps, online portals, UPI, digital wallets, and debit/credit cards. 
• Step 2 – Enter the meter details: Input your prepaid meter number accurately. It’s usually printed on the meter display and can also be found on previous recharge receipts. Some meters also require a unique account or customer number. Enter these numbers correctly to ensure credit goes to the correct account.
• Step 3 – Select the recharge amount: Choose the desired credit amount based on your consumption needs and budget. 
• Step 4 – Complete the payment: Pay through your chosen method. For offline recharges, you may receive a physical token or card to insert into the meter. For online recharges, the credit usually updates automatically.
• Step 5 – You’ll receive a recharge confirmation: Wait for payment confirmation through SMS, email, or app notification containing transaction ID, recharge amount, and updated meter balance for your records.

What is the Difference Between a Normal Meter and a Prepaid Meter?

Normal postpaid meters operate on a use-first, pay-later basis, where consumers receive monthly bills for electricity consumed. On the other hand, prepayment meters operate on a pay-first, use-later basis, where users must load credit before consuming electricity. 

Let’s check out all the major differences between a normal meter and a prepayment meter:

Is a Prepaid Meter Better Than Postpaid?

A prepaid meter is not automatically better than postpaid, and postpaid isn’t always better than prepaid. Each has its own advantages, and which one works for you depends on your lifestyle and how you like to manage money.

When is a prepayment meter better?

• You want full control over your spending and like to pay only for what you use.
• You don’t want to deal with surprise bills at the end of the month.
• You prefer topping up little by little instead of paying one big bill.
• You live in a rented place or move often, and don’t want to get tied into monthly bills.

When is a postpaid meter better?

• You don’t want the hassle of topping up and would rather just pay once a month.
• You want peace of mind that your power won’t be cut off if you forget to recharge.
• You use a steady amount of electricity and prefer the convenience of automatic payments.

What Are the Types of Electric Prepayment Meters?

The two main types of prepayment meters in India are smart prepaid meters and key/card prepaid meters. 

• Smart electric prepayment meters: Smart prepaid meters offer real-time balance checking and remote recharge facilities. 
• Key/card prepaid meters: These are conventional models that require physical keys or smart cards to be topped up with credit at authorized locations.

Let’s check out how the two differ:

What Are the Benefits of Prepaid Electricity Meters?

The biggest advantage of prepaid electricity meters is that you pay first and then use electricity. This gives you more control over your spending, helps you avoid surprise bills, and makes it easier to manage your monthly budget. In fact, these meters are also beneficial for utility companies as they improve revenue collection and reduce the risk of unpaid bills.

Here are the key benefits of prepayment meters for consumers:

• Full control over spending: You decide how much money to put in, and you can track how quickly it’s being used.
• No surprise bills: Since you pay before you use, you’ll never be shocked by surprise bills at the end of the month.
• Easy to recharge: Most modern electricity prepayment meters let you top up online using apps, wallets, or websites.
• Emergency credit option: Many prepaid meters come with emergency credit, so the power doesn’t cut off suddenly if your balance hits zero.
• No risk of overdue bills: You don’t have to worry about late fees or reminders because you’re paying in advance.
• Great for rentals and shared homes: Tenants or people in shared spaces can easily manage their own electricity use without disputes over bills.

Here are the key benefits of prepayment meters for utility companies:

• No risk of unpaid bills: Customers pay before using electricity. It means that utility companies always recover costs.
• Lower chances of power theft: Prepaid meters, especially smart ones, make it harder for people to tamper with or bypass the system.
• Fewer collection costs: There’s no need to send staff for bill collection or reminders.
• Better demand planning: Discoms can track usage patterns more accurately, which helps in managing supply and load.
• Remote monitoring and service: Smart prepaid meters allow utility companies to track usage and detect faults.

What Are the Disadvantages of Prepaid Meters?

While prepaid electricity meters have many benefits, the main issue with them is the risk of sudden disconnection if you forget to recharge. Although prepaid electricity is beneficial for budget control, the cost of prepaid meters, particularly smart prepaid meters under the Smart Meter National Programme, can be higher. 

Let’s check out the main disadvantages of prepaid meters in detail:

• Risk of sudden power cut: If your prepaid balance hits zero and there’s no emergency credits, your power can stop immediately.
• Need to recharge regularly: If you don’t top up in time, especially in places without easy online top-ups, you might lose power.
• Cost of smart prepaid meters: Consumers have to pay a significant portion of the cost for installing smart prepaid meters under the Smart Meter National Programme.

Does Installing Rooftop On-Grid Solar Systems Offer Budget Control?

If you’ve been thinking about getting prepaid meters because they offer budget control and you’re tired of paying hefty electricity bills, changing a meter isn’t a long-term solution. The true solution is installing on-grid solar systems that can reduce electricity bills by 90% or more.

On-grid rooftop solar systems offer numerous advantages over off-grid solar systems: 

• The government offers homeowners and housing societies a subsidy under the PM Surya Ghar Muft Bijli Yojana: You’ll get this subsidy only for on-grid rooftop solar for housing societies and homes. This assistance is not provided for commercial rooftop systems, off-grid solar systems, or ground-mounted solar systems.
• Your electricity bills will decrease by 90% or disappear altogether: On-grid rooftop solar panel systems generate free solar electricity from solar radiation, a non-polluting and abundant resource. Once the system’s initial investment cost recovers in 3-5 years, you will get free electricity for 25 years of the system’s life. 
• They’re cost-effective to maintain: On-grid solar systems are better than off-grid solar systems because they do not include lithium batteries. Since no batteries are involved, maintaining on-grid solar panel systems is cheaper.

On-Grid Solar Investment Cost vs Solar Savings in 25 Years

You can use SolarSquare’s free solar rooftop calculator to calculate solar savings from an on-grid rooftop solar system in your city. 

For illustration purposes, here’s a comparison between the estimated cost of installing a rooftop on-grid solar system in Nagpur and the money the system saves in 25 years of its life:

*Please note: The above-mentioned solar plate price is indicative as of 26th August 2025 for the SolarSquare Blue 6ft variant. The final cost of installing an on-grid rooftop solar panel system at home depends on your DISCOM charges, product variant opted for, panel type, inverter type, mounting structure height, type of after-sales service, savings guarantee, roof height, etc. Prices are subject to change. Additionally, while calculating savings, we have considered the annual tariff escalation at 3% and the annual degradation at 1%. The actual final savings from solar panel installation depend on the types of solar panels you’ve installed and their efficiency, intensity of sunlight your rooftop receives, orientation of the panels and tilt angle, the pollution level and weather conditions in your city, the temperature, shadow on the roof, impact of dirt/dust, and how well you maintain your panels after installation.

For any further information, book a free solar consultation call with SolarSquare.

Conclusion

Prepaid meters are quite beneficial when it comes to budget control. Since users pay in advance for electricity, utility companies don’t have to worry about revenue collection, and consumers don’t have to worry about surprise bills at the end of the month. However, prepayment meters are not always suitable in all situations. Whether you go with prepaid meters or postpaid meters depends on your specific situation. 

If you’re a landlord, a tenant, or someone who moves frequently, a prepaid meter can be very beneficial for you. On the other hand, if you consume a steady amount of electricity every month, a postpaid meter might suit your needs better.  

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FAQs

Q1. Can a prepaid meter be recharged?

Ans. Yes. You can recharge a prepaid meter online through apps, websites, or UPI, and offline at authorized centers or shops. Once recharged, the balance updates on your meter automatically.

Q2. Can I recharge my prepaid meter without electricity?

Ans. Yes. Even if your power is off, you can still recharge online or at a recharge point. Once payment is made, the meter updates the credits, and the supply is restored.

Q3. What is the difference between a credit meter and a prepayment meter?

Ans. A credit meter is a postpaid meter that lets you use electricity first and pay later when you get a bill. A prepayment meter, on the other hand, requires you to pay upfront by topping up before you can use electricity.

Q4. Does a prepaid meter use a SIM card?

Ans. Smart prepaid meters often have a SIM card or communication module inside. This lets them connect to the supplier’s system for remote monitoring, balance updates, and online recharges.

Q5. What is the cost of a prepaid meter in India?

Ans. The cost of a prepayment meter in India can vary from ~Rs. 2,000* to ~Rs. 13,000*. *Please note: The final cost of prepaid meters can vary significantly from the range mentioned above. The actual cost depends on several factors, including the type of prepaid meter, brand, state electricity board or DISCOM policies, installation and service charges, location and infrastructure, and government policies like the Smart Meter National Programme.