US prepaid cell phone market totals $10 billion a year, and the user base is expected to grow at breakneck speed of 70% to include 24.8 million subscribers in 2007 according to the Yankee Group, up from 18 million currently on prepaid plans. In Europe and Asia the proportion of subscribers using prepaid plans reaches 63% and 45% respectively.

 

Retailers and service providers are increasingly using prepaid plans as a marketing tool to attract new consumers to the wireless service.

 

7-Eleven launched a series of prepaid phones with its own brand in April 2004, and rumors say that Wal-Mart and other US retailers might soon launch their products.

 

Many retailers now provide scratch cards or electronic POS activation (POSA) services for US wireless carriers, and prepaid phones will fit in logically with this service since the companies can take advantage of the existing POS systems.

 

If POSA services are provided through a card terminal or network, this system will allow users to give up scratch cards that pose security threats of theft from shoplifters or store employees. Prepaid products, now combined with credit and debit card processing, generate an attractive profit for sales companies and merchant level salespeople.