Prepaid scratch cards are extremely costly
Many airtime operators can significantly increase their earnings if they choose to discontinue the traditional prepaid scratch cards that are currently being used by many customers to top-up their mobile account. The scratch cards can quite simply be replaced by topping up electronically.
The traditional scratch card has historically played a central role in airtime distribution, but on the other hand also has several financial and security costs and aspects that allow operators to increase their EBITDA margin by 3 – 5 percentage points without having to increase their sales volume, market share or in any other way change their current competitive situation on the market they are doing business on.
In practice, an analysis of the costs an operator has on producing, marketing, distributing and selling prepaid scratch cards results in most operators using between 18 and 27% of their sold airtime revenue on production, distribution and commission costs, every time they sell a prepaid scratch card.
An analysis of airtime distribution via electronic top-up shows that costs vary from between 3 – 12%, depending on the type of electronic top-up being used. The cheapest type of electronic top up is achieved by using bankcards, credit cards and ATMs and the most expensive via convenience stores, supermarkets and other retail channels.
On many markets, operators distribute between 20 – 40% of their prepaid airtime via scratch cards. Our research shows that if operators choose to replace their traditional prepaid scratch cards, they can easily significantly reduce their top-up costs and at the same time increase their EBITDA(Earnings Before Interest, Taxes, Depreciation and Amortization) margin by between 3 – 5 percentage points. site name generator .