Glossary definition of PAYG

A prepaid mobile phone (also commonly referred to as pay-as-you-go or prepaid wireless) is a Mobile phone for which service is purchased in advance of use. By purchasing credit to use on a mobile phone network, a user can access a mobile phone network without ongoing billing. Users can then use the mobile phone network until they run out of credit. The alternative billing method (and what is commonly referred to as a mobile phone contract) is the post-paid mobile phone, where a user enters into a long-term billing arrangement with a mobile network operator or carriage service provider (CSP).

A customer can add more credit to the pre-paid account at any time, known as "topping up" the account. This can either be a credit / debit card transaction with the provider (performed on the phone itself or via a third party such as a shop or ATM) or by purchasing a "top-up card" at retail. The top-up card is stamped with a unique code (often under a scratch-off panel) which can be redeemed on the phone for credit. Credit for a prepaid mobile phone may have a time limit, for example 90 days from the date the last credit was added. In these cases, customers who do not add more credit before expiration will lose their remaining balance, and their service (and its associated phone number) may be discontinued.

By 2003 the number of prepaid accounts grew past contract accounts, and by 2007, two thirds of all mobile phone accounts worldwide were prepaid accounts.