If you're not too familiar with prepayment meters and how they work, read our guide. We'll break down the benefits and drawbacks of this type of meter.

Prepayment meters allow businesses to pay in advance for gas and electricity. You only use what has already been paid for. This type of meter is most commonly used by businesses looking to clear existing debt.

How do they work?

How do they work? With a prepayment meter, the display shows your remaining credit and standing charge. It also includes emergency credit, provided by your supplier. This helps prevent your supply from being cut off.

Older prepayment meters are topped up with a key or card. You take it to a shop or Post Office, add credit, then insert it into the meter. Newer smart prepayment meters work differently. You can top up through an app or online in seconds. The credit reaches your meter automatically.

Standing charges apply every day, whether you use energy or not. If you don't top up for a while, those charges build up. Your next top-up will cover the backlog first. This can catch businesses out after a quiet period or a seasonal closure.

Prepayment Advantages & Disadvantages

The advantages:

  • You have greater control over daily energy spend. You can't run up a bill you haven't budgeted for.
  • There are no surprise invoices or estimated bills at the end of the month.
  • They provide a structured way to clear existing energy debt. A portion of each top-up goes towards the outstanding balance.
  • There are no credit checks. This can suit newer businesses without an established credit history.

The disadvantages:

  • Unit rates are typically higher than standard credit or smart meter tariffs.
  • Your choice of tariffs and suppliers is more limited. Many of the most competitive business contracts aren't available on prepayment.
  • If your credit runs out and emergency credit is used up, your supply stops. For a business, even a short interruption can be costly.
  • Topping up takes time and attention. Someone has to remember to do it.
  • Standing charges accumulate even when the premises are empty.

This is why many businesses choose to switch out their prepayment meters for smart alternatives. With accurate readings and the ability to monitor monthly bills, customers often find smart meters bring similar control over their energy use, without the higher rates.

What are the most common meter types?

The most common meters you will find are:

Traditional meters: these are older meters that require manual readings and are typically linked to the prepayment option. However, with newer meter options, prepayment can be managed through an app or online, removing the need for a key or card to top up your energy.

Smart meters: are digital gas and electricity meters that automatically send usage to your suppliers. This eliminates estimated bills and ensures customers are billed accurately based on the energy they actually use throughout the month.

Half-hourly meters: up until this year, half-hourly meters were typically used only by larger businesses with high energy usage. There is only a slight difference between smart and half-hourly meters. Smart meters record data less frequently, sometimes daily or monthly, as opposed to half-hourly meters, which record data every half hour, allowing for more accurate and precise energy usage.

Why most businesses are moving to smart and half-hourly

A smart or half-hourly meter provides better monitooring and more accurate billing, without the need to top up. You'll also receive real-time energy data, allowing you to track your business's monthly energy usage. Over time, that data shows you where energy is being wasted. Many businesses spot savings within the first few months.

Previously, only larger businesses had access to half-hourly settlement. That's changing under the market-wide half-hourly settlement (MHHS) programme. The migration began in October 2025 and is due to finish in July 2027. This allows businesses and households to have their usage settled every half hour. The initiative, overseen by Ofgem, aims to combat energy waste. Consumers pay for the energy they actually use rather than relying on estimates. It also supports the UK's net zero goals.

Overview

Prepayment meters offer control and can help clear debt, but most businesses prefer smart meters for easier management and access to better tariffs.

Your supplier should allow you to switch to a smart meter as long as you are not currently in debt. For some multi-function meters, the switch can be made electronically without equipment changes. If you have an older prepayment meter, a technician may need to physically install a new smart meter. If you are unsure how to start the switch, contact us. We will review your specific metering situation and walk you through each step of the switching process.

A smart or half-hourly meter provides better monitoring and more accurate billing without the need to top up. You will also receive real-time energy data, allowing you to track your business's monthly energy usage.

How can we help?

If you need help with your business gas or electricity, get in touch with us!

If you would like a free quote, please fill in the box below, or…

Contact us on 0161 521 3400 or email us at info@purelyenergy.co.uk