The 2006 Prepayment Innovation Award, sponsored by Eskom, for the most innovative prepayment metering or vending solution was awarded to the Expertron Group for its Cell Power phone vending system.
The award was handed over by Cape Town mayor Helen Zille at the 2006 African Utility Week in Cape Town recently.
Rolled out by the City of Tshwane Metropolitan Municipality in July 2005 to sell electricity in communities, the Cell Power system attracted 88 merchants as vendors by December 2005. This grew to 110 by March this year. Combined, they vend over R2.3 million electricity per month.
The Tshwane Municipality pays a 5% commission to these merchants, whose businesses have very low overheads. During field trials in Olievenhoudtsbosch in 2003, buyers indicated they preferred buying electricity from a person they knew to buying it from a faceless machine.
Eskom's new Innovation Award recognises the innovative implementation of prepayment projects in both the water and electricity sectors. Criteria required the deployment of the innovation during the 2005 award period with a positive and important contribution to sustainable community development.
According to Expertron MD, Dr Walter Smuts, Cell Power is an electronic voucher vending system that uses standard mobile telephones as point of sales devices. Merchants can sell to both the banked - and non-banked clients, respectively using credit cards and cash.
Community members can become electricity merchants by registering their mobile phones as payment terminals on the system. Merchant turnover varies and can exceed R5 000 per day. This translates into a turnover of more than R1.5 million per year - a remarkable achievement, taken into account that this is done by a single person with only a mobile phone and R5 000 savings money.
To serve non-banked clients, merchants pay cash for bulk purchases of electricity and sell it for cash to clients within the community, earning a commission on each sale. Clients receive a PIN which they enter into their electricity meters to access the purchased amount of electricity. Banked community members with a valid electricity meter, a mobile phone and a credit card can buy electricity by sending an SMS to the Cell Power server, which concludes the transaction and sends an electricity token back to the client's mobile phone.
"Benefits of using Cell Power are numerous," says Smuts. "Not only does it enable municipalities to increase pay points by devolving these to merchants within communities, there are no direct terminal running costs and merchants carry the full risk of the pay points - their mobile phones. Selling electricity through mobile phones also extends business hours to any time of the day or night."
When using Cell Power, cash is collected and returned by many independent merchants in small quantities, thereby solving the municipality's cash collection problem. And importantly, Cell Power enables municipalities to create business opportunities for community members, increasing new businesses and new jobs.
Specialists in innovative product development for information and communications security solutions, Expertron - a graduate company from the maxum Business Incubator at The Innovation Hub - was one of the first tenants to join the Science Park in 2000.
Company founding members Smuts and Gavin Ehlers are upbeat about being part of The Innovation Hub's hi-tech, innovative environment. "The Innovation Hub has provided us with office infrastructure in an affordable and flexible way and helped us to present a professional image to clients. The most important advantage, however, is being in close proximity to other entrepreneurs."
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