What is a Prepayment Meter UK?
Around 7 million UK households are on prepayment meters — but many don’t fully understand how they work or whether they’re on the best deal. Here is everything you need to know.
In this guide
What is a prepayment meter?
A prepayment meter — sometimes called a pay-as-you-go meter or PPM — is a type of energy meter that requires you to pay for your gas or electricity in advance before you can use it. Rather than receiving a monthly bill and paying after the fact you top up your meter with credit and use energy as you go.
Prepayment meters are common in rental properties and are sometimes fitted by suppliers when a household has fallen into energy debt. However many households choose them voluntarily as a way of budgeting more easily.
Key fact: If your energy runs out on a prepayment meter your supply will be cut off until you top up — unlike a credit meter where you continue to receive energy and pay the bill later. However most modern prepayment meters have an emergency credit facility to prevent this happening at inconvenient times.
How does a prepayment meter work?
The process depends on what type of prepayment meter you have. However the general principle is the same — you add credit to your meter and use energy until that credit runs out.
🏪 Topping up — you add credit at a PayPoint or Payzone outlet, a Post Office, or via your supplier’s app or website. The amount you top up is added to your meter’s credit balance.
⚡ Using energy — as you use gas or electricity the credit balance on your meter decreases. The rate at which it decreases depends on your tariff’s unit rate and standing charge.
🚨 Emergency credit — most meters offer a small amount of emergency credit (typically £5-10) that activates when your balance reaches zero. You repay this automatically when you next top up.
💰 Standing charge — your meter deducts the daily standing charge from your credit even when you are not using any energy. Consequently your balance decreases every day regardless of usage.
Types of prepayment meter
There are several types of prepayment meter in use across the UK. Furthermore the type you have affects how you top up and manage your energy:
Key meter
The most traditional type. You top up a physical key at a PayPoint outlet and insert it into the meter to transfer credit. Additionally the key stores your usage data which is uploaded to your supplier when you top up.
Card meter
Similar to a key meter but uses a card instead. You top up the card at a PayPoint or Post Office and insert it into the meter. Consequently the process is very similar to a key meter.
Smart prepayment meter ⭐ Most modern
A smart meter operating in prepayment mode. You top up via an app, online or at a PayPoint — no need to visit the meter at all. Furthermore you can see your real-time usage and balance on your In-Home Display or app. This is the most convenient type and is being rolled out across the UK.
Do prepayment meters cost more?
Historically prepayment meter tariffs were significantly more expensive than credit meter tariffs. However following regulatory changes by Ofgem in 2023 suppliers are no longer allowed to charge prepayment meter customers more than direct debit customers for the same tariff under the price cap.
This was a significant change — previously prepayment meter customers were paying up to £100 more per year than equivalent credit meter customers. Consequently the cost gap has narrowed considerably.
However: While the price cap rate is now the same prepayment meter customers typically have access to fewer fixed tariff deals than credit meter customers. Furthermore fixed deals that are available to prepayment customers can sometimes be priced higher. Therefore it is still worth comparing deals to make sure you are on the best available tariff.
Pros and cons of prepayment meters
Advantages:
✓ Easy to budget — you only spend what you top up
✓ No surprise large bills
✓ No direct debit required
✓ Helps manage debt repayment
✓ Smart meters allow app top-ups
Disadvantages:
✗ Supply cuts off if credit runs out
✗ Fewer tariff options available
✗ Need to remember to top up
✗ Top-up locations not always nearby
✗ Less convenient than direct debit
Can I switch tariff or supplier with a prepayment meter?
Yes — you have the right to switch energy supplier even if you have a prepayment meter. The switching process is the same as for credit meter customers and your supply is never interrupted during a switch.
However there are some things to be aware of before switching. If you owe more than £500 in energy debt your supplier can prevent you from switching until the debt is reduced. Additionally if you have an older key or card meter your new supplier may need to upgrade it — consequently the switch can take slightly longer.
Compare prepayment meter tariffs
Find the best deals available for prepayment meter customers at your postcode. Free, no obligation.
Compare energy deals →Can I switch from a prepayment meter to a credit meter?
In most cases yes — you can request to have your prepayment meter replaced with a credit meter. However your supplier may charge a fee for the meter exchange and will carry out a credit check before agreeing. Consequently if you have a history of payment difficulties your supplier may decline the request.
The simplest route is to request a smart meter — most suppliers will install one free of charge. Once you have a smart meter you can then ask your supplier to switch it to credit mode, which effectively converts you from prepayment to a standard credit meter arrangement without a physical meter swap.
Steps to switch from prepayment to credit meter:
1. Contact your energy supplier and request a switch to a credit meter
2. Your supplier will carry out a credit check
3. If approved an engineer will visit to replace or reconfigure your meter
4. You will then receive monthly bills and pay by direct debit
5. You can subsequently compare and switch to the full range of credit meter tariffs
What if I’m in energy debt?
If you have energy debt your prepayment meter will automatically deduct a portion of each top-up toward repaying the debt. Your supplier sets this repayment rate — typically around 20% of each top-up goes toward debt repayment with the remainder used for energy.
If you are struggling with energy debt there is help available. Furthermore you can contact your supplier to negotiate a more manageable repayment rate. Additionally charities including Citizens Advice and the Energy Saving Trust can provide free advice on managing energy debt.
Switching with debt: If you owe less than £500 to your current supplier you can usually still switch to a new supplier. However the debt stays with your current supplier and you must repay it. Your new supplier cannot take on your old debt. Consequently switching does not write off what you owe.
Related guides
How to switch energy supplier UK 2026 → What is a smart meter and do I need one? → How to reduce your energy bills UK 2026 →Find the best deal for your prepayment meter
Compare energy deals available to prepayment meter customers at your postcode. Free, no obligation.
Compare energy deals →Written by the FastSwitch team · Last updated May 2026
FastSwitch is a free UK energy comparison service. We may earn a commission when you switch via our site — this never affects the deals or prices you see.
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