Pay As You Go on the rise

Quarter of people considering ditching mobile contracts in favour of Pay As You Go.

A quarter of people are considering ditching their mobile contracts in favour of Pay As You Go (PAYG).

The landscape of the mobile phone market is set to alter dramatically in the coming months as 6.5m users consider switching from a mobile phone contracts to a Pay As You Go option because of the economic climate.

A further 723,000 say they are already in the process of switching, according to a report out from Post Office® Telecoms.

There are already more than 32.7m PAYG users in the UK, making up 54% of the population, and this recent study indicated it could increase to a possible market share of around 65%.

In recent months some Post Office branches have seen an increase in sales of mobile top ups of over 100% and, as the UK’s second largest provider of the service, the network is bracing itself for a sharp increase in sales during 2009.

Martin Moran, Post Office head of telecoms, said: “Clearly people are being mindful of their finances during difficult times, and taking control of their spending by switching to more manageable options for mobile phone costs.”

“59% of people say that having a PAYG mobile allows better control of spending and in some Post Office branches we’re seeing record numbers of people topping up their mobile phone at the counter.”

“The Post Office also offers customers the option to pay many bills in cash, including our HomePhone and broadband services, which can help them control their spending in an easy and transparent way. We’re preparing ourselves for an increase in use of these services as the financial crisis deepens.”

PAYG is a good option if you have a bad credit rating, with 31% of under-25s citing this as a reason to use the service. The under-25s were also the wariest about signing a monthly contract (67%).

Regionally, mobile phone users in the South West were the most likely to switch from contracts to PAYG (40%).

The main reasons cited for topping up rather than signing a contract were:

1. You only pay for what you use (69%)
2. You have more control over you spending and won’t be saddled with bills you can’t afford (59.2%)
3. You don’t feel the pressure of being tied into a contract (58%)
4. You don’t need a good credit rating (21%)
5. They are simpler to understand (15%)