Prepayment versus direct debit: satisfaction and costs compared

Pay-as-you-go energy used to be the expensive, second-class way to buy gas and electricity, and the satisfaction numbers showed it. In Ofgem's August to September 2023 survey, 71% of direct debit payers were satisfied with their supplier, against 66% of prepayment meter customers and 64% of standard credit customers¹. Two years later the picture had flipped: in the July to August 2025 survey, satisfaction was highest among prepayment meter customers, at 80% satisfied with their supplier overall².

On price, the old rule that prepayment costs more has also weakened. Standing charges for prepayment and direct debit customers were levelised from April 2024³, and under the current price cap the prepayment level is set £48 a year below the direct debit level for a typical dual fuel customer⁴. Independent bill data for 2024 still showed prepayment households paying 7.93% more than direct debit customers on average⁵, so the real-world gap depends on which tariff a household is on, not just on the cap.

Satisfaction: 66% versus 71%, and what changed

The 2023 figures come from Ofgem's consumer satisfaction survey, which asked households across Great Britain how satisfied they were with their supplier. Direct debit payers reported the highest satisfaction at 71%, prepayment meter customers 66%, and standard credit customers 64%¹. The same survey found direct debit and receipt-of-bill customers more content with the practical side of billing: 71% were satisfied with how easy their bill was to understand and 70% with its accuracy¹. Unexpectedly high bills were also concentrated among standard credit customers, 54% of whom reported one in the previous three months, against 30% of direct debit payers¹.

By July to August 2025 the ranking had changed. Satisfaction with customer service improved for prepayment customers from 73% to 80%, and for standard credit customers from 73% to 79%². Overall, satisfaction was highest among prepayment meter customers at 80%². Ofgem's analysis of what drives satisfaction notes that earlier data from January to February 2024 still showed prepayment customers less satisfied than direct debit customers, at 68% against 76%⁶, so the shift happened over roughly a year.

The likely driver is cost. Ofgem's own report observes that since July 2023 prepayment meter customers have no longer faced the highest energy costs, which may have gradually influenced satisfaction levels⁶. Ofgem's State of the Energy Market reporting records the same trend, that prepayment customers' satisfaction has improved and matched direct debit levels for the first time⁷. For a household weighing the two payment methods, the lesson is that the satisfaction gap is not fixed: it tracks what each group is paying and how suppliers treat them.

Why prepayment users may be happier when other influences are accounted for

Raw satisfaction scores compare very different groups of people, and Ofgem's deeper analysis controls for that. Once other variables are held constant, prepayment customers show higher satisfaction than those on direct debit⁶. In other words, the lower headline scores prepayment customers record are partly explained by who they are and what else they are dealing with, not by the meter itself.

The lived-experience research backs this up from the other direction. The main perceived advantage of prepayment, reported by prepayment users in the Scottish Government's fuel poverty research, was that it provided a sense of control, allowing users to decide how much money to put into their account and manage their energy use accordingly⁸. Direct debit users in the same research saw their arrangement as more flexible, because it allowed them to negotiate a payment plan with suppliers if bills became unmanageable, something they perceived would not be available on prepayment⁸.

The strain each group was under also differed. Consumer Scotland's winter 2022 briefing found 74% of prepayment consumers rationing their energy use, against 66% of direct debit and standing order customers⁹. Consumer Scotland's Energy Tracker found direct debit customers more likely to say their supplier treated them fairly, 46% against 28% of prepayment customers, and more likely to recommend their supplier, 37% against 24%¹⁰. Only 30% of prepayment customers agreed their supplier made it easy to contact them¹⁰. So the controlled-for finding is not that prepayment is a better experience in every respect: it is that among similar households, pay-as-you-go customers report satisfaction at least as high, most plausibly because of the control it gives them over spending.

Why paying by direct debit typically costs less

Despite the closing cap gap, direct debit remains the cheapest way to pay for most households. Which? notes that almost all companies offer a discount for paying by direct debit, so it is often the cheapest way to do it, and that prepayment tariffs tend to be higher than those paid by direct debit¹¹. Payment on receipt of a bill sits above both¹¹.

The independent bill data show the same ordering. In 2024, prepayment electricity customers had an average annual bill of £987, paying 10.84% less than standard credit customers but 7.93% more than direct debit customers⁵. The direction of travel matters though: between 2023 and 2024, prepayment bills fell by 16.85%, standard credit bills by 12.28% and direct debit bills by 11.11%⁵, so prepayment households saw the largest fall.

Two regulatory changes have narrowed the structural gap. Standing charges for prepayment and direct debit customers were levelised from April 2024³. And Ofgem has pressed suppliers on how they set direct debit amounts: suppliers must take all reasonable steps to ensure the fixed amount of a domestic customer's regular direct debit payment is based on the best and most current information available¹², and must ensure fixed direct debit amounts are based on accurate and up to date information so credit balances are not excessive¹³. The direct debit discount, in other words, is not meant to be funded by suppliers holding large credit balances.

Where prepayment beats the price cap

Under the default tariff cap, the prepayment level is now set below the direct debit level, reversing the historical position. For October to December 2025, the prepayment cap level is £48 lower than the direct debit level for a typical dual fuel customer, while standard credit customers pay an additional £136 compared with direct debit⁴. Both the direct debit and prepayment levels rose by £35, or 2%, from the previous quarter, with prepayment moving from £1,672 to £1,707⁴.

The gap is wider on Economy 7 electricity-only meters. For April to June 2025, Economy 7 prepayment customers paid £25 less than Economy 7 direct debit customers¹⁴. For July to September 2025 that difference was £30¹⁵, and for October to December 2025 it remained £30⁴. Economy 7 standard credit customers paid an additional £82 compared with direct debit in the July to September 2025 quarter¹⁵.

Two caveats keep this in proportion. First, the cap is a ceiling, not a tariff: Ofgem noted in February 2025 that a number of fixed direct debit tariffs were tracking below the April price cap level, with savings of around £50 available¹⁶, and fixed deals are generally marketed at direct debit customers. Second, the cap figures are for a typical dual fuel customer; a household's own usage determines what it actually pays. The broader picture of how prices have moved over time is covered in UK domestic energy prices over time.

Your options: prepayment, direct debit or a mix

Neither payment method wins outright, because they answer different needs. Prepayment suits households that want to spend a set amount and no more, including those who cannot risk a variable monthly debit. Direct debit suits households that want the lowest unit rates and are comfortable with estimated monthly amounts. Consumer Scotland's recommendation is that there should be parity of costs for direct debit and prepay customers⁹, and the Scottish Government has said it will continue to press for customers with pre-payment meters to access similar tariffs to direct debit customers¹⁷.

Switching between them is now easier than it was. Moving from an existing gas or electricity prepay meter to a smart credit meter is described as straightforward for customers who request it¹⁸. A smart meter can serve in either mode, and in prepayment mode it lets a household add credit automatically or without having to visit a shop¹⁹. That means the choice is less permanent than it once was: a household can move to direct debit for the cheaper rates and back to prepayment mode if budgeting demands it, without a meter exchange.

What households actually report about the switch is mixed in an instructive way. In the Scottish Government's research, those who had switched from prepayment meters to direct debit described having saved money as a result, but prepayment users who had not switched were concerned that direct debit would make it harder to manage their money²⁰. Both positions are supported by the evidence: direct debit is usually cheaper, and prepayment gives firmer control over weekly spending.

Payment habits also differ across the UK. Survey data from 2011 to 2012 recorded a much higher share of Great Britain's standard electricity customers paying by direct debit than by prepayment, while in Northern Ireland the positions were reversed, with prepayment the more common arrangement²¹. Northern Ireland's market has its own price controls and a far larger prepayment share, so the GB cap figures above do not describe it.

New obligations on suppliers to support prepayment customers in difficulty

Prepayment households carry a risk direct debit customers do not: running out of credit and disconnecting themselves. Ofgem's guidance is that a customer who cannot afford to top up should talk to their supplier, and the supplier must offer to help, for example by giving extra credit in a vulnerable situation²². Suppliers are under a licence obligation to provide appropriate support to customers in vulnerable situations using prepayment meters who have self-disconnected or self-rationed, or are at risk of doing so²³. Ofgem completed a review of how suppliers support customers in vulnerable situations and set out these expectations as licence obligations²³.

The same protections are being extended to heat networks. Under Ofgem's draft consumer protection guidance, authorised heat network suppliers are obliged to offer a reasonable amount of additional support credit in a timely manner where a prepayment consumer has self-disconnected or self-rationed in circumstances in which any occupant of the household is in a vulnerable situation²⁴. Where a supplier switches an existing supply meter to prepayment mode without the consumer's consent, the consumer must receive prepayment meter credit unless that is technically infeasible or outside the supplier's control²⁴.

Enforcement has teeth. Ofgem has taken action against suppliers that failed to provide additional support credit to prepayment customers in difficulty, securing compensation for those affected, with the payments tied to the Energy Bill Support Scheme, under which prepayment customers should have received smart meter credits or payment vouchers for traditional prepay meters²⁵. Northern Ireland's advice service makes the same practical point for all payment types: it is better to agree a payment plan with your supplier rather than cancelling direct debits and letting debt build up²⁶.

For households on prepayment, the dependence that remains is on the supplier behaving properly when credit runs low, and on the supplier's app or top-up channels working. The obligations above are the floor, not a guarantee, and the data on how often credit runs out are covered in prepayment meter top-ups and self-disconnection data. Households in arrears can also see the wider picture in energy debt and arrears statistics.