In South Africa, the management of municipal services has been an ongoing dilemma for the new government because of what it terms `a culture' of non-payment among users. As a result, prepayment has been widely implemented in electricity, telephone and, more recently, water services. Hailed as the solution to the non-payment problem, but also as a new social `paradigm' for service delivery, prepayment has been made more palatable by the introduction of free basic water and electricity. This paper analyses the state's attempt to impose prepayment in order to regulate, manage and re-educate the poor in South Africa into a `payment culture'. These social control processes, however, have been resisted; they provide a window on to the ambiguities of neo-liberal social development and the re-assertion of class power in South Africa through the engineering of a market-based disciplinary society. The paper concludes that the analysis of neo-liberal class power in South Africa needs to take account of the reciprocal dynamics of the state and popular responses. Prepaid service delivery has only to a limited extent relieved absolute poverty, but more generally has become linked to negative outcomes such as intermittent services and increased household stresses. The article draws on state documents, local municipal records and case studies of prepayment.