A payphone or pay phone is a public telephone, with payment made by inserting money (usually coins) or a debit card (a special telephone card or a multi-purpose card) or credit card before a call is made. Payphones are very common in the industrialized world, though the rise of mobile phones has meant a decline in usage, and thus, in recent years, a decrease in the availabity of these phones.
Payphones are often found in public places, transportation hubs such as airports or train stations, and on street corners. By agreement with the landlord, either the phone company pays rent for the location and keeps the revenue, or the landlord pays rent for the phone and shares the revenue. In recent years, deregulation in the United States has allowed private companies to provide pay phone services to businesses; such arrangements are called Customer Owned Coin Operated Telephones (COCOTs). In some cases, particularly at gas stations, payphones are mounted in drive-up structures in which people in automobiles can make calls while still in their vehicles.
In the United States, the coin rate for a local direct-dialed station-to-station call from a payphone has been 50¢ in most areas for an unlimited number of minutes. As late as the 1970's, the same call typically cost 10¢. While some areas only cost 5¢, smaller companies occasionally charged as high as 15¢ to 20¢. Over the years the price of a call gradually changed to 20¢, and again rose to 25¢ in some areas between 1985 and 1990. In the late 1990s, the price rose to 35¢ in many areas.
A payphone operator collects an FCC-mandated fee of 49.4¢ from the owner of a toll-free number for each call successfully placed to that number from a payphone. This results in many toll-free numbers rejecting calls from payphones in an attempt to avoid this surcharge. Calling cards which require the caller to dial through a toll-free number will often pass this surcharge back to the caller, either as a separate itemized charge, a 50¢ to 90¢ increase in the price of the call, or (in the case of many pre-paid calling cards) the deduction of an extra number of minutes from the balance of the pre-paid card.
The decline of payphones supported and maintained by telephone companies due to widespread mobile phone usage has been in contrast to social advocates who consider them a communication necessity for low income people. Nevertheless, on December 3, 2007, AT&T announced that they will sell all 60,000 pay phones they operate. The company claims that they will exit the pay phone business before it becomes unprofitable.
In the UK, as in the USA, payphones have been deregulated. The great majority of them are still operated by British Telecom but there are other providers, mostly in urban areas. Birmingham, Leicester, London and Nottingham now have a greater concentration of non-BT payphones.
Currently most (BT) payphones charge £0.40 for the first 20 minutes of any direct dialled national geographic call. Previously (before November 2006) the minimum charge was £0.30, before 2004 it was £0.20 and before 2000 it was £0.10.