Pre-payment allows customers with variable and unpredictable incomes to pay what they can, when they can, for an essential service.

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They were issued by Manulife (subsequently taken over by John Hancock) and were called Flexible Purchase Payment Deferred Combination Fixed and Variable Annuity Contracts Non- Participating.

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The PVF allows the investor to receive an up-front payment (typically, 75-85% market value) in exchange for delivery of a variable amount of shares or cash in the future, at which time the capital gain is realized for tax purposes and the tax on the capital gain is paid.

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"Overnight, the variable costs of a transaction have tripled, " says Mr. English, who runs a marketing company that devises payment programs for vending machines.

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