Prepayment for service

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Prepaid refers to goods and services paid for in advance. Examples include postage stamps, attorneys, tolls, public transit cards like the Greater London Oyster card, pay as you go cell phones, and stored-value cards such as gift cards and preloaded credit cards.

Prepaid services and goods are sometimes targeted to marginal customers by retailers.

Unlike postpaid or contract based services, prepaid accounts can be obtained with cash. As a result, they can be established by people who have minimal identification or poor credit ratings. Minors, immigrants, students, defaulters, and those on low incomes are typical prepaid customers.

In accounting terms, a prepayment is treated as an asset by a buyer, and as a liability by a seller.^[1]