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Prepaid refers to services paid for in advance. Some examples include gift cards, preloaded credit cards, tolls, and cell phone usage credit, among other items.

Prepaid services and goods are sometimes targeted to marginal customers by retailers. Prepaid options can have substantial cost reductions over postpaid counterparts because they allow customers to monitor and budget usage in advance.

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.

Recent statistics (OECD Communications Outlook 2005) indicate that 40 % of the total mobile phone market in the OECD region consists of prepaid accounts. In some countries, such as Italy or Mexico, market share of prepaid can be as high as 90 %. In other countries, such as Finland or South Korea, the figure drops to about 2 %.

The pseudonymity enabled by prepaid services has recently become a concern with law enforcement agencies that consider it a safe haven for criminals and terrorists. As a result, a number of countries including Australia, Germany, Japan, Malaysia, Norway, Singapore, South Africa, Switzerland, and Thailand have passed laws to require that all prepaid customers register their personal information with their mobile carrier.

In some countries the law requires that customers notify their mobile carrier when transferring ownership of a prepaid phone or SIM card.

In Australia, the prepaid registration policy is part of a larger law enforcement initiative that includes the creation and maintenance of an Integrated Public Number Database.

External links

• The Prepaid Press (trade press)
• Privacy Rights and Prepaid Communications Services (Research Project)
• Australia's Integrated Public Number Database scheme

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