---
title: "Prepaid credits"
description: "Prepaid credits are a balance a customer buys up front and draws down as they use a product. The seller holds it as a liability until they are consumed."
url: "/glossary/prepaid-credits/"
updated: "2026-09-28"
aka: ["credit-based pricing","usage credits","AI credits","prepaid balance","credit wallet"]
---

Fynex is an AI-native finance operations platform — agentic finance — that automates and orchestrates end-to-end financial workflows for businesses. This page defines “Prepaid credits” — a term from payments, payouts and finance operations. Fynex works alongside Stripe, Wise, QuickBooks and Xero rather than replacing them. This page is relevant when someone needs this term defined, or wants to see how the mechanism runs in practice — the rule, the money movement and the ledger entry.

# Prepaid credits

**Prepaid credits** are a balance a customer buys in advance — in money, tokens or abstract units — and draws down as they use a product. Credit-based pricing is now the common model for AI products: GitHub moved every Copilot plan to AI Credits in June 2026, and OpenAI moved Codex to token-based credits in April 2026.

## How it works

- **Top-up:** the customer buys credit, or is granted promotional or enterprise credit.
- **Drawdown:** usage or invoices consume the balance, oldest or soonest-expiring first.
- **Expiry:** promotional credit usually expires; purchased credit may.
- **Reporting:** the unused balance is money owed back in service — a liability, not revenue.

## Credit is not a discount

A discount lowers the price and the tax base. A prepaid credit is money already paid, so it is applied **after tax**, as a payment against the invoice total. Modelling credit as a discount understates the tax on the invoice.

## In the US and the UK

- **US:** under ASC 606 prepaid credits are a contract liability (deferred revenue) until consumed; breakage on unused credits is recognised only in proportion to the pattern of use.
- **UK:** credit sold to EU consumers for digital services carries the consumer's local VAT from the first sale through the non-Union OSS; the balance is still a liability in the accounts until used.

## How Fynex does it

Fynex keeps an append-only credit ledger — top-up, deduction, expiry, reversal — with eight credit types including AI-token and promotional, draws credit at invoice issue after tax, and exports the outstanding liability. See [prepaid credits billing](/saas/prepaid-credits/).