Prepaid credits
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.
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.