In the case of chip cards, the credit amount is stored in the memory chip; in the case of magnetic cards, it is stored in the magnetic strip. When using a service, the stored credit amount is reduced according to the tariffs and duration of the used service. The advantage of prepaid services is that it provides the user with cost security. The latter can use the service only as long as he has a credit balance on the prepaid card.
Prepaid services are used in mobile communications, pay TV and prepaid credit cards, among others. In mobile communications, prepaid is type of contract for the use of mobile services. The prepaid cards, which are mainly used in mobile communications as SIM cards, must be topped up with credit before use, which can then be used to make cell phone calls. If the credit is used up, the prepaid card must be topped up again with a credit amount.
Prepaid services often have higher rates than other mobile services, and prepaid cards can also be deactivated if the cards are not regularly topped up. Cell phones with prepaid cards are usually SIMlocked to block other SIM cards and Netlocked to block other providers.