Prepaid phones work with pre-purchased credit cards - you can only call and use data up to the charged amount. No monthly fees, making them suitable for infrequent callers or temporary needs.
In Japan, SoftBank's "Simple Style" is the main prepaid service. Buy charge cards at convenience stores, add credit to your number, and use until the balance runs out. Outgoing calls stop at zero balance, but incoming calls work for a limited period.
Prepaid phones are very common overseas, especially for travelers buying local SIM cards. They're a primary communication tool in developing countries where bank accounts aren't universal.
However, lax identity verification (previously not required) led to criminal misuse for fraud and threats. Japan now requires ID verification for prepaid phone purchases, and transferring or selling prepaid phones under someone else's name is illegal.