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.
In the past, identity verification was lax or not required at all, which made prepaid phones a tool for fraud, threats, and other crimes. Japan later enacted the Mobile Phone Improper Use Prevention Act, making it mandatory to present identification when buying a prepaid phone. Transferring or selling a prepaid phone registered under someone else's name is also illegal.