Purchased (prepaid) credits
When a customer buys credits, the money is a liability: you owe them service. Lago books the top-up to a customer credit balance, not to revenue. As the customer consumes usage against the wallet, that usage is recognized as revenue, exactly like any usage-based charge, and the credit balance draws down. A customer buys $100 of credits on January 1, then consumes $30 of usage during January.
Whether usage is paid with cash or with prepaid credits, the recognized revenue is the same. Only the funding source differs.
Granted (free) credits
Credits you give away (promotional credits, goodwill) aren’t paid for, so when they’re consumed they don’t produce real revenue. Lago records their consumption as contra-revenue (free credits), which reduces recognized revenue rather than adding to it. This keeps your revenue honest: you can’t earn revenue on service you gave away.Voided or refunded credits
If purchased credits are voided or refunded, Lago reverses the wallet entry so the credit balance and any refund net out correctly. Granted credits that are voided simply reverse the original grant.What this means for your reports
- A wallet top-up does not appear in the Recognized Revenue report. Only consumption does.
- Unused prepaid credits sit as a liability (customer credit balance) in the Statements.
- Consumed free credits show as negative contra-revenue, distinct from purchased-credit consumption.