Gift card breakage refers to the amount of money from gift cards that goes unspent or left dormant.
For example, if you receive a $50 gift card but only use $40 of it, the remaining $10 is considered "breakage". Additionally, if a gift card is purchased and left inactive for a prolonged period of time, it can be assumed the balance will never be spent. Some businesses will take this unspent balance (or "breakage"), and recognize the revenue under the assumption that the remaining balance will not be spent.
How to Run a Breakage Report
A breakage report is essentially an inactivity report. We typically run our breakage reports at 3 years of inactivity, but based on your business you may want to run it for a different period.
To run an inactivity report, you can follow these steps:
- Go to manage.ackroo.com and sign in
- Select "Cards"
- Press the "+" button beside "Filter Cards by", and select "Inactivity"
- In the "Select Inactivity Range" dropdown, select the desired time period, then select "Apply"
- To export this report, select "Bulk Action", and then "Export"
- This will initiate a download of this report in Excel, you can open this report and "SUM" all of the card balances, to obtain your breakage total.
*Caution: it is an assumption that these cards will not be redeemed. However, these customers are still entitled to redeem the balance on these cards, as gift card funds do not expire