Retailers earn billions in pure profit every year from gift cards that are never redeemed
Retailers retain approximately 6% of the $200 billion annual gift card market as pure profit through breakage, a financial phenomenon where unredeemed balances function similarly to a casino house edge.
Major retailers capture billions in annual revenue through breakage, the accounting term for gift card balances that are never redeemed. In the United States, where the gift card market reaches $200 billion or roughly 1% of GDP, an estimated 6% of that value is never spent. This unearned revenue flows directly to the bottom line, with older demographics driving the volume; Gen X and Boomers spend over $100 per card on average, doubling the typical $50 commitment of Millennials.
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