Key Factors That Impact Gift Card Breakage

Gift card breakage, the portion of funds that goes unused, can dramatically influence the financial performance of a gift card program. Understanding the drivers behind breakage helps businesses forecast outcomes more accurately and design programs that encourage full redemption. Below are the key factors that determine how much of your program’s load value may go unused.

1. Card Value
Low-value cards, particularly those under $50, are far more likely to be forgotten or deprioritised by customers. When a balance feels “too small to bother,” redemption drops sharply, increasing breakage.

2. Expiry Period
Expiry settings significantly shape user behaviour. Shorter expiry periods often result in higher breakage because customers run out of time to use the card. Longer or more flexible expiry windows support higher redemption rates and better customer satisfaction.

3. Redemption Locations
Cards restricted to a single merchant or narrow merchant category tend to see higher breakage. The more places a customer can spend their card, the greater the likelihood they will use it fully.

4. Notifications
Proactive reminders—such as low-balance alerts, expiry warnings, and unused-fund nudges—keep the card front of mind and reduce breakage. Programs that provide no reminders often see significantly higher unused balances.

5. Balance Merge
Allowing customers to merge small leftover balances into a single card makes redemption easier and prevents “orphaned” balances that would otherwise go unspent.

6. Delivery Method
How a card is delivered matters. SMS and email both work well, but effectiveness depends on audience habits. Streamlined digital delivery ensures customers receive, store, and remember their cards.

By understanding these factors, businesses can design smarter, more customer-friendly gift card programs that minimise breakage and maximise value.