Most retail gift card programs are closed-loop prepaid cards...

Most retail gift card programs are closed-loop prepaid cards that expire two years from date of purchase or latest use. The two years is meant to protect the consumer from quick expiration and account for breakage. In the retail and payments industry, the term ‘breakage’ refers the portion of funds left on a partially used gift card. As discussed later in this report, International Financial Reporting Standard 15 (IFRS 15) regarding issuers’ accounting for breakage will change in 2018, a change that may have major financial implications for issuer.Expect continual regulatory changes that will affect the prepaid card industry now and into the future.