Breakage analysis & stored-value advisory
Most stored-value liability on the balance sheet will never be redeemed.
CardBreakage quantifies Breakage across gift card, prepaid, rewards, and promotional programs — using your own redemption history, modeled by cohort, and reconciled to your reported Outstanding Liability.
Confidential intake · Analyst-led · No platform integration required
Illustrative portfolio
SampleRedemption decay by cohort age
Illustrative curve. Dashed line marks the modeled terminal position.
Programs we analyze
- Gift cards
- Prepaid
- Rewards points
- Promotional credits
- Stored value
The problem
Breakage is estimated once, then inherited for years.
Most stored-value liabilities are carried on a rate someone selected years ago — an industry benchmark, a vendor default, or a conservative placeholder that was never revisited as the program matured.
Meanwhile the underlying behavior moves. Denominations shift, channels change, aged balances stack up, and dormancy characteristics start to matter for unclaimed-property purposes.
Symptom
A single blended rate
Symptom
No cohort visibility
Symptom
Unexamined dormancy
Symptom
Undocumented assumptions
What we analyze
Four dimensions of a defensible breakage position
Each engagement produces the same four analytical layers, built from your data and documented for review.
01
Redemption curve construction
We rebuild your actual redemption decay from transaction history, by issuance cohort, denomination, and channel — not from an industry average.
02
Liability aging
Outstanding balances are segmented by age so mature value is separated from balances still inside the active redemption window.
03
Terminal breakage estimation
Cohort curves are extrapolated to a terminal state to produce a defensible expected-breakage rate with sensitivity ranges.
04
Escheatment exposure mapping
Balances are tested against dormancy characteristics so potential unclaimed-property exposure is quantified, not assumed away.
Process
From data extract to documented readout in about three weeks
Data intake
A single secure extract: issuance, redemption, and balance history. No system integration, no platform migration.
Cohort modeling
We construct redemption curves per cohort and reconcile modeled balances against your general ledger position.
Breakage determination
Terminal breakage rates, sensitivity bands, and the portion of liability that is behaviorally inactive.
Advisory readout
A documented analysis pack your finance team, auditors, and advisors can interrogate line by line.
Deliverable
What you receive
A quantified liability position with sensitivity ranges, cohort-level redemption curves, an aging profile of outstanding balances, and an exposure map for potentially dormant value.
Delivered as an analysis pack plus a working session with the analyst who built the model.
Analysis pack contents
- Expected breakage rate with low/base/high sensitivity bands
- Cohort redemption curves by issuance vintage and denomination
- Liability aging schedule and behaviorally inactive share
- Potential escheatment exposure by dormancy characteristic
- Reconciliation to reported outstanding liability
- Documented assumptions and reproducibility notes
Coverage
Every stored-value structure carries breakage differently
Methodology
Built to survive audit review
Four principles govern every engagement, and they are the reason our output holds up when it is challenged.
Cohort-based, never blended
Blended portfolio rates hide the only thing that matters: how each issuance vintage actually behaves over time.
Reconciled to your ledger
Every modeled position is tied back to the reported outstanding liability so the analysis survives review.
Documented and reproducible
Assumptions, inputs, and sensitivities are written down. The same extract produces the same result.
Advisory, not accounting
We quantify behavior and exposure. Your accounting policy, auditors, and counsel determine treatment.
Exposure
Breakage and escheatment are not the same number.
Value that customers will never redeem is not automatically yours. Depending on program structure and jurisdiction, a portion may carry Escheatment Exposure. We separate the two so the recognizable position is not overstated and the compliance position is not ignored.
Glossary of termsModeled non-redemption
Subject to jurisdiction
Subject to accounting treatment
Questions
What finance teams ask first
Engagement
Run your breakage audit
A confidential, analyst-led review of your stored-value liability — expected breakage, redemption behavior, and escheatment exposure quantified against your own data.
No engagement commitment required. Scope is confirmed before work begins.