How do retailers account for the debt incurred by issuing gift cards that are never redeemed?

Question

If someone buys a $100 gift card from Target, does this $100 debt stay on their books until the card is redeemed, or do they have an algorithm that slowly depreciates this debt over time? Companies benefit from selling gift cards by assuming many will be lost/never redeemed, how do they know when they’ve achieved profit from these sales?

Assuming the gift cards have no expiration date, which many today don’t.

In: 118

Answer 1

I literally send a payment to a third party (like an escrow account) for every gift card purchase made at my store. I receive a deposit for every gift card redeemed at my store. We don’t sell third party gift cards so not sure how they work. In my case, if you buy a card from my store and use it at a different store, I lose that money. If I had same brand competitors nearby, I wouldn’t offer gift cards.