[JeffAtlanta]

They should consider it a conversion of cash to a card that is only usable in their own stores, and show no effect on their general ledger until the card is actually used to purchase true merchandise.

What do they do with the cards that are never redeemed?

[Political Junkie Too]

"They" do nothing, if "they" is the store. At this point, the transaction is between the gift card purchaser and the gift card receiver -- the store is only facilitating the conversion of cash to the gift card.

If the gift receiver never redeems the card, then it is like stuffing cash under your mattress. The store loses nothing, the gift purchaser still has the satisfaction of giving a gift, and the gift receiver can still redeem the card until the store either goes out of business, ends the gift card program, or upgrades their system to the point where the cards are no longer readable by their technology.

The only real cost to the store is the materials cost of the gift card, and whatever wear and tear there is for encoding the card with value. I would consider that an SG&A expense, the cost of doing business.

-PJ

[longtermmemmory]

Too bad the post office does not offer a "money card" much the way they offer money orders.

Why not just give cash?

A $50 home depot gift card is the same as $50 in a home depot holiday card?