Gift Card Liability
Definition
The value of gift cards you have sold but customers have not redeemed yet. It is a liability, not revenue, until the card is used.
Want a deeper explanation?
Shopify reports often count gift card sales as revenue on the day they are sold, which double counts when the card is later used to buy products.
Unused balances (breakage) and state unclaimed-property rules make it more complex over time. Watch for: holiday revenue inflated by gift cards, followed by a January that looks better than it really was.
Example
You sell $18,000 of gift cards in December. That is a liability in December and becomes revenue as customers redeem them in January and February.