Breakage: Prepaid Cards and prepaid payment instruments usually represent a Future Performance Obligation held by the instrument issuer and owed to the Cardholder. In the world of accounting, future performance obligations typically are booked as liabilities on the balance sheet of the issuer. Overtime some instruments or cards, and their related liabilities, are not used and may become stale or abandoned. In accounting parlance, these stale or abandoned liabilities are known as Unexercised Customer Rights. In common language, they are known as Breakage. Breakage is subject to regulation by Consumer Protection Laws, Unclaimed Property Statutes, SEC Guidance, GAAP, and IFRS.
