How does breakage accounting work for unredeemed loyalty...

Breakage—the portion of issued points that expire without being redeemed—is a meaningful line item on any bank’s balance sheet. Xoxoday Plum gives finance and operations teams the granular data they need to calculate, book, and audit that liability without manual aggregation or reconciliation guesswork.

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Point lifecycle tracking across every state

Xoxoday Plum’s loyalty engine records every point in one of four states: issued, outstanding, redeemed, or expired. Each record carries ageing metadata and an expiry timestamp, so the bank’s accounting team can apply its own policy—whether straight-line accrual, statistical breakage estimation, or a hybrid model—directly to the exported data. Reports can be generated on demand or scheduled to feed into downstream ERP workflows, including finance systems such as SAP SuccessFactors.

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A pre-paid wallet model that caps bank exposure

On the redemption side, Xoxoday Plum’s marketplace operates on a pre-paid, pay-on-redemption basis. The bank funds a wallet in advance, and Xoxoday Plum draws from that wallet only when a member completes a successful redemption. If a member redeems points for a gift voucher and then never uses that voucher, the resulting downstream breakage is settled between Xoxoday Plum and its supplier network under separate commercial terms. That settlement does not appear on the bank’s books and does not create additional liability for the bank. This clean separation bounds exposure precisely: liability exists for outstanding points, shrinks as points are redeemed or expire, and is never compounded by what happens to a voucher after it leaves the marketplace.

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Example: end-of-quarter liability close

At quarter-end, a bank’s finance team can pull a point-state report from Xoxoday Plum showing the total outstanding balance segmented by ageing bucket—for example, points aged 0–90 days, 91–180 days, and 181+ days. Using historical redemption curves, the team applies an expected breakage rate to each bucket and books the net liability in its general ledger. Because Xoxoday Plum has already handled any downstream voucher breakage separately, the journal entry reflects only the points the bank issued, with no residual exposure from voucher-level non-usage.

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Audit-ready data, always

Xoxoday Plum retains the full transaction history, so internal auditors and external reviewers have a single, consistent data source. Xoxoday Plum is SOC 2 Type II certified and ISO 27001 compliant, which means the data integrity underpinning your liability calculations meets enterprise security and audit standards out of the box. Learn more: Xoxoday Plum Help Centre — Operational Requirements