The clarification follows an Entrackr report that examined the economics of gift cards and so-called “breakage” income.
Breakage refers to money left unspent on a gift card after it expires or remains unused for a prolonged period.
For example, if a customer receives a ₹1,000 Starbucks gift card but spends only ₹800, the remaining ₹200 is considered breakage if it is never redeemed.
The Entrackr report argued that breakage is a high-margin earnings stream in the gift card ecosystem and suggested that proposed RBI rules requiring unused balances to eventually be returned to customers could impact profitability for players exposed to such income streams.
Pine Labs, however, says that assumption does not apply to its business model.
In an exchange filing, the company described the report as “speculative, incorrect and misleading”, stating that breakage income belongs to partner brands under its co-branded gift card programmes and has never been recognised in Pine Labs’ profit and loss account.
According to the company, when it powers gift card programmes for brands through its subsidiary Qwikcilver, Pine Labs acts as the technology and distribution partner. The company says that any unutilised balance ultimately belongs to the partner brand, not to Pine Labs.
As a result, Pine Labs says breakage has never formed a material part of its revenue or profit pool.
The company further stated that even if the RBI introduces new rules governing the treatment of breakage income, it does not expect any meaningful impact on its business, revenue or profitability.
The issue has attracted attention because gift cards and prepaid instruments are a significant business line for Pine Labs.
Out of ₹2,711 crore revenue Pine Labs for the year FY26, approximately ₹874 crore came from from Issuing and Acquiring Platform (IAP) business, which includes gift cards and prepaid payment instruments.
However, Pine Labs says that revenue consists of processing and distribution fees earned from issuing and distributing gift cards, rather than any income from unspent balances.
In other words, the company says it earns money when a gift card is issued, processed and distributed, not when customers leave money unused on those cards.
Sources also pointed to Pine Labs’ accounting treatment of prepaid card balances. The company’s FY26 balance sheet carries ₹5,383 crore of liabilities towards prepaid cards, with corresponding funds held in earmarked bank balances. According to Pine Labs, these amounts are reflected as liabilities and not recognised as revenue.
Any unutilised gift card balances are held in escrow-like earmarked accounts and are not booked as revenue, added these sources. If the funds remain unclaimed after the prescribed period- typically around three years- they are transferred back to the co-branded partner brand in line with current regulations and programme terms.
