Australian gift card program producers routinely promote high breakage rates in their marketing to convince merchants to sign up and offer prepaid gift cards to their customers. Gift card 'breakage' is the value left on the card when it expires.For example, ePay Australia launched its "Precision Gift Card platform" in 2012, describing it to retailers as the "Rolls Royce" of gift card and loyalty programs.ePay Australia's promotional material tells merchants that: "Another area where your business can earn additional revenue from a gift card program is from gift card breakage, which is the unused funds remaining on the gift card beyond the defined expiry period. "Breakage typically ranges from three per cent to 15 per cent of the face value of a gift card."The Restaurant and Catering Association promotes a Visa gift card called "Savour Australia." In its promotional material, the association tells members: "Typically 20 per cent of gift card holders do not spend the card's full value - the remaining balance goes to your bottom line."Queensland based loyalty program maker Dynamic Rewards tells retailers that gift cards are better than gift certificates because of: "Increased cash flow and breakage - on average ten to thirty per cent of cards are never redeemed.""This is seriously outrageous," said Tom Godfrey, spokesperson for consumer lobby group CHOICE."People will be completely staggered to learn this."And it just goes to show what poor value [for consumers] gift cards are. At the end of the day you are just putting a whole lot of very restrictive terms and conditions on cash," he said.Those on the production side dispute this analysis.Fergus Koochew, General Manager of GiftE, a division of Edge Loyalty, told Banking Day that gift card program providers did not market their products to merchants and retailers on the basis of easy profits from high breakage rates.  "I'd be surprised about that, there might be someone out there doing that but generally retailers don't want breakage, they want people in their store."Merchants want new customers and they want to up-sell to new customers who come in with a gift card," Koochew said.