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Dark side of Starbucks app: Coffee giant accused of rigging payments to the tune of nearly $900 million over 5 years | Fortune (fortune.com)
submitted 2 years ago by to c/technology@lemmy.world
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[–] 3 points 2 years ago (1 child)

Nope, the money is counted as income straight away. Think about the process: person gives cash for gift card. Merchant now had the money and a promise to give that amount of inventory at a future date. Some of those promises are never acted upon, in which case merchant has the gift card money AND the merch which they can also sell.

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  • [–] 2 points 2 years ago (2 children)

    Why would you comment on something you know nothing about?

    Basic gift card revenue recognition

    Companies cannot recognize revenue upon the initial sale of a gift card because of a key revenue recognition principle that states that revenue is recognized when or as an entity satisfies a performance obligation by transferring a promised good or service to a customer.

    https://blog.leapfin.com/how-to-properly-recognize-gift-card-revenue

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  • [–] 0 points 2 years ago

    Ha, completely forgot about this.

    You should read that article carefully though. They even outline why this is a money maker later:

    You might be wondering, how did I get $1650 in total revenue from a $1500 sale? Well, it’s true, because you were able to take 10% of the gift card in breakage income, and on an individual order/customer it can look funny, but on the whole, with your P&L, it’ll be offset by another gift card purchase not being used and money that was “indefinitely deferred!”

    So, uhhh, I guess I'd ask, why would you comment on something about which you know nothing?

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