The digital gift card business, which earns around 80% of its revenue from markets outside Australia, says rising regulatory costs are threatening its international growth plans. At the heart of the issue is the expense of meeting both Australian and US accounting standards, which the company says increases its administrative costs by close to 40%.
The Australian-based platform allows users to purchase, send and store digital gift cards that are accepted by over 1,500 retailers globally, including major brands across Australia and the US. Founded with a global focus, Prezzee recently entered into a joint venture with China’s UnionPay to release a new debit card product. This deal aligns with Prezzee’s broader international ambitions. However, these developments are unfolding as Australian financial regulations are increasingly seen as mismatched with the demands of businesses looking to grow internationally.
In contrast to the US, where companies can recognise revenue from gift card sales straight away, Australian accounting rules only allow revenue to be declared once a card is redeemed or expires. Prezzee’s leadership argues that this difference distorts the company’s actual performance. The business reported a statutory loss of $79 million over an 18-month period, but claims the loss would shrink to $12 million under US accounting rules, excluding one-off costs. Running two sets of financial records, one to meet Australia's IFRS requirements and another for US GAAP, has become too expensive and inefficient for a fast-growing business.
The issue goes beyond cost. Industry observers suggest that Australia’s strict adherence to IFRS may prompt more technology firms to shift operations abroad to jurisdictions with more favourable regulatory environments, such as Singapore. Prezzee has indicated it may take this path if regulatory changes are not introduced soon. The key question is whether Australian authorities are prepared to adapt or risk losing innovative companies to overseas markets.
Despite these challenges, Prezzee's growth continues. The platform processed $3.4 billion in gift card sales in 2023, up from $1.1 billion in the previous year, and is now entering new markets including Ireland and parts of Asia. Through its new UnionPay venture, named PrezzeePay, the business will also begin offering regulated financial products under its existing Australian Financial Services licence. Still, remaining headquartered in Australia may no longer be financially viable.
