Facebook Enters Gift Card Realm With Facebook Card

What's Next In Payments®
3:20 PM EDT January 31st, 2013

Facebook has officially entered the virtual gift card space, launching its Facebook Card program Thursday morning for users in the U.S.

The Facebook Card is a physical card linked to your Facebook account that can be preloaded with credit for multiple stores. The first four merchants to integrate are Target, Sephora, Olive Garden and Jamba Juice, although it’s reasonable to expect more to partner in the near future.

What’s unique about the card, is that funds must be allocated to specific retailers, and do not come from a central fund that can be used for any location. Gift-givers can chose to split up and allocate the money they send – for example, giving $10 each to Target and Jamba Juice through a $20 gift – but once the retailer has been selected, the money is locked in and can only be used for that brand.

In some ways, this is a natural extension of Facebook’s Gifts platform, which launched late in 2012 and has seen middling success to this point. In other ways, this is a strange move from Facebook, who’s tried entering the physical retail space before with its failed Credits program. 

This is also somewhat unexpected as yesterday, during Facebook’s Q4 earnings call, Zuckerberg said Facebook Gifts accounted for under $5 million of the company’s total revenue, and hinted that he didn’t see it as a huge point of growth in the immediate future.

The logic here is likely that if people can send a quick $5 or $10 gift card to friends for their birthday or a special occasion, they’re more likely to do so if that gift can be deliver instantly on a prepaid card than if it takes a few weeks to ship to the recipient. We reviewed Facebook Gifts back in December, shortly after its universal U.S. launch, and while the platform worked fairly well the notion of buying someone a novelty item on their birthday and then having it deliver much later was a bit odd.

While the Facebook Card could potentially alleviate such a problem, some might be turned off by its funds allocations, and the idea of giving on Facebook may still take some getting used to.

What do you think? Does the Facebook Card appeal to you? Do you think it will help grow Facebook’s eCommerce strategy? Tell us in the comments below.

View the original story here.

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