Discover Financial Services is expanding its efforts to tie its credit card rewards to social media, by allowing gamers to redeem their points for gift cards and online credits.

The Riverwoods, Ill. company on Thursday said it has expanded its partnership with virtual game distributor Zynga, Inc., which makes FarmVille, CityVille and The Pioneer Trail. The deal will allow Discover customers to convert $25 worth of cash-back rewards points into a $50 Zynga gift card. New customers that apply for a Discover More card will receive a gift card worth $100 in Zynga points after their first purchase.

As a part of the deal, Discover’s brand will show up within Farmville games, as characters use Discover cards or visit a Discover farm. The game is primarily played on Facebook.com, but can also be accessed through Microsoft Corp.’s MSN games website.  

The partnership is “a major play on social media that really nobody in the card business is doing,” says Brian Riley, a senior research director in the retail banking and cards practice at TowerGroup. He adds that the gaming rewards will help Discover appeal more to young customers.

Discover already offers its customers the option of exchanging $45 in cash-back rewards for $50 in Farmville credits, according to Mike Boush, Discover’s vice president of e-business.  But this new offer will be a better deal for cardholders. 

Industry analysts praised Discover’s Zynga deal as the latest example of its ability to be innovative in rewards programs.

“Everyone in the card space is looking for new ways of offering attractive rewards to their [customers] and this is just another example, in my mind, of that approach,” says Jason Arnold, a research analyst covering the financial services sector at RBC Capital Market in San Francisco. “Seeing [Discover] moving into this area as well makes sense to me, as it is exploring all the different ways to get your cardholders using your card.”

Discover has already made multiple forays into social media, especially via Facebook. Earlier this year, Discover held several contests that offered customers who became “fans” of the company’s Facebook page the chance to win gift cards and other prizes.

“This is the first step in a broader strategy to bring together the online customer and the offline use of our product, and the rewards,” says Boush, adding that this strategy will help differentiate Discover from its competitors.

The card company is not alone in the “game-ification” of its payments, and Zynga works with other financial companies, including Capital One Financial Corp. Like Discover, the McLean, Va., bank has its own branded farm on Farmville.

Such efforts are largely still experiments, analysts say.

“Financial services providers are looking for the best ways to integrate social networking opportunities into their marketing and delivery,” says Beth Robertson, the director of payments research at Javelin Strategy and Research. “[It’s] short-term in nature, which will allow Discover to readily assess the benefit of using social gaming as a vehicle for building brand awareness.”