First Data Corp. has created a business unit to process transactions made with stored-value cards.
The move follows a similar step by National City Corp., one of First Data's processing competitors.
"We think this is an area worth investing in," said Synetta Armstrong, a First Data spokeswoman. "We are dedicating significant resources to stored- value card processing."
The new unit will come under the direction of Deborah M. Grant, who has overseen strategic product planning at the Nabanco unit for the past year. Ms. Grant joined First Data when her previous employer, First Financial Management Corp., merged with the Hackensack, N.J.-based company. The stored-value card unit will be based in Fort Lauderdale, Fla.
The new stored-value card platform is built upon magnetic stripe technology, but First Data said chip-based card technology will also be investigated.
Blockbuster Video is the first merchant partner to sign on for First Data's stored-value card processing. Blockbuster piloted an electronic "gift certificate" in Salt Lake City last year.
Now, with First Data's help, Blockbuster plans to roll out a stored- value card nationwide. A Blockbuster spokesman said no timetable had been set. The electronic gift certificate will eventually be available at the more than 3,900 Blockbuster Video, Blockbuster Music, and Discovery Zone FunCenter stores, he said.
Blockbuster is negotiating with several other as yet unnamed retailers to accept the card, said the spokesman. Industry sources said McDonald's is talking to Blockbuster, but the Blockbuster spokesman would not comment.
The electronic gift certificate is separate from the Blockbuster Visa credit card, which was introduced last year.
"We're very pleased with the success of the Blockbuster pilot and initial merchant response, which shows there is a clear consumer and merchant interest in such a capability," said Paul Garcia, president of First Data's CES/Nabanco unit.
CES/Nabanco plans to add the electronic gift certificate and additional stored-value card applications to its repertoire of value-added services for merchants.
"The new card technology is compatible with most point of sale terminals available today and, thus, will allow merchants to immediately reduce costs, increase sales, and strengthen customer relationships," said Mr. Garcia.