There may be no such thing as a free lunch, but FreeMonee Network is convincing investors and bank partners that giving people money to spend at a specific store will cause them to spend even more there.

Since its debut last year, the San Mateo, Calif., firm has landed Capital One (COF) and U.S. Bank (USB) as merchant acquiring partners. And it just raised another $34 million, quadrupling its total funding to $45 million.

The latest round was led by Charles Ryan, the chairman of UFG Asset Management and former Chief Country Officer and CEO of Deutsche Bank (DB) Group in Russia. Ryan's claim to fame was backing Yandex, the Russian search engine which has gone toe to toe with Google (GOOG) in that country.

FreeMonee tries to differentiate itself by letting merchants offer personally-targeted cash gifts to consumers instead of coupons or general gift cards, based on a deep dive into that consumer's demonstrated propensity to shop at that specific retailer.

The lure for consumers and merchants is a potential head start on a shopping spree. For banks, the selling point is a new way to earn fees, both from the FreeMonee relationship and from increased consumer activity pegged to the gifts.

"The gift can change consumer behavior in a way that isn't about sales. It's like the difference between getting a birthday gift and a coupon that's good for $10 off of a specific $100 item," says Gadi Maier, the president, CEO and co-founder of FreeMonee-whose founders include veterans of Google, Visa (V), Oracle (ORCL), Coca Cola (KOF) and Procter & Gamble (PG).

FreeMonee calculates the likelihood a consumer will visit a merchant and spend more than the amount of the gift. The firm does this by running a number of data points culled from acquiring institutions and publicly available sources, through internal analytics that attempt to determine a consumer's propensity to buy.

"What we do is present a cash incentive that's been tailored for a specific person," Maier says.

FreeMonee searches its database for purchases made by similar consumers, personal spending history, frequency of purchases, the consumer's distance from the store and other data from the consumer's card relationship. The firm calculates a score for customer spending levels at specific stores, which helps determine the size of the gift, usually $5 to $50.

FreeMonee calculates the optimum incentive — big enough to entice the consumer but small enough that the merchant can afford it — and tracks redemption rates. The merchants pay FreeMonee to offer promotions and the firm splits the fee (averaging $50 per card per year) for completed offers with the financial institution. Consumers receive the gift via an email alert or text, and can spend the money on whatever they want at the retailer, the obvious limitation being the money has to be spent at that retailer. The gifts usually expire several days after the offer.

Capital One, for example, uses FreeMonee to power its new personalized deals program in which offers are delivered to consumers based on spending habits. Capital One's program loads the deals directly onto consumer accounts for specific merchants. U.S. Bank also offers a similar program that matches consumer activity to specific offers at merchants.

FreeMonee sees only the transaction data, not information that can identify the customer.

"We know your behavior, and compute likelihood of how you will enjoy a gift from a certain retailer," Maier says, adding the firm will use the capital it just raised to hire people and beef up the algorithms used to compute the cash gifts.

Other firms offering similar services as FreeMonee include Edo, which uses a service called Geocommerce to analyze location data in customer transactions. After a purchase, Geocommerce provides a special offer for a merchant that is within walking distance of the initial payment. The idea behind the offers, which usually expire in a few hours, is to spur quick spending for related products at nearby merchants. Edo, whose clients include Fifth Third (FITB) and Ally Financial, offers additional merchant reward programs that have longer time windows.

There's also potential to use the transaction and account data aggregation that drives personal financial management tools to power merchant incentives.

Bryan Clagett, the chief marketing officer at Geezeo, says it does not offer FreeMonee-style gifting tech today "but no doubt we see opportunity to leverage aggregated and transactional data as a means to drive relevant merchant offers." Geezeo provides bank and credit union clients with the ability to present relevant banking product and service offers through a free marketing program that leverages demographic profiles, types of financial accounts and transaction data.

A Mint spokeswoman said the firm aggregates users' spending to identify ways to save money, but does not offer a FreeMonee-style gift product.

Other investors in FreeMonee's latest funding round included Redpoint Ventures, Sutter Hill Ventures, Opus Capita Ventures and Pinnacle Ventures.