The social networking website operated by Facebook Inc. now includes payments applications.
The ice cream chain Cold Stone Creamery last week introduced an e-gifting service that lets people send a code through Facebook pages that can be redeemed at its 1,400 U.S. locations. The service is based on payments software developed by First Data Corp.
First Data said it believes social networks can be used to jump-start the stagnant, closed-loop gift card market. "The space hasn't been very innovative over the last few years," said Chris Wuhrer, First Data's vice president of mobile commerce solutions. "We're taking a relatively flat category and giving it new legs."
The Atlanta unit of Kohlberg Kravis Roberts & Co. hopes to use "electronic gifting to make giving gift cards more mainstream and help consumers give it more consideration when they pay at the [point of sale] and online," he said.
Consumers can access the free application through Cold Stone's Facebook page or website, and the coupons can be sent either to recipients' Facebook pages or by e-mail. The message contains the code and instructions on how to redeem the funds at the point of sale.
Senders pay with credit or debit cards, though Wuhrer said First Data eventually plans to add more payment options.
First Data receives a fee for each transaction, though the company would not say how much.
The application could give First Data access to a potential consumer base of several million people, Wuhrer said. Cold Stone, a Scottsdale, Ariz., unit of Kahala Corp., has more than 600,000 Facebook fans who "like" its page, according to Cold Stone's page.
Wuhrer said the e-gifting application could work well for merchants that specialize in products that are often given as presents, such as treats and coffee.
First Data is not the first payments company to target social networks.
InComm Inc., an Atlanta prepaid card marketer, in May acquired GroupCard, which has developed a Facebook application that enables consumers to purchase gift cards from a retailer's Facebook fan page or website.
GroupCard's application enables multiple consumers to add to a gift card's value and participate in a "group gift." First Data's application lacks that option, but Wuhrer said the company is exploring the idea.
First Data hopes to target other social networking websites; though Wuhrer did not mention any by name, he said that social networking sites that offer location-based capabilities would be a good fit.
For example, the Foursquare social networking site lets users "check in" at specific venues, such as restaurants and bars. Retailers including Starbucks Corp. are using Foursquare to drive traffic to their locations with discounts for frequent Foursquare users.
