Seeing an opportunity from consumers who have unspent gift cards, ChargeSmart Inc. is working with gift card exchange firm Plastic Jungle Inc. to enable its customers to use value left in proprietary merchant gift card accounts to pay bills from its website, Tim Brinkman, the online consumer bill payment company’s CEO, tells PaymentsSource.
The ChargeSmart service, which will go live in about six weeks, will enable customers to apply a percentage of their remaining gift card value to their bill payment. If the gift card account lacks sufficient funds to pay the full bill amount, the customers could use a debit or credit card to pay the balance, Brinkman says.
According to ChargeSmart’s website, the funding of a ChargeSmart payment account is free. However, depending on the biller, there is either a blended fee (including a percentage of the transaction cost) or a flat fee associated with the transaction. The fee will be displayed prominently before consumers proceed with their transaction, and again at the "Confirm your Payment" screen before the card is charged.
Enabling consumers to use funds left in gift card accounts to pay their bills is part of ChargeSmart’s goal to add a variety of tenders to its bill-payment options, says Brinkman, who notes the company also is considering adding electronic checks to the mix.
Working with Plastic Jungle, whose website allows consumers to buy and sell unused value left in merchant closed-loop gift card accounts at up to 35% discount, enables the companies to supply the secondary gift card market with cards, says Brinkman. For the bill-payment option, customers may apply up to 92% of the gift card’s value toward the bill payment.
The product’s concept seems sound, but it remains to be seen if consumers will take to the payment option, one observer says.
“The anecdotal evidence is that there is a lot of activity in the secondary gift card market, but there are no numbers released to prove it,” says Ben Jackson, senior analyst at Mercator Advisory Group.
ChargeSmart eventually may turn to traditional advertising to promote the service but for now will rely on the 500,000 average website hits it gets per month through search engines, says Brinkman.
ChargeSmart has 300,000 customers, and its 4,000 billers include Ford Credit, Bank of America Corp., Citi Mortgage and Florida Power and Light.
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