Up to eight retailers in the next few weeks plan to launch First Data Corp’s Facebook application that enables uses to send funds to individuals using “virtual” prepaid gift cards, the transaction processor tells PaymentsSource.
Sears Holding Corp. subsidiaries Sears, Roebuck and Co. and Kmart on Nov. 11 became the latest merchants to launch the app on their respective Facebook pages. First Data did not reveal which merchants will roll out the app in the coming weeks.
When First Data Corp. introduced its Facebook gifting application in July with ice cream chain Cold Stone Creamery, it hoped the technology would help jumpstart a stagnant closed-loop gift card market (
Consumers may access the application through a participating retailer’s Facebook fan page or website. Senders may select one or multiple friends to whom to send funds via a virtual gift card either by adding them through Facebook or by entering their e-mail addresses. They select the type of gift, such as fast-food chain value meal, enter a personal message, and pay using a credit or debit card.
Recipients receive a Facebook message, e-mail or both to alert them about the gift. The message contains the code and instructions on how to redeem the funds at the point of sale. The service is free for both the sender and recipient.
The merchant determines when the funds expire, though most retailers have moved away from expiration dates, according to a First Data spokesperson.
First Data takes a small fee per transaction from the merchant. The company declined to reveal the exact amount.
Merchants believe the product ultimately is about everyday gifting, but they “do see and anticipate an upside in having this available during the holidays and absolutely wanted to make sure they had this available for the holiday season,” according to Sarah Owen, First Data vice president, mobile applications and loyalty products.
On Nov. 9, fast-food chain Culver’s became the third merchant to launch the app just days after women’s specialty apparel retailer Dots LLC did the same (
“The enhanced Sears and Kmart Facebook experience is an extension of our brand’s continued commitment to provide an online shopping experience that appeals to our customer’s varying needs,” says Aaron Caid, vice president and chief marketing officer for Sears Financial Services.
First Data’s app helps to “completely rejuvenate gifting,” says Todd Ablowitz, president of Double Diamond Group, a Centennial, Colo.-based consulting firm. Consumers who consistently use Facebook now have a more “natural” way to give gifts, he adds.
It remains unclear, however, how much the app will affect gift card sales over the next six weeks for participating merchants, Ablowitz says. “There is plenty of excitement around it this holiday season, and throughout next year we’ll see the excitement grow,” he predicts.
The service also helps to give virtual prepaid cards validity in the marketplace. “Payments innovation always starts with adoption from top merchants,” Ablowitz says.
First Data may have learned from past mistakes, Ablowitz notes. Though the processor has become a leader in supporting gift cards, it was not involved with gift card malls when they debuted about five years ago, he says.
“I don’t think if I’m First Data I’m going to let that happen again,” Ablowitz adds.
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