Facebook is further dipping its toe into physical payments and launching a new, branded gift card for its users. The closed-loop card is redeemable at several national retailers.
The social networking giant made the cards, which can be used at Jamba Juice, Olive Garden, Sephora and Target, available to its users last week. The Facebook Card is reloadable and one card can be used at all four merchants. Users set up different buckets of money to use at any of those chains.
An email sent to Facebook's press department was not immediately returned.
"It's an interesting product because it's new and it's on Facebook, which has a large audience," says payments consultant Philip J. Philliou. "It's not interesting in that it is closed loop."
The cards are being issued through Sutton Bank, an approximately $350 million-asset institution in Attica, Ohio. The Facebook Card is using Discover's network to facilitate its transactions.A Discover spokeswoman did not immediately return an email seeking comment.
Facebook generated $810 million, or almost 16% of its revenue, from "payments and other fees" last year, the company said in its latest SEC filing. That figure has exponentially increased since the Menlo Park, Calif. company began tracking the revenue it received from those transactions in 2009.
Facebook also generates a profit from facilitating its digital currency, Facebook Credits. Each credit costs 10 cents. Users can exchange those credits for digital items to display on their Facebook pages or to upgrade games played on the social networking site. Facebook is in the process of moving away from Credits to instead offer items in local currencies, though it still supports Credits during the transition period.
Facebook sells Credits both online and on stored-value cards sold in retail stores. This fall, Facebook also launched a gifts program that lets people pay for physical items on its site.
Right now, however, the company is most likely just experimenting with different models before it decides on how best to make its big entrance into payments, says Nick Holland, a principal analyst leading with Yankee Group's Mobile Money research.
"They are just trying stuff out," he says. "I don't think that they really worked out what they want to be when they grow up."