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Introducing the Facebook card: Social network debuts gift cards

January 31, 2013|By Jessica Guynn
  • Facebook is launching gift cards.
Facebook is launching gift cards. (Daniel Acker / Bloomberg )

SAN FRANCISCO -- Facebook is rolling out a new commerce product: gift cards.

The move is an expansion of its Gifts program.

The preloaded cards will work with retailers in the real world. Initial launch partners are Jamba Juice, Olive Garden, Sephora and Target.

Facebook is targeting a multibillion-dollar business as it tries to regain the confidence of investors who continue to be worried about the company's money-making potential.

During a Wednesday call with analysts to review its fourth-quarter financial results, Facebook Chief Executive and founder Mark Zuckerberg said the company is still figuring out its gifts and retail business. He warned that these businesses won't trickle revenue for some time.

But investors are pinning their hopes on Facebook making a major play in commerce.

"There are many products in these categories [gift card and reloadable prepaid cards] issued by Visa, MasterCard and American Express that have more flexibility in where you can use them and where you can reload them, so Facebook is getting into a very saturated space with a limited offering at this point," Wedbush Securities analyst Gil Luria said in an email.

How the gift cards work: You send the cards to your friends through Facebook's Gifts product. Once a card is purchased, your friend is alerted. A few days later, the friend receives a card in the mail. Users can keep track of the balance online. One card works with all of the retailers and can have multiple balances, say for bread sticks at Olive Garden or a box of diapers at Target. The balances can be monitored on Facebook mobile apps.

Gift cards usually top wish lists, which is why Facebook is expanding its Gifts program to include them. The program is being rolled out gradually, and right now it's only in the U.S. But it's not an experiment -- this appears to be a program that Facebook is very sure about.

Facebook has looked to expand its footprint into the physical world before, by rolling out its own cards loaded with a virtual currency that could be used in social games and applications on its site.

Called Facebook Credits, the prepaid gift cards were available at retailers such as Target, Best Buy and Wal-Mart. But Facebook shuttered the program.

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Follow me on Twitter @jguynn

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