Discover to Support New Facebook Gift-Card Program

   By Andrew R. Johnson 
 

Discover Financial Services (DFS) will help process transactions made with new gift cards that social-networking company Facebook Inc. (FB) has begun selling on its website.

Facebook said Thursday its users are now able to buy gift cards on its site and have them delivered to their friends for use at physical merchants.

Currently, the gift cards can be used at Jamba Inc.'s (JMBA) Jamba Juice, Darden Restaurants Inc.'s (DRI) Olive Garden, LVMH Moet Hennessy Louis Vuitton SA's (LVMUY, MC.FR) Sephora and Target Corp. (TGT). Individual cards can store balances for multiple merchants, Facebook said. The cards are being offered through Facebook's "Gifts" platform that allows users to purchase virtual and physical goods with their payment cards on the site and have them sent to their friends.

A Facebook representative didn't immediately respond to a request for comment Thursday.

Discover, which offers credit cards directly to consumers and operates a payments network that competes with Visa Inc. (V) and MasterCard Inc. (MA), said transactions made with the Facebook-branded gift cards will run over its processing network.

The deal is Discover's latest move to align with technology companies that are targeting the lucrative payments business.

The Riverwoods, Ill., company last year struck a deal with eBay Inc.'s (EBAY) PayPal unit. Under that relationship, Discover will equip the more than 7 million merchants that already accept its cards to also accept PayPal as a payment option when checking out.

It also has been heavily promoting Google Inc.'s (GOOG) digital wallet, which allows consumers to load credit- and debit-card information in to a mobile application. That mobile app can then be used to pay for transactions in physical stores by tapping a smartphone equipped with a special computer chip against a merchant's payment terminal.

Such deals allow Discover to "deploy our infrastructure in a unique way," Diane Offereins, executive vice president of payment services for Discover, said in an interview. She declined to discuss the economic arrangement between Facebook and Discover.

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