A surge in gift transactions on the Zelle person-to-person payment network has led JPMorgan Chase & Co. to roll out a feature allowing its mobile users to send digital gift cards. The new service, announced Monday, is available now for both mobile and online customers and enables more than 60 gift cards from a range of major brands, including AMC Theaters, The Home Depot, Panera Bread, Sephora, and Starbucks.
Features include the ability to add a short message, track which cards were sent and for how much, and schedule special events, such as a recipient’s birthday. Values allowed range from $5 to $100, and the recipient can spend the cash immediately upon receipt. The bank is not charging a fee for the service, but the sender must use the recipient’s email address. “No other bank has something quite like this.” says a Chase spokesperson by email.
Observers confirm the gifting service may be unique to Chase. “This is indeed a new offering via the banking channel,” says C. Sue Brown, director for the prepaid advisory service at Mercator Advisory Group, Maynard, Mass., in an email message. “Typically this is offered through a digital gift card aggregator/provider that is imbedded in the mobile app of a merchant. Think Amazon, where a consumer can purchase other retailer cards through their system, or via a digital gift card provider.”
According to Chase, users start the process by clicking on “gifting” in the digital-banking menu. Recipients can redeem the cards by scanning a barcode from their email at checkout or by typing in a code online.
Chase, which released its financial results Friday, claims 34.4 million active mobile users and 50.7 million active digital customers, though it doesn’t report the extent of the overlap. Those numbers grew 11% and 6%, respectively, from the first quarter of 2018.
The idea to offer digital gift cards via the mobile app originated from Chase’s experience with Zelle, which it brands QuickPay with Zelle. “We saw that around 15% [to] 20% of transactions through QuickPay with Zelle had a memo indicating that the transaction was being used as a gift,” says the spokesperson. “They said things like, ‘Happy birthday,’ ‘Congratulations,’ ‘Happy graduation.’”
Beyond that, the spokesperson says, the bank saw it could add some enhancements. “Customers were … missing a feature where they could track the gifts they scheduled and the gifts they’ve sent in the past. We asked ourselves if we could make something of this, [and] the result was digital gift cards,” she says.
Though banks have tried physical card malls in the past without much success, as some observers point out, the new service could bring some key advantages to Chase. “This is an interesting add on to its mobile app,” says Ben Jackson, chief operating officer at the Innovative Payments Association, a Washington, D.C.-based trade group for the prepaid industry. “This is trying a new channel that doesn’t require them to hold inventory or train branch staff, so the overhead theoretically would be lower.”
Jackson adds that the new service could help insulate customers from the allure of competing services from nonbanks. “Chase is competing against companies like Gyft and Swych, and maybe even some of the traditional wallets, but this may be a strategic play to keep customers in their app,” he observes.
Also, he points out, the cards all appear to be closed-loop gift cards, which would exempt them from the massive new prepaid rule from the Consumer Financial Protection Bureau.
This latest move comes nearly six years after Chase shut down what had been a longstanding open-loop gift card program.