ChargeSmart Inc. and Plastic Jungle Inc. are working together to turn unspent gift cards into the new currency for online bill payment.
The ChargeSmart service, which will go live in about six weeks, will let customers apply a percentage of the remaining value of a gift card to their bill payment. If the gift card account lacks sufficient funds to pay the full amount, customers can use a debit or credit card to pay the remainder, said Tim Brinkman, ChargeSmart's chief executive.
According to the online consumer bill-payment company's website, funding a ChargeSmart payment account is free. However, depending on the biller, there is either a blended fee, which includes a percentage of the transaction cost, or a flat fee associated with the transaction.
The fee will be displayed prominently before consumers proceed with a transaction and again at the "confirm your payment" screen, before the card is charged.
Enabling consumers to use funds from gift card accounts to pay bills is part of ChargeSmart's goal of adding a variety of tenders to its bill-payment options, Brinkman said.
The San Francisco company is also considering adding electronic checks to the options, he said.
Plastic Jungle, of San Jose, Calif., operates a website where consumers can buy and sell the unused value in merchant closed-loop gift card accounts at a discount of up to 35%.
Companies that partner with Plastic Jungle can supply the secondary gift card market with cards, Brinkman said. For paying bills, customers may apply up to 92% of the gift card's value toward bill payment.
The product's concept seems sound, but it remains to be seen if consumers will take to using gift cards as a payment option, one observer said.
"The anecdotal evidence is that there is a lot of activity in the secondary gift card market, but there are no numbers released to prove it," said Ben Jackson, senior analyst at Mercator Advisory Group.
ChargeSmart eventually may turn to traditional advertising to promote the service but for now will rely on the average 500,000 website hits it gets per month through search engines, Brinkman said.
ChargeSmart has 300,000 customers, and its 4,000 billers include Ford Credit, Bank of America Corp., Citi Mortgage and Florida Power and Light Co.
