New software from ChargeSmart, an online payment portal, allows gift-card holders to use those cards to pay for utility, car and mortgage payments, among other bills, which should certainly bring cheers from debt-weary consumers.
The gift card market is open and untapped – Javelin Research says 56% of consumers used a gift card in 2009 – while, according to the Federal Reserve, the total amount of U.S. consumer debt stood at $2.4 trillion in 2010, or roughly $7,800 for every man, woman and child in the U.S.
So like some of the great unforeseen pairings of our time, such as peanut butter and chocolate or flip-flops and sunglasses, partnering gift cards with bill payment might just help consumers pay down some of their debt.
ChargeSmart, a San Francisco-based online bill payment portal, and Plastic Jungle, one of the largest gift card exchanges in the U.S., have created a system where consumers can basically turn their gift cards into cash to pay household bills. The partnership, announced at the Finovate bank industry technology conference held this week in San Francisco, uses technology developed by both companies.
The technology is based on the gift card exchange idea, using software developed by companies that link bill payments with gift card exchanges. Both companies say additional details are coming soon, with the new service to be fully available to the public “within the next couple of months.” At that point, consumers will be able to use up to 92% of the full value of a gift card to pay a bill.
It’s hard to predict how well the program will work, but as Plastic Jungle estimates, the balance on unused gift cards totals about $30 billion this year, so consumers may have a new tool in their debt relief arsenal.
“Utility, car and mortgage bills have to be paid, so every dollar applied from these gift cards puts real money in the pockets of our customers,” said Bruce Bower, CEO of Plastic Jungle. “Our joint solution with ChargeSmart will get gift cards out of American sock drawers and provide a valuable, seamless and instant way to reduce these non-discretionary expenses.”
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