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Facebook Ramps Up E-Commerce With Gift Cards

NEW YORK ( TheStreet) -- A day after reporting fourth-quarter results, Facebook (FB - Get Report) ramped up its e-commerce efforts, introducing its own gift cards.

With the Facebook Card, the social networker's looking to increase revenue outside of advertising. The cards are plastic gift cards that work at a number of retailers, as opposed to traditional gift cards that work in one place. Facebook is partnering with Discover Financial Services (DFS) on the cards.

The initial stores in the program are Jamba Juice (JMBA), Olive Garden, Sephora and Target (TGT).

From the blog post:

Here's how it works:

First, select a gift for your friend from the Gift Cards & Digital category.

Next, choose a value and complete your purchase. Your friend will be notified instantly about your gift, and will receive a Facebook Card in the mail a few days later. As soon as it arrives, your friend can use the card at the retailer you've chosen for the amount you've gifted.

Facebook Cards are reusable. After you've received a card, the next time you get a Facebook Card gift, it will instantly be added to your existing card. Your card can hold multiple gift balances, and each balance is dedicated to the retailer associated with the gift. For example, you might have gift balances of $100 at Sephora, $75 at Target, $50 at Olive Garden, and $8.25 at Jamba Juice.

With this announcement, Facebook is taking on Visa (V - Get Report), MasterCard (MA - Get Report) and American Express (AXP), which also offer pre-paid gift cards that work at various stores.

Facebook previously announced Gifts, allowing users to send gifts, mostly in smaller denominations, to their Facebook friends.

During the fourth quarter, Facebook's payments and other fee revenue was $256 million, which was four months' worth of revenue for accounting reasons. Adjusting for the extra month, payments revenue was essentially flat. Gifts contributed a nominal amount to this, the company said on the earnings call.

Overall, the social-networking giant reported non-GAAP earnings of 17 cents per share on $1.585 billion in revenue, as revenue jumped 40%. Revenue from advertising was up 41% to $1.33 billion, 84% of total revenue. Mobile revenue represented 23% of advertising revenue in the fourth quarter, up from 14% in the third quarter.

Shares of Facebook dipped 1.06% to $30.91 in early afternoon trading.

-- Written by Chris Ciaccia in New York

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