American Express And Zynga Promote Prepaid Cards Linked To Virtual Cash

American Express (NYSE:AXP) has recently launched Zynga Serve Rewards in collaboration with social gaming company, Zynga (NASDAQ:ZNGA). ^[1] This program is tied with American Express’s digit wallet, Serve, and will offer in-game incentives to attract gamers. Zynga will issue prepaid debit card carrying the American Express logo, which will be linked with Serve and will allow players to earn virtual game cash when they use the card to make a purchase.

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American Express is the first company to offer a rewards program associated with a pre-paid card and is trying to capitalize on the social media craze that has enveloped the globe. (See AmEx Finds That Social Media Facilitates Customer Feedback And Higher Spending) This offering will help it compete with rival wallet services such as MasterCard’s (NYSE:MA) PayPass and Visa’s (NYSE:V) V.me.  (See Wallet Services Provide A Glimpse Into MasterCard’s Future) Providing a glimpse of what is to come, the two companies announced that cardholders who make purchases exceeding $25 will be entitled to collect Farm Cash, which can be used in Zynga’s popular online game, Farmville.

We believe that this collaboration will benefit both companies as Zynga’s regular gamers will look to use the opportunity to combine real life expenditure with their shopping experience online, thus leading to an increase in the volume of transactions carried out using American Express issued cards.  Zynga is also likely to see an increase in online subscribers as the incentives offered by the program along with the publicity created is likely to attract more customers to sign up to avail its gaming services.

We currently estimate a price of $51.25, concurrent with the current market price.

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1. Zynga and American Express Launch Zynga Serve Rewards Program, May 22^nd, 2012 [↩]