PayPal adds gift cards to checkout

According to a recent press release from PayPal, the company now allows gift cards to be used during the checkout process.

Prepaid gift cards are a highly lucrative industry targeted by many and in different ways. FirstData estimated a total of $43 billion worth in gift cards were purchased throughout 2012. Prepaid gift cards are mostly used in brick-and-mortar establishments due to the difficulties in using them online. Gift cards are not associated to a billing address so AVS verification systems usually decline them.

One of the solutions given by a number of card issuers was to register a billing address to the card through an online account. The process proved cumbersome and not efficient for only 1 out of 4 people actually completed the process, according to PayPal.

PayPal has been working on the subject of gift cards closely for the past few months, including a partnership with BlackHawk which specializes in gift card purchasing, to devise a way to accept the cards without the use of billing address verification. The solution could not come at a better time, right before the holidays, as gift cards are going to be one of the most purchased gifts this year.

The issue of gift cards for online purchases has been around for quite some time. The inability to use them on Ecommerce websites not only creates a loss for online merchants, but also results in a large number of gift cards going unused. Supporting gift cards especially this close to the holiday season should generate more online sales after the holidays.

As of now, any gift card associated to an accepted card company can be entered during checkout with any supporting PayPal merchant.