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PayPal Makes It Easier to Pay with Prepaid Gift Cards

PayPal allows users to fund their accounts and pay for purchases using many different methods, and now it is adding prepaid gift cards to the list. On Wednesday, just in time for Black Friday and Cyber Monday shopping, it announced that shoppers can use prepaid gift cards through PayPal Checkout.

While sellers who accept PayPal won’t have to take any action, they could view the development positively if it means more shoppers will be spending those gift cards on PayPal-enabled stores and marketplaces instead of offline retail stores.

“How often do you give or receive prepaid gift cards with a Visa, American Express, MasterCard, or Discover logo on special occasions or during holiday season,” PayPal asked on its blog announcement. “Probably a handful, if not more.”

However, the eBay payments unit said a lot of ecommerce sites “can’t or won’t” accept the cards “right off the shelf.” And in fact, PayPal said it found the majority of shoppers are unable to register their billing address and complete an online purchase successfully.

“Many consumers are forced to call the card issuer or go to a special website to register a billing address before trying to pay with the prepaid gift card. It might sound simple, but in PayPal’s recent usability study, it was found that only 1 person out of 4 was able to register their billing address and complete an online purchase successfully.”

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According to the Visa Prepaid Card website, its prepaid card is welcome everywhere Visa Debit cards are accepted, and recipients must simply register the card online or by phone:

“To make an online or phone purchase, you will need to register your card. To register, either call the issuer, or visit their website. This information should have been supplied to you by the issuer when you received the card. It may also be printed on the back of the card. When you make an online or phone purchase, the name, address, and phone number you use will need to be exactly the same as the information you provided when registering your card in order to avoid declines. You can verify or update your information by visiting the card issuer’s Web site, or by contacting them using the toll-free number provided in your card materials.”

While PayPal is adding convenience for shoppers by removing an extra step, PayPal didn’t explain why a whopping 75% of consumers were unable to complete the registration and redemption process.

PayPal was also a bit mysterious about how it was unable to overcome this “pain point” that it heard “again and again” from its customers. “After months of research and investigations, we discovered a patent-pending and innovative way to allow the usage of prepaid gift cards so that you can seamlessly apply them to the purchase of products and services anywhere PayPal is accepted.”

The announcement is found on the PayPal blog. Happy shopping.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.