How to Transfer Money From a Gift Card to PayPal

While a direct transfer of a gift card’s balance into a PayPal account is generally not possible for most types of gift cards, certain prepaid cards can be used effectively as a payment method through the PayPal platform. These cards function similarly to a debit or credit card, allowing for online purchases and transactions where PayPal is accepted. The ability to use a gift card with PayPal depends primarily on the card’s specific type and how it is prepared for online use.

Understanding Gift Card Types

Gift cards are broadly categorized into two main types: open-loop and closed-loop. Open-loop gift cards are backed by major payment networks such as Visa, Mastercard, American Express, or Discover. These cards function much like traditional debit or credit cards, offering the flexibility to be used at any merchant that accepts the associated payment network, both online and in physical stores. This broad acceptance is due to their integration into established financial systems.

In contrast, closed-loop gift cards are issued by specific retailers or groups of affiliated merchants. These cards are restricted to purchases only at the issuing merchant’s locations or their online store. The fundamental difference lies in their network backing; open-loop cards utilize global card networks, while closed-loop cards do not, limiting their usability to specific brands. Consequently, only open-loop gift cards are potentially usable with PayPal because they operate within the same payment networks as standard bank cards. Retailer-specific gift cards, lacking this universal network support, cannot be added to or used through PayPal.

Preparing Your Open-Loop Gift Card

Before attempting to link an open-loop gift card to a PayPal account, First, it is important to confirm the gift card’s current balance, which can typically be done by visiting the card issuer’s website or calling the toll-free number provided on the back of the card. Many open-loop gift cards also require activation before they can be used for purchases, a step that often involves visiting a specific website or calling a dedicated phone number listed on the card packaging. Activating the card enables the payment network to authenticate its legitimacy.

A crucial step for online use, including linking with PayPal, is registering a billing address to the gift card. Most online payment systems, like PayPal, require an associated billing address for verification purposes to prevent fraud. This registration is typically completed on the gift card issuer’s website, where you will provide your personal address details, including your name, current address, and sometimes a phone number. The billing address you register for the gift card should match the address associated with your PayPal account for successful linking. You will also need to have the card number, expiration date, and the three-digit Card Verification Value (CVV) readily available, as these details are essential for both registration and later for adding the card to PayPal.

Adding an Open-Loop Gift Card to Your PayPal Account

Once your open-loop gift card is activated and a billing address has been registered, you can add it to your PayPal account. Log into your PayPal account through either the website or the mobile application. Navigate to the “Wallet” section, which is typically found on the main dashboard or within the account menu. Within the Wallet, locate and select the option to “Link a card or bank” or “Link a debit or credit card.”

From the available choices, select the option to link a debit or credit card, as open-loop gift cards function in this capacity. You will then be prompted to manually enter the gift card’s details, including the 16-digit card number, the expiration date, and the CVV security code found on the back of the card. It is important to accurately input the registered billing address associated with the gift card during this step. After entering all the required information, confirm by selecting “Link Card.” PayPal may perform a small authorization charge, which is usually refunded, to verify the card. If the card is successfully linked, it will appear as a payment method within your PayPal wallet.

Using Your Linked Gift Card for PayPal Payments

After successfully linking an open-loop gift card to your PayPal account, it is important to understand how its balance can be utilized. Direct transfers of the gift card’s balance into your PayPal account balance are generally not supported. Instead, the linked gift card functions as a funding source for making payments through PayPal, similar to how a traditional credit or debit card would operate. This means you can use the gift card’s balance for online purchases, sending money to others, or paying for services wherever PayPal is accepted.

When making a payment via PayPal, you will have the option to select your preferred funding source during the checkout process. From the list of linked cards and bank accounts, simply choose the open-loop gift card you have added. PayPal will then draw funds directly from the gift card’s balance to complete the transaction. It is important to ensure the gift card has sufficient funds to cover the entire purchase, as some transactions may be declined if the balance is insufficient. This method allows you to effectively use the value of your gift card for a wide range of online transactions without converting it into your PayPal balance.