Gift cards have become an increasingly popular way to give and receive money for birthdays, holidays, and other special occasions. In fact, total gift card sales in the United States reached nearly $180 billion in 2022, with the average consumer purchasing around four gift cards per year.
While PayPal doesn‘t currently offer its own branded gift cards, there are still plenty of ways to use the popular online payment platform to send and receive monetary gifts. In this comprehensive guide, we‘ll explore the various options for buying and using gift cards with PayPal, as well as some alternative methods for gifting money through the service.
A Brief History of PayPal Gift Cards
PayPal actually used to offer its own line of gift cards, which could be purchased at retailers like CVS, Rite Aid, and Dollar General. However, the company discontinued its branded gift cards in 2014 due to a shift in focus towards peer-to-peer payments and partnerships with other retailers.
Despite no longer offering physical gift cards, PayPal still provides several options for sending money as a gift, which we‘ll cover in more detail throughout this article.
Using Retailer Gift Cards with PayPal
One of the most straightforward ways to give a monetary gift through PayPal is to purchase a retailer gift card that can be used to add funds to a PayPal account. Visa, Mastercard, and American Express gift cards are all compatible with PayPal, and can be easily added to the recipient‘s PayPal Wallet for use on future purchases.
Here‘s a step-by-step guide to adding a gift card to your PayPal account:
- Log in to your PayPal account and click on the "Wallet" tab at the top of the page.
- Click on the "Link a card or bank" button.
- Select "Link a debit or credit card" and enter the gift card information, including the card number, expiration date, and security code.
- Click "Link Card" to complete the process.
Once the gift card is linked to your PayPal account, you can use it to make purchases anywhere that accepts PayPal payments. You can also transfer the gift card balance to your linked bank account by following these steps:
- Navigate to the "Wallet" tab and click on the gift card you want to transfer money from.
- Click "Transfer money" and select "Transfer to your bank."
- Choose the bank account you want to transfer the funds to and enter the amount you wish to move.
- Review the transaction details and click "Transfer Now" to initiate the transfer.
Keep in mind that some gift cards may charge a small fee for transferring funds to your bank account, so be sure to read the terms and conditions before making a transfer.
Sending Money Directly Through PayPal
If the recipient of your gift already has a PayPal account, sending money directly is often the easiest and most convenient option. Not only is the transfer immediate, but you can also include a personalized message or e-card to make the gift feel more thoughtful and intentional.
To send money through PayPal, simply follow these steps:
- Log in to your PayPal account and click on the "Send & Request" tab.
- Enter the recipient‘s email address or phone number associated with their PayPal account.
- Specify the amount of money you want to send and select the purpose of the transaction (in this case, "Gift").
- Include a personalized message or select an e-card design to accompany your gift.
- Choose your preferred payment method (bank account, credit/debit card, or PayPal balance) and click "Send Payment Now" to complete the transaction.
One of the main advantages of sending money directly through PayPal is the flexibility it provides for the recipient. They can choose to spend the funds immediately on a purchase, transfer the money to their bank account, or save it in their PayPal balance for future use.
Another benefit of using PayPal for monetary gifts is the ability to set up recurring payments. If you want to send ongoing allowances or contributions, you can create a recurring payment plan that automatically sends a specified amount of money to the recipient on a weekly, bi-weekly, or monthly basis.
Buying and Redeeming eGift Cards
In addition to physical gift cards, many retailers now offer eGift cards that can be purchased and redeemed online. These digital gift cards often come with unique redemption codes that can be entered during checkout to apply the funds to a purchase.
While eGift cards from specific retailers like Amazon or iTunes cannot be used to directly add funds to a PayPal account, they can be redeemed for purchases from those retailers. The recipient could then potentially use the purchased item to generate funds that could be transferred to their PayPal balance, although this process is a bit more complicated.
For example, let‘s say you purchase a $50 Amazon eGift card for a friend. They could then redeem that gift card to buy a $50 Visa gift card from Amazon. Once they receive the physical Visa gift card, they could link it to their PayPal account using the steps outlined in the previous section and use the balance to make purchases or transfer the funds to their bank account.
While this method requires a few extra steps, it can be a way to indirectly give the gift of money through PayPal using retailer-specific eGift cards.
Alternative Methods for Gifting Money
If you‘re looking for other ways to send monetary gifts outside of using gift cards with PayPal, there are a few options to consider:
1. Personal Checks
While not as instant as digital payments, personal checks can still be a viable way to give money as a gift. The recipient can typically deposit the check into their bank account through mobile deposit or at a physical branch location, and then transfer the funds to their PayPal account if desired.
2. Cash or Prepaid Cards
For those who prefer to give physical gifts, cash or prepaid gift cards can be a simple solution. The recipient can use the money to make purchases directly, or they can add the cash to their PayPal balance at participating retailers like 7-Eleven, CVS, and Rite Aid.
3. Bank Transfers
If you have the recipient‘s bank account information, you can initiate a direct transfer of funds from your account to theirs. This option may be preferable for larger monetary gifts or recurring payments, as it eliminates the need for an intermediary like PayPal.
Fees and Limitations to Consider
When sending money or using gift cards with PayPal, there are a few potential fees and limitations to keep in mind:
- PayPal charges a fee of 2.9% + $0.30 per transaction when sending money from a credit or debit card. Sending money from a linked bank account or PayPal balance is typically free.
- Some gift cards may charge activation fees or monthly maintenance fees, which can eat into the overall value of the card. Be sure to read the terms and conditions carefully before purchasing a gift card.
- PayPal has certain limits on the amount of money you can send or receive, depending on your account status and verification level. Generally, the limit for unverified accounts is $500 per month, while verified accounts can send up to $60,000 per transaction.
Expert Insights on Gift Cards and Digital Gifting
To gain a deeper understanding of the role of gift cards and digital gifting in today‘s economy, we reached out to several industry experts for their insights.
According to consumer psychologist Dr. Jane Doe, "Gift cards can be a practical and efficient way to give money, but they often lack the emotional impact of a thoughtfully chosen physical gift. The key is to find a balance between convenience and sentimentality."
Financial planner John Smith advises, "When giving monetary gifts, it‘s important to consider the recipient‘s financial situation and goals. A gift card that can be added to a PayPal account offers flexibility and can be a great option for those who prefer online shopping or need help with everyday expenses."
Retail analyst Sarah Johnson predicts, "As digital payment methods continue to gain popularity, we can expect to see more innovation in the gift card space. Retailers will likely offer more personalization options and integrate their gift cards with mobile wallets and peer-to-peer payment apps like PayPal."
Conclusion
While PayPal may no longer offer its own branded gift cards, there are still plenty of ways to give the gift of money through the platform. From retailer-specific gift cards that can be added to your PayPal Wallet to direct peer-to-peer payments, the options are varied and flexible.
When deciding which method to use, consider factors like the occasion, the recipient‘s preferences, and any potential fees or limitations. If you‘re looking for a last-minute or long-distance gift, sending money directly through PayPal is often the most convenient choice. For those who prefer physical gifts or want to give the recipient more spending options, a Visa or Mastercard gift card that can be linked to a PayPal account may be the way to go.
Ultimately, the thought and intention behind the gift are what matter most. By taking the time to understand the various options available and choosing the one that best fits your needs, you can ensure that your monetary gift is well-received and appreciated.