Ebay and Paypal are the most stringent companies I know, which in my opinion is a good thing. They are good about catching fraud and shutting down suspicious accounts.
In the past, Paypal had a policy which made it difficult, if not impossible to link a prepaid gift card to your account and make a purchase with paypal checkout. According to this old help FAQ page
You can’t link a gift card, prepaid card, or one-time-use card to your PayPal account.
However, it looks like they have changed this policy in November 2013, and now allow you to use prepaid gift cards with any merchant that uses paypal checkout. They should probably update that FAQ page.
Many online websites don’t allow for the direct use of prepaid gift cards as payment for purchases since there is no billing address associated with them. However, if that merchant uses paypal checkout, you can now link your prepaid gift card to your paypal account and use it as payment.
According to the new announcement, if you:
Already have a PayPal account?
Add your prepaid gift cards to your PayPal wallet during checkout as you add a new debit or credit card, and choose a prepaid card that has enough balance to cover the total amount to pay. It’s that simple!
Don’t want to create a PayPal account just yet?
No problem! Just enter the card information as you normally do with a debit or credit card during checkout. For the billing address, you can enter your home or shipping address. As long as the prepaid gift card you selected has enough balance to cover the total amount, you are good to go! If you like this experience, you can sign up to become a PayPal member at any time.
So, this adds an avenue to actually use Visa, Amex, Mastercard, and Discover gift cards for merchants online. I would much rather offload the Visa and Mastercard gift cards to Bluebird, but this will in a small way help me offload them legitimately 🙂