On December 2, 2013, PayPal announced the creation of the new PayPal Digital Gift Store.¹ With this announcement, the popular payment processing company has stepped out from behind the scenes to offer products. The Digital Gift store is, essentially, “a store that will give people the chance to purchase digital gift cards from a host of our partner merchants.”² There are several reason for this move.

Firstly, gift cards are set to be the most popular gift this holiday season. Analysts are predicting a surprisingly large total of $118B to be spent on gift cards, for the whole of 2013 – exceeding the GDP of 136 countries.³ Adding to that, more than 80% of holiday shoppers are planning to purchase at least one.⁴ Although digital gift cards are still a small minority purchase segment, total digital gift card purchases are set to approach a total of $4B in 2013.⁵ If PayPal can capture a segment of the digital gift card market, this move will be a success.

Second, in October of 2013, PayPal teamed up with Blackhawk Network – a leading provider of prepaid and financial payments products – to accept and support gift cards within PayPal’s digital wallet.⁶ It only makes sense that PayPal sell these gift cards as well.

Currently, only iTunes gift cards are available on the PayPal Digital Gifts store, but the payment network has promised to offer gift cards from “a host of our partner merchants.”⁷