The Current State of Gift Card Trading on Paxful

The constantly evolving nature of cryptocurrency has truly changed the world. People who previously did not have access to financial services are now part of a new system that allows them access to their finances. Our mission is to help provide financial services to the unbanked and underbanked, but it hasn’t been easy.

Gift cards can be a risky payment method

We are aware that there are users on the platform who trade with gift cards. Lately, there’s been an increasing number of users experiencing some difficulty with that particular payment method. Why? We are the only peer-to-peer bitcoin marketplace that still supports gift card payments. All others stopped accepting them because of the hassle and near impossibility of proving proper account balances. Here at Paxful, we have fought hard to keep gift cards open as a service to the unbanked. We know this is how many unbanked users in Africa obtain their bitcoin and we refuse to abandon the same people who we built the company for in the first place.

As much as we wish otherwise, bad actors will always try to take advantage of honest users. To fend off scammers and maintain our standard of security, we make sure to uphold strict guidelines when dealing with gift cards. It’s important to abide by these rules not only to protect yourself but to also have a strong case in the unlikely event that something goes wrong. Here are the checkpoints you should never forget:

  1. You need to have proof of purchase. This is applicable to both physical cards and e-codes.
    Why? Proof of purchase is needed to support your claim as the owner of the card. If you’re not the owner, it’s impossible to know how many hands the card has been in before it came to you or the integrity of the process as a whole. If you are the owner of the card, you present a stronger case in a situation where the other party is trying some funny business. In case of a dispute, we ask for the following:
  • A photo of the original gift card with your Paxful trade chat clearly visible in the background
  • A complete photo of the original receipt (do not cut off any portion of the receipt)
  • For electronic codes (e-code), an invoice of the original payment and a video recording of your bank statement as proof of purchase
  • Proof of exchange between the third party’s customer support

2. The brokering of gift cards is not allowed. Brokering refers to buying a gift card from trade and then reselling the same card on Paxful. If you are caught brokering, your account will be banned. 

Why? If you are not the original owner of a gift card, it makes proving the validity of the gift card in question very difficult.  If you are brokering the gift card, there is no way to know what position you are in along the brokerage line before the card ends up in the hands of a consumer. Moreover, it will also be difficult for you to know whether or not the card has already been redeemed by someone else. 

In addition, brokering a card that cannot be redeemed in the broker’s native country is all but a common practice. This makes the whole cycle about guess-who-redeemed-when even hazier. To stop this, we experimented with an idea which we thought would be a one-stop solution, which was to block users from trading gift cards that are not redeemable in their countries. However, people started using VPNs and the ban did very little to solve this issue. 

3. Gift card disputes can take up to three weeks to resolve. 

Why? The volume of bad trades involving used gift card codes is what creates a delay in gift card disputes. We have a team of more than 50 people working to keep the trading experience safe and secure for all our users. Make sure that you have evidence, follow the moderator’s instructions, and are responsive in the trade chat to ease resolving disputes in a timely manner.

4. Bitcoin sellers are highly favored.

Why? Proving the validity of a gift card is very hard and for codes like iTunes or Google Play, it’s not possible to check the balance until they are redeemed. The integrity of any trade should be verified by the ownership of the asset. The evidence that can be provided to the bitcoin seller, such as screenshots, can be easily tampered with by the gift cardholder. 

Gift card companies refuse to disclose any information to us. Things have become so difficult for us that we tried banning gift card payments in Africa. That trial backfired and the fraud rate tripled, as honest users were banned and the scammers just used VPNs to bypass the block. Other P2P bitcoin services banned gift cards completely as the only way to stop the massive influx of scammers who focus on gift cards. Gift cards are one of the ways the unbanked can join the bitcoin economy and we could not abandon them as a payment option, as it was and will continue to be central to our mission to serve the unbanked and underbanked. 

Paxful Team

Paxful is a marketplace where people can buy and sell bitcoins directly with each other. You can get bitcoins instantly and pay with debit, credit, cash, Paypal and any currency.

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