The PayPal Digital Gifts website is a new e-commerce hub that sells virtual gift cards that can only be purchased using the eBay subsidiary's digital wallet.
The site launched Monday, offering virtual iTunes gift cards, and the eBay subsidiary said it will soon expand and sell virtual prepaid cards from other merchants.
Users select a gift card and denomination, enter their PayPal ID and password, and send the gift to the recipient. Currently, the virtual iTunes cards can be purchased in denominations of $15, $25, $50 and $100.
PayPal plans a social media component to the website, offering deals and promotions via its Twitter and Facebook profiles, the company said in a blog post.
"Gift cards are the most popular present this holiday season, and generally one of the most sought after gifts for anyone in your life," Patrick Gauthier, PayPal head of emerging retail services, wrote in the blog post.
PayPal already accepts prepaid gift cards, and recently added gift card support to the PayPal wallet. PayPal also recently partnered with Gyft, a mobile gift card provider, to offer a loyalty system to incent consumers to use PayPal over credit cards.
Other payment companies are also tweaking their rewards programs as the holidays approach. Citigroup recently expanded its ThankYou Rewards program, giving consumers virtual account numbers to redeem points online.