Adding a new payment method
Why won’t my phone allow me to add a gift card as a payment method ?
iPhone XR, iOS 16
Question marked as
For online purchases the gift card needs to be redeemed, at which point the value is added to your Apple Balance. Once the value has been added to your Apple Balance it can then be used for purchases as your payment method.
See Apple's document How to redeem your Apple Gift Card or App Store & iTunes gift card - Apple Support
Read Check your Apple Account balance to check the value on your Apple Balance.