Note: this affects ONLY the situation where you have a gift card FROM YOUR COUNTRY and are actually IN YOUR COUNTRY. If you want a means to redeem a foreign card, or redeem a domestic card while in another country, look elsewhere.
This issue popped up recently on Google Play.
Location services were off, but turning them back on did not help.
What did work was turning off Wi-Fi and completing the transaction over mobile data.
This might work for other countries, I don't know.