According to Doctor of Credit, Discover has indeed started enforcing the gift card exclusion in the Apple Pay 10% cashback terms.
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Summary
This is definitely not good news, but most people probably expected that Discover would eventually crack down on earning 20% cashback from buying gift cards. Since many merchants provide Level 3 Data to Discover when processing credit card transactions, and that data includes itemized purchase details, the blogger guesses this may be how Discover identified that the purchases were gift cards. So there may not be any great workaround here. Be careful. What do you think? Share your thoughts in the comments.