From
Xbox Live support:
Solution 6: Confirm that you are using an approved payment method
You can use Visa, MasterCard, or American Express cards in the Windows Phone Store as long as they allow international purchases. Even if your card displays a Visa or MasterCard logo, it is possible that it's not approved by your bank or issuing financial institution to make an international purchase. Pre-paid cards, debit cards, and gift cards (even those with a Visa or MasterCard logo) do not qualify as international cards and are currently not accepted by the Windows Phone Store.
For more information about payment methods supported by the Store, see the
Understanding international payment methods and billing activity article in the Microsoft Knowledge Base.