PayPal: Two weeks for eBay to respond

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eBay have just two weeks today to respond to hundreds of concerns lodged with the Australian Competition and Consumer Commission (ACCC) regarding their proposed exclusivity deal with PayPal. With some 350 odd submissions it’s going to be a busy time for them.

Many of the submissions are from eBay users complaining that they want choice for eBay payments, and in fact the crux of many complaints is simply that they’ll have to pay PayPal fees on top of their eBay fees. In reality this is a lessor concern for larger businesses trading on eBay as they’ll already be paying banking or merchant account fees for each transaction anyway.

One of the most interesting submissions come yesterday, from the Australian Bankers Association (ABA). It addresses two main points – firstly the exclusion of PayPal’s competitors from a large segment pf the market, i.e. eBay. Currently they state 50% of transactions on eBay’s Australian site occur through PayPal, with the next most popular payment method being bank transfer, followed by cheques and money orders. As in the UK whilst there are alternative payment methods they are either used very rarely or are banned from eBay as an unsafe payment method.

It’s the second point that is most interesting though, the ABA assert that exclusivity on eBay for PayPal will give it a “slingshot” effect and unfair advantage for non-eBay transactions. As buyers will be forced to sign up for a PayPal account when using eBay they’ll naturally then find it more convenient to use PayPal rather than sign up for alternative services in the future.

The ABA state “Even banks, which might otherwise be expected to develop their competing services with comparable features to PayPal may be deterred from doing so”. Once PayPal gains an unassailable market position their market share is predicted to be 65% of all Australian ecommerce transactions, should exclusivity on eBay become ratified.

In conclusion the ABA say “Clearly, the public benefits are exaggerated or illusory” and finish with the warning that PayPal would be “able to increase fees and charges to eBay users.” In reality (for the UK at least) PayPal have lowered fees in recent years, although it’s a legitimate concern.

It’s worth noting that other site with third party sellers such as Amazon have their own exclusive payment method and they too are opening up their payments for off-Amazon transactions. If their off-Amazon business becomes substantial they too could face similar issues in the future.

Whatever the outcome of the ACCA ruling it’s going to an interesting time for the online payment industry.

27 Responses

  1. That is an interesting slant…

    That Paypal will dominate the online payment market through this action, eventually.

    This could be a stone in the shoe of their latest plans.


  2. It might be healthy for Ebay to lose one of these battles 🙂

    Make them take stock.

    Lots of steam rolling going on lately it seems.


  3. Thats so funny. Some of the complaints are because eBay is a US company. Down with the US!!!!!

  4. I find it very hard to believe that eBay/PayPal didn’t spend a helluva long time with lawyers making sure they could go PayPal-only before taking this move.

  5. I imagine Dan the outcome will be a bit like a retrospective planning application made by Tesco’s.

    Still wish all the eBayer’s in OZ the best of luck though.

  6. I hate to admit but quite frankly it would make my life a lot easier if eBay in the UK went PayPal only. I’m fed up with cheques, postal orders etc and it would…. well just be simple!

    98% of all my payments are PayPal anyway, the other 2% if forced to be PayPal would just be a housekeeping exercise to tidy things up.

  7. A lot of people have had their fingers burnt though Chris, with Paypal.

    Not everyone likes it.

    I think a lot of these will be the seller/buyer group that Ebay do not seem to recognise.

    Alienate sellers and you are alienating core buyers.

    I do not think Ebay have looked at this group and realised their importance.

    Buyers and sellers are treated as if they are two classes of people.

    I think that is very far from the truth…


  8. I heard an eBay employee quoted as saying it was because a smaller percentage of users use PayPal in Australia than in the UK, Whirly. More to gain, I guess.

  9. I see. Given that less people use it you could assume from that they have a reason not to or prefer other methods, therefore thrusting it down there throats and giving them no choice surely is not the best PR move, I could be wrong of course Stalin for example was a very successful dictator.

  10. I have tried to go paypal only a number of times,
    though because of buyer pressure asking me to take cheques etc we have reverted back to taking other than paypal,
    though 99% of our payments are made using paypal
    it saves a lot of hassle and explanation to allow the other 1% the option,
    especially as we specialise in low start no reserve auctions.

    who knows how many that want to pay by cheque but dont win, bid up and raise the price of those that eventually win and pay with paypal.

    and paypal only thing just does not somehow taste right,
    is akin to saying you only have a choice of labour party only at a general election

  11. We’ve not taken Paypal for nearly 4 months now, it will be interesting to see what affect it has on trade.

  12. not taking paypal is simply not an option for us,

    it would be suicidal for our on line sales

  13. I am paypal only on ebay, and think that it is the only way to do business on

    However there is no way in the world I would allow it on any other channel or my own website!

  14. Well, firstly buyers expect it, secondly its the only payment method integrated with ebay’s checkout. Added to this I firmly believe that ebay UK will become paypal only within the year.

    Buyers want to be able to buy today, checkout and have delivery within 1-2 working days and the best way to achieve this at the moment (on ebay) is with paypal.

  15. In certain categories I imagine that to be true, in mine however it is not.

    Why are your website buyers different to your eBay buyers if you don’t mind me asking? as you said you wouldn’t have paypal on your site.

    I imagine you are right about paypal, assuming they can get away with it.

  16. Website buyers as a whole aren’t stuck in the ‘paypal only’ mindset that ebay promotes 🙂

    I prefer to use a more traditional merchant provider on my website, I don’t mind if they credit check me first, or if they want my last 3 years accounts, or even if they hold my payments for 31 days in case of chargebacks.

    Just so long as I know that they’re not suddenly going to freeze my account, without any complaints, for making too much money too quickly.

    And if they ever do have a problem with me I like to be treated like an adult and for a human to listen to what I say and the evidence I provide, reviewing it on its merit rather than whether or not its in their script.

    I don’t feel confident that paypal will treat me like that.

  17. Regardless of what ebay dictates, I will take any payment that the buyer cares to send, providing I can actually get the money (I’m thinking of US money orders here which is one I won’t take).
    Cash may be banned but I still get it occasionally. Not a problem for me.
    If they go Paypal only here, I will still happily take cheques POs and bank transfers – the only problem will be if ebay thinks the buyer hasn’t paid.
    I just hate the way ebay keeps moving the goalposts all the time and I’m sure that this one is all about profit and not buyer security.

  18. eBay is out to dominate any competitor they perceive as a threat to their way of thinking, even if that domination might break the law. eBay retains 24/7 legal council to deal with of any problems down the road.

    The following was taken from a forum on eBay, and spelling errors were corrected:

    For people who are new to the eBay boycott being supported internationally:

    As per eBay’s new “restructuring” policies and changes, if you want to sell on eBay, you must allow eBay to:

    1. Steal your right to leave honest feedback

    2. Force an unfair DSR system.

    a) Punishing you for favorable ratings between “Good Transaction” & Excellent Transaction”

    3. Hide your listings in “Best Matches”, but not tell you how placings are calculated.

    4. Force you to accept PayPal.

    5. Put “WARNING” signs on your listings for not offering PayPal.

    6. To refund YOUR money (via PayPal) to a customer at PayPal ‘s sole discretion.

    7. Withhold your funds for 21+ days, via PayPal.

    8. Hide your bidders’ IDs.

    9. Pad their listing numbers.

    10. Lie to the media.

    11. Give bad customers coupons, so they will continue to abuse sellers.

    12. Increase your FVF by 67%, at their whim.

    13. Withhold performance discounts from you.

    14. Throw away your feedback percentages, except for the last 12 months.

    15. Remove your auctions and not notify you why.

    16. Censor your opinions and ban you for those opinions.

    17. Red flag your auctions and put others listings on them.

    18. Ruin their own reputation by protecting scammers.

    19. Make you pay for their mistakes.

    Boycott eBay, and the monopoly they’ve created!


    The International Boycott IS ALIVE & WELL!

    Join the N.O.I.S.E. & Boycott Feebay / Rapepal.

    Boycott May 1st and beyond.


    If you are boycotting eBay, please add your name to the map at:

  19. Ebay Australia has a smaller take-up of PayPal than other countries, but their saturation push over the past 12 months has seen it increase. Until recently the preferred payment method of buyers has been direct bank deposit, but recent reports suggest that PayPal has finally passed bank deposit.

    I think the above is one of two reasons they have done this in Australia – the other is simply that it is a small but strong independent market that is a good test for how this policy will affect other markets. While Ebay’s penetration is healthy here there are only just over a million Australian listings at any time. Therefore if the “test” (as John Donahoe calls it) fails, it will have a minimal impact on Ebay’s bottom line (ignore how the failing test affects the over 52,000 livelihoods that operate on Ebay Australia).

    PayPal has not lowered fees in Australia. Ebay and PayPal have made it clear that they expect to shed some buyers through this move, but have also made it clear that they will not reduce fees.

    Unlike many of the submissions, I am not bothered by PayPal’s fees or that they are owned by a US company (although I do not trust PayPal per se). I see PayPal as business tool, and appreciate it’s inherent risks. That said, it is convenient and works well, and PayPal do earn the fees that I pay them. I know at some point I will lose a dispute through something as stupid as multiple shipping, but I allow for that being a business cost. I think that anyone who feels that PayPal should be their ONLY payment method though is being shortsighted.

    I am in Australia, but I still average one cheque a month from the UK, and about half that number from the USA. A recent UK cheque was from someone who had had her PayPal account hijacked a short while earlier, and preferred to send a cheque internationally to trusting PayPal. There are people out there who do not trust PayPal, or do not wish to use any online payment service. It will probably vary according to what you sell, but I think that only allowing PayPal does stand to reduce the competitive bidding on auctions.

    With Respect for the varying opinions above, Kevin


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