Will eBay force customers to use PayPal?

BERIGAN · May 26, 2008

Will eBay force customers to use PayPal? Idea already has Australians irked

By Steve Johnson

Mercury News

Article Launched: 05/09/2008 02:05:26 PM PDT

EBay users riled: That's because of rumors the San Jose online auction company is exploring the idea of requiring many if not most customers to use its online payment service, PayPal.

EBay's PayPal-only rule in Australia, which takes effect next month, already has drawn antitrust scrutiny in that country. It's unclear whether eBay will institute a similar policy in the United States and other countries. However, eBay often tries big changes in smaller markets before expanding them worldwide and says it is open to that in this case.

Critics claim PayPal is costlier than other payment options and suspect eBay is just interested in increasing PayPal's revenue.

As the Australian Bankers Association put it: "Competition will be restricted, innovation and development will be constrained, new entry will be discouraged and PayPal will be able to increase fees and charges to eBay users."

http://www.mercurynews.com/ci_9209125?source=most_viewed

Edited May 26, 2008 by BERIGAN

BERIGAN · May 26, 2008

eBay Australia Files Response to PayPal-Only Policy Complaints

By Ina Steiner

AuctionBytes.com

May 26, 2008

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eBay Australia has filed its response to submissions to the Australia Competition and Consumer Commission (ACCC) regarding its PayPal-only policy slated to go into effect next month. The company rejected claims from sellers, banks, competitors and other organizations that the policy would lessen competition in the online payments market and that the public benefits were illusory.

eBay stated that buyers and sellers who did not wish to pay PayPal fees were able to avoid doing so by listing and purchasing items through competing services, and cited a report that its competitor, Oztion, has seen its membership increase by approximately 22% to over 250,000 members since eBay's announcement of the policy. (It did not state whether the policy announcement had had any effect on activity on its own site.)

While having stated in its original notification to the ACCC that it contributed $2.6 billion to the Australian economy annually, eBay downplayed its market power in its response. "Data does suggest that eBay transactions comprise only (redacted by the ACC) of all online retail transactions in Australia. Given that online retail transactions themselves represent only a part of the online payments market, eBay's contribution must necessarily be considerably smaller than that."

eBay said PayPal was one of the smallest participants in the online payments market and would continue to face considerable competitive constraints.

In addressing the issue of public benefit to the policy, eBay stated, It is only by requiring the use of PayPal on eBay that sufficiently comprehensive data can be obtained and used to minimise the incidence of "bad buyer experiences" across the eBay platform. It is not possible for eBay to achieve the stated objective of signivicantly reducing "bad buyer experiences" for all eBay users without mandating the use of PayPal.

eBay Australia said in its filing, "No party has adequately demonstrated that the benefits submitted by eBay as resulting from the Project will not outweigh any likely detrimental effect on competition."

The full text of the response is available on the ACCC website.

http://www.accc.gov.au/content/index.phtml...omItemId/336311

http://www.auctionbytes.com/cab/abn/y08/m05/i26/s00