Reserve Bank weighs in on eBay’s PayPal push

The Reserve Bank of Australia’s Payment Systems Board is entering discussions with PayPal and its owner eBay to encourage the payment provider to voluntarily remove the no-surchage and no-steering rules that have come under fire by the ACCC for being anti-competitive.

The no-surcharge rules prevent eBay sellers from charging additional fees to recover the cost of a buyer using a particular payment method, like PayPal.

The no-steering rules relate to eBay’s aggressive promotion of the PayPal payment method which has drawn heavy criticism from users and competitors for suggesting that PayPal is the default, safest and accepted method of payment. Sellers and buyers claim they aren’t provided with readily accessible information about other payment methods.

eBay owns PayPal, and charges a fee for using the service per credit card payment in addition to its standard fees for buying and selling items.

The ACCC expressed concerns in June that eBay could use its massive online market share to lessen competition in the market where PayPal operates if its intention to make PayPal the sole payment offered was achieved.

"PayPal currently competes with a range of other providers to supply online payment services to users of online marketplaces. If the notified conduct is allowed to go ahead, there will be no competition for the supply of such services to buyers and sellers using eBay," said ACCC chairman Graeme Samuel at the time.

eBay jettisoned the controversial PayPal-only plan, but has now attracted the attention of the RBA over the no-surcharge and no-steering rules, as well as the “mandated acceptance of PayPal on eBay’s auction site” that requires all sellers to offer the payment method.

“Where no-surcharge and no-steering rules have existed in other systems, the Board has encouraged their removal on the grounds that these rules can diminish competition in the payments system. Consistent with this, the Bank will shortly be holding discussions with PayPal with a view to seeking the removal of these rules,” read an RBA media release announcing the discussions.

Last month Anthony Green, a representative of a “group of people who use the online auction platform eBay to buy and sell goods”, posted on an eBay forum a copy of a letter that had been sent to the RBA’s Payment Systems Board chairman calling for the RBA to take action against the auctioneer and its payment provider.

The RBA can invoke its regulatory powers to force PayPal into adhering to its recommendations as it controls all payment systems in Australia, but is entering discussions in the hope of achieving voluntary compliance.

The RBA was unable to provide comment.

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