Now that eBay came up with another way to remove competition from their site by imposing PayPal as the only payment method in eBay Australia, (and this is just a testbed market and if successfull, the same is to follow for other markets where eBay can attempt to get away with it) some Aussie sellers and consumers are not happy about it and point out that Australian Competition and Consumer Commission cannot grant eBay Australia request for PayPal only payments
New US Sellers on eBay are already forced to accept PayPal or major Credit Card via merchant account if they are too new or if their feedback is not quantitative enough:
What are the payment policy changes? Which sellers do they affect?
eBay will require some sellers to offer a safer payment option, either PayPal or a merchant credit card. These payment options offer additional protections to buyers. Sellers will be required to offer safer payment if they meet any of these conditions:
- have more than 5% dissatisfied buyers in the last 30 days
- have a feedback score of less than 100
- are listing items in the following higher risk categories (and sub categories): gift certificates, video games, cell phones, computers and consumer electronics
If you are required to offer a safer payment option, you might also be subject to holds on payment. PayPal may hold payments for the sale of an eBay item until the earliest of the following occurs:
- the buyer leaves positive feedback,
- 3 days after confirmed item delivery*
- 21 days without a dispute, claim, chargeback, or reversal filed on that transaction
*PayPal can confirm delivery. PayPal will confirm delivery if you use USPS, UPS, or FedEx to ship the item and (i) use PayPal shipping labels, or (ii) upload tracking information to PayPal via the transaction details page. This applies to US domestic transactions only.
eBay Motors vehicle categories (Cars & Trucks, Motorcycles, Powersports, Boats, and Other Vehicles categories and subcategories) will not be included in these payment policy changes.
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You can immagine that lot of sellers are screaming bloody murder because they do not want to be forced to accept PayPal and fork over 3% of the transaction to PayPal if they can receive Money Order or Cashier’s Check which costs the seller nothing… but then eBay would not be making that 3% additional profit forcing PayPal, eh?
This blogger just published Shame, eBay, Shame! describing PayPal promotion going to eBay buyers who do not use PayPal and concluded:
“That con will be brought down upon the eBay sellers – those who don’t wish to be involved in the hideous restraint of trade fiasco that eBay is attempting to wrought.
In a couple of weeks time, eBay and their wholly-owned subsidiary PayPal will be happily telling sellers, “look at all these new PayPal users our latest campaign have brought to you. You really ought to get on-board our new regime; PayPal is the only way of the future.”
Either that or a very cynical attempt to convince two separate groups of people that eBay/PayPal is a good idea. The sellers will be told that the buyers are flocking to payPal; the buyers told that all the sellers want to use PayPal.
“
It is the vendor who should dictate which payment options he/she wants to permit to exchange his goods/services for money.
We have utilized many brick and mortar venues for our retail sales before, but I have never heard from a Mall Management or Swap Meet Operator something like: ‘well you know, cash is not safe … what if some buyer passed a fake bank note to you! …. or traveller’s checks may be fake as well, so for this reason if you wanted to sell in our venue/marketplace, you cannot accept cash, money orders or travellers checks… and ehm, since you are new around here, you can only accept Credit Cards or our Mall Gift Cards (… as we at the Mall get a percentage cut from our Gift Card transactions, which of course, makes it safer… ehm ..)’
Another fake claim eBay makes is that PayPal is cheap. I have personally recommended PayPal to many of our newbie merchants (we own a hosting company so we get lot of requests for recommendation in this area) but since PayPal increased their rates quietly, they are not one of the most expensive options out there so we recommend against PayPal.
Check these PayPal fees: 2.9% plus $0.30 per transaction so you would be paying $0.59 to PayPal on $10 sales
vs Real Merchant Fees here for example 2.1% plus $0.25 per transaction so you would be paying $0.46 to merchant CC processor
—
Update 5-8-2008 : here is an interesting news article
eBay boss: “not offering PayPal is like buying heroin” the folks Down Under are definitely not happy about being forced to PayPal and are very vocal about it. A smart credit card merchant service company should make a fortune marketing to eBayers.
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Update 5-10-2009
Australian financial, commercial and internet industries appear to stand united against eBay’s attempt to stifle competition using “consumer safety” as a smoke screen to push through PayPal as the only payment method on eBay Australia property. Here are some interesting points made in submissions to Australian Competition and Consumer Commission:
- Australian Bankers’ Association:
"2.1 ABA's concerns
The ABA opposes the Notification, its chief concerns being that:
(a) the Conduct would limit the choice of both eBay buyers and sellers
without justification for doing so;
(b) the benefits of the Conduct as described in the Notification are
overstated; and
(c) the Conduct will have the effect of eliminating competition in an
important segment of the market for online payment services, and
of distorting competition in the balance of that market.
2.2 The ACCC should revoke the Notification
ABA submits that the ACCC should revoke the Notification under s 93(3) of the
Trade Practices Act 1974 (Cth) ("the TPA") because the Conduct:
(a) has the purpose and/or is likely to have the effect of substantially
lessening competition; and
(b) is not likely to result in a benefit to the public, or to the extent that
it would result in any likely public benefit, any such benefit would
not outweigh the public detriment that would be caused by the
lessening of competition likely to result from the Conduct.
According to Phishtank.com, 72%
of the phishing sites it identified in February 2008 were fraudulently imitating
eBay or PayPal websites.' More recently, eBay has been subject to phishing
scams affecting sellersm6 The Conduct does nothing to prevent these phishing
scams. A further potential security issue for PayPal is that PayPal does not take
the same steps that banks take to verify the identity of their account holders by
requiring the provision of drivers' licences, birth certificates, etc.
"
- Electronic Frontiers Australia Inc : ”
Prevailing prices on eBay will increase
PayPal impose various fees and commissions on users receiving payment through
PayPal. eBay's proposed conduct would impose these additional direct costs on
eBay sellers who do not use PayPal, or who do not exclusively use Paypal. The
direct per-transaction fees alone could cause affected eBay sellers to raise their
fees by up to 5% to compensate.
eBay and PayPal's notoriously poor customer service record
Many websites on the Internet are devoted to criticism of eBay and PayPal's
customer service, policies, and actions. Some examples include
www.nopaypal.com and www.paypalwarning.com. A frequent criticism of eBay
and PayPal's customer service is that they are 'faceless' corporations, who to
the greatest extent possible try to 'hide behind' email communication,
typically conducted with boilerplate 'form' emails, and that they do not make
available, or do not sufficiently make available other contact methods such
as telephone.
If eBay proceed with their proposed conduct, PayPal will in effect have a largely
'captive market' and will have no incentives to provide better levels of customer
support, or a better service generally. In short, PayPal will be free to give less
and charge more.
PayPal's 'user agreement'
Australian users of PayPal's services are required to accept the terms of a
contractual 'user agreement', which is posted on the PayPal Website.
Many of the terms of this 'user agreement' are potentially misleading,
unconscionable, unfair, or unenforceable. Some specific criticisms of
the PayPal 'user agreement' include:
The user agreement is in reality, not one agreement but constitutes more
than a dozen separate documents. The 'user agreement' incorporates
the terms of 13 other 'policies' by reference, including a 'Privacy Policy',
'Closing Accounts and Limiting Account Access' policy, 'Buyer Complaint Policy
and PayPal Buyer Protection Policy', 'Fees Policy', 'Acceptable Use Policy', etc;
PayPal reserve the right to amend the user agreement and policies at any
time;
The user agreement allows PayPal to place a 'hold' on any funds in a user's
account for up to 180 days and to 'fine' the user up to $3000 for
contraventions of the Acceptable Use At common law, this 'fine' is
likely a penalty and would be unenforceable for that reason; and
The user agreement (and associated polices) contain many terms which may
be 'unfair terms' within the meaning of Part 2B of the Fair Trading Act 1999
(Vic), including terms which:
o Permit PayPal but not the user to avoid or limit performance of the
contract;
o Penalise the user but not PayPal for a breach or termination of the
contract;
o Permit PayPal but not the user to vary the terms of the contract;
o Permit PayPal unilaterally to vary the characteristics of the services
supplied to the user;
o Limit PayPal's vicarious liability for its agents; and
o Limit the user's right to sue PayPal.
The effect of eBayls proposed conduct will be to force eBay users who currently
exercise an informed choice not to deal with PayPal to accept the current and
future terms of PayPal's user agreements and policies.
On the whole, eBay appears to be arguing that:
eBay customers are incapable of choosing the 'best' payment option,
according to eBay's definition of what the 'best' option is;
For those customers' own good, eBay must force them to use the 'best'
payment option;
It is impliedly irrelevant to eBay's decision-making that the 'best' payment
option is provided by a wholly-owned subsidiary of eBay, and will result in a
significant financial benefit to eBay.
eBay's argument is condescending and paternalistic at best, and ignores the
fact that eBay users are capable of making rational choices about what they
view the best payment method to be
Most if not all of the benefits claimed to result from eBay's proposed conduct
are already available to buyers and sellers who want those benefits. The only
change in those benefits which eBay's proposed conduct would cause would be
to force those benefits upon people who currently choose not to receive them
because they view the associated costs as too high. EFA submits that this
cannot properly be characterised as a public benefit.
EFA submits that the ACCC should revoke the notification lodged by eBay.
“
- Australian Securities & Investments Commission :
"However, unlike most AFS licensees that provide banking or non-cash
payment services, PayPal has declined to become a signatory to the Electronic
Funds Transfer Code of Conduct (EFT Code). The EFT Code is the key consumer
protection code of conduct applying to the payment services industry, and
covers fundamental issues concerning consumer rights, security, disclosure
and resolution of mistaken or unauthorised payments.
PayPal's business involves the provision of EFT transactions in relation to EFT
accounts within the meaning of Section 1 of the EFT Code, and, if it became
a signatory to the Code, it would be regulated by Part A of the Code.
Part A prescribes rules of conduct relating to the provision of EFT transactions,
including around: record-keeping requirements
liability for unauthorised transactions
liability in cases of system or equipment malfunction
audit-trails, and
complaint investigation and resolution procedures.
ASIC considers that it is highly desirable that PayPal become a signatory to
the EFT Code, given the large numbers of retail customers who use eBay,
as it would provide an additional desirable layer of consumer protection
that is not currently in place"
- RESERVE BANK OF AUSTRALIA: ”
The Reserve Bank sees some potential issues with the proposed conduct
in terms of its impact on competition in the Australian payments system
The issues:
The proposed conduct by eBay is to mandate the use of PayPal for almost all
transactions on the eBay site. This raises three potential issues in relation to
the payments system.
The first is that it could limit the ability of new on-line payment
systems to become established and for alternative systems to compete in the
on-line payments space.
The second is that it could restrict merchants' ability to negotiate
lower fees.
And the third is that it restricts choice for consumers
eBay states that the service operated by PayPal offers some security
advantages to consumers relative to other payment methods currently available
for eBay transactions. Should consumers value PayPal's security features highly,
they will choose it over other payment methods and this may, in turn,
place pressure on those other systems to improve security for similar
transactions. It is possible that, in the long run, this competitive process may
achieve safer payment facilities than would be the case if PayPal were the only
payment option available.
“
These comments by some of the best brains in major institutions of Australia are not just some bloggers rantings. They clearly summarize and expose the true motivations of eBay management.
Same scammer. Just a different hijacked seller.
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