ACCC plans to reject eBay's PayPal push

The Australian Competition and Consumer Commission is proposing to revoke a notification lodged by eBay.

The Australian Competition and Consumer Commission has issued a draft notice proposing to revoke a notification lodged by eBay in April, regarding its plan to lock users into paying for purchases through its fee-based PayPal service.

ACCC Chairman Graeme Samuel expressed concern the changes will allow eBay to use its massive online market share to lessen competition in the market where PayPal operates.

"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 Samuel, in a statement.

"Given eBay's position as Australia's leading online marketplace, the notified conduct will substantially reduce competition to supply online payment services to users of online marketplaces more generally."

Touting buyer confidence and safety as the two key reasons, eBay announced in April that as of June 17, users in Australia must use its PayPal payment service for all transactions, with the only exception for cash-on-delivery.

eBay's new policy will be implemented in two stages. Carried out on May 21, the first stage required that all items for sale must offer PayPal. Then the second stage, planned for June 17, will put an end to direct deposits, personal cheques and money orders as a payment option.

Samuel said that the ACCC acknowledged that the PayPal-only policy has the potential to increase buyer protection and safer online trading. However, the organization believes the consumers are in the best position to decide which payment methods to use.

"The notified conduct denies them that choice. Accordingly, the ACCC considers that these benefits do not outweigh the anti-competitive effects of the conduct," Samuel said.

The ACCC has asked eBay to delay the second stage of its plan until the ACCC has made a final decision.

eBay and interested parties now have time to lodge submissions in response to the draft notice.

An eBay spokesperson said it's currently assessing the ACCC draft notice and will make further comment following the review process.

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