Wednesday, May 14, 2008

Is eBay being anti-competitive?

Online shopping site eBay recently made a decision that will see the company's online credit agency PayPal handle most of the purchase transactions made on the site. With this announcement has come claims the decision is anti-competitive.

Homepage producer Matthew Heffernan recently investigated the issue and the claims of anti-competitive business management.

eBay's user friendly chief, told Matthew the decision is based on improving user safety. PayPal is universally praised for its security measures and it makes good business sense for eBay to require sellers to give their buyers the option of using the safest method of payment.

PayPal allows a user to register their bank or credit card details to establish their online shopping balance. A user can then access funds from that balance to purchase items off the net.

eBay's decision to make PayPal the preferred option for transactions does not exclude other credit agencies from the service - but rather requires those credit cards be used through PayPal for greater security for users. According to eBay a user is four times less likely to run into a transaction problem if they use PayPal when shopping online.

eBay suggests the change to PayPal ensures better transaction security for buyers and sellers.

It's important to note that users can still pay for their goods in person for 'pick up' only purchases. So there is a cash payment option available for buyers and sellers who choose not to use PayPal.

The ACCC is currently investigating the eBay / PayPal case and has declined to comment at this time.

However, Matthew was able to speak with Jerome Fahrer from the Allens Consulting Group about the anti-competitive business claims. The Allens Consulting Group is an independent agency that examines cases like this and offers recommendations to clients on how to proceed in such cases.

Mr Fahrer suggests eBay is well within its rights to make this business decision. He further adds that because eBay is not the only online shopping site available, the company has the right to impose whatever payment system they prefer.

Jerome compared the eBay / PayPal issue to buying a car. When buying a new car you often don't get to choose what radio it comes with, but nobody is forcing you to buy that car and there are others available to you to buy.

Users shouldn't really be too worried about the decision by eBay to introduce a PayPal exclusive payment option, because PayPal offers optimum security features.

As for the claims of anti-competitiveness, we'll await the decision from the ACCC.


Zief said...

I think ebay is both anti-competitive, and aren't regulated enough. It must break various consumer protection laws just on its one response suits all policy on complaints, and extremely poor customer service whereby they handle everything through email and like they haven't read your complaint properly.
Ebay charges a bunch of fees to list your item in the first place, then forces you to use Paypal which charge further fees and has serious issues when it comes to fraudulent buyers claiming they haven't received an item, and how Paypal handles that massively in favour of the buyer.
Google Checkout and alternatives are completely safe, and should be offered. I disagree with the analogy used in the case for ebay being within its rights to force people to use Paypal, it is more analogous to being forced to use a particular brand of toothpaste if you buy a particular brand of toothbrush. Totally unacceptable! Why hasn't there been some kind of class action law suit against ebay yet, and why aren't they being sued world wide for anti-competitive?

Anonymous said...

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Anonymous said...

PayPal's Buyer Protection on eligible transactions purchased on has increased from $3,000 AU to $20,000 AU. To know if your item is covered, simply look for the 'buy safely' section when viewing your item on

Anonymous said...

Won't you wonder if somebody says he doesn't know what is a software company ? Am sure you will fall off from your chair. But believe me it is true. There still are people in third world countries who don’t know anything about Web Design, Ecommerce Solutions or internet. So those who are not really aware about these buzzing things, try to find out what is a tech-world of Internet.

SteveieB said...

Ebay and Paypal = anti-compettitve Thieves.

PAYPAL should be rgulated and Ebay wied off the face of Cyberspace and replaced by something else.