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.