The competition guardians have initiated proceedings against the online payment service PayPal. The reason is the terms of service of the company.
“These clauses could restrict competition and constitute a violation of the ban on abuse,” said the President of the Cartel Office, Andreas Mundt. “The victims would then be the consumers in particular, who ultimately pay these higher costs indirectly through the product prices,” he said. The cartel office will now check what market power Paypal has and to what extent online retailers are dependent on offering Paypal as a payment method.
Specifically, according to the Cartel Office, PayPal dealers were prohibited from offering their goods and services at lower prices if customers choose a cheaper payment method than PayPal. They are also prohibited from expressing preferences for payment methods other than Paypal or making their use more convenient for customers.
Sufferers: the consumers
“If retailers are prevented from taking into account the different costs of the various payment methods with corresponding surcharges or discounts, other and new payment methods can hold their own less well in price and quality competition or not even come onto the market,” said Mundt. Payment services with market power could thus gain further leeway for their own pricing. “The victims would then be the consumers in particular, who ultimately pay these higher costs indirectly through the product prices.”
The fees to be paid by merchants for using a payment service differ significantly depending on the payment method. Retailers usually pass these fees on to the product prices, so that consumers ultimately bear the costs. According to market studies, PayPal is not only the leading provider of online payments in Germany, but also one of the most expensive online payment services, the competition authority reported.
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.