EBay Australia replies to PayPal-only policy complaints

The company rejects claims from sellers, banks, competitors and other organizations that this initiative diminishes competition in the online payments sector and does not provide any public benefits. EBay argues that the change improves security and it does not have a considerable effect on the online payments market, which includes banks, the Bpay payment method and credit card companies that are bigger than eBay’s subsidiary PayPal. The Bpay scheme allows for internet banking or telephone banking payments and most Australian banks, credit unions and financial institutions are participating Bpay members, covering around 90 percent of Australian consumer bank accounts.Although it has stated in the original notification to the ACCC that its contribution to the Australian economy reaches USD 2.6 billion annually, eBay minimised the significance of its market power in its response:Data does suggest that eBay transactions comprise only (redacted by the ACCC) of all online retail transactions in Australia. Given that online retail transactions themselves represent only a part of the online payments market, eBays contribution must necessarily be considerably smaller than that.EBay also argued that PayPal is one of the smallest participants in the online payments market and would still face considerable competitive constraints.At the end of April 2008, The Australian Bankers Association and The Reserve Bank have asked ACCC to stop eBay from forcing eBay customers to use its PayPal service to make payments on the online auction website. EBay has applied to the ACCC for an exemption from the Trade Practices Acts to prevent vendors from using other payments methods, including direct bank deposits, cheques and money orders, on its online auction website. If the new change is adopted in Australia, eBay is expected to introduce the same rules across its global websites. EBay claims that buyers would still have the possibility to choose from different payment methods and competing services. Consumers do not acknowledge this claim: eBay’s competitor, Australian online auction site OZtion reports a 22 percent growth in listings to approximately 580,000, following eBay Australia’s announcement that all items must be paid via PayPal. Daily new member registrations have increased by 165 percent and daily new sellers registrations by 300 percent. OZtions registrations have reached over a quarter of a million. Traffic has also increased to over 2 million visitors per month. OZtion experts believe that such increases across most metrics reflect the fact that Australians are looking for alternatives to eBay and will not be using only the PayPal option.The ACCC is expected to make a ruling by mid-June.