RBA joins chorus against eBay PayPal exclusivity claim

Stan Beer
Friday, 09 May 2008 14:04

Business IT - Technology

The Reserve Bank of Australia (RBA) has joined a growing throng of PayPal and eBay competitors and detractors opposing eBay's push to have the Australian Competitition and Consumer Commission (ACCC) look the other way while it seeks to enforce PayPal exclusivity on the Australian arm of the world's largest auction site.

In its submission to the ACCC, the RBA indicates granting eBay PayPal exclusivity would close the doors on the establishment of competing online payment systems. PayPal's online competitors couldn't agree more and may well be breathing a sigh of relief to have such a powerful ally as the RBA on side.

eBay Australia has signalled its intention to force all buyers and sellers on its site to use either its own PayPal transaction funds clearance system unless they pay cash on delivery. If successful, this would eliminate all other popular forms of payment on eBay's Australian site including direct bank transfers, direct credit card payments and competing transaction funds clearance systems.

Mindful that such an anti-competitive action could trigger prosecution under the Australian Trade Practices Act, eBay is also seeking immunity from prosecution in a submission to the ACCC, claiming that enforcing exclusive use of PayPal would be for the public good. Critics, however, say that eBay Australia's action is merely an attempt to increase its PayPal customer base while gaining extra fees for each eBay transaction through the enforced use of PayPal.

Companies who operate competing online payments systems, such as Australian-based Paymate and Centricom, the developer of the POLi online debit payment service, have put in submissions to the ACCC opposing the eBay request. They say PayPal offers no added benefit to competing systems and that if eBay Australia succeeds in its quest it would automatically gain a customer base of 5 million users for PayPal, the approximate number of users of the eBay site.

While PayPal competitors already have a tough time competing on eBay because the site's system integrates with PayPal and discriminates against other systems, they worry about the impact that enforced PayPal use on eBay would have on other auction sites. Both Paymate and Centricom argue in their submissions that forcing all eBay Australia users on to PayPal would create such a large PayPal user base that the competitors would also be severely disadvantaged when trying to compete on sites other than eBay. CONTINUED