E-Commerce, Newsroom | 24. January 2023

Bundeskartellamt investigates PayPal

The Bundeskartellamt has targeted PayPal and initiated proceedings against PayPal (Europe) S.à r.l. et Cie, S.C.A. for possible obstruction of competitors and restriction of price competition. by

The subject matter of the proceedings are the “Rules on Surcharges” and the “Presentation of PayPal” set out in PayPal’s Terms of Use for Germany.

PayPal’s terms of use in focus

PayPal’s terms of use state that merchants may only offer their goods and services at a lower price if customers choose a payment method apart from PayPal, and that merchants may express a preference for payment methods besides PayPal. These clauses could restrict competition and constitute a violation of the prohibition of abuse, said Andreas Mundt, President of the Bundeskartellamt (German Federal Cartel Office).

Impact on competition and consumer interests

Sellers are thus prevented from considering the different costs of the various payment methods by corresponding surcharges or discounts. This can make it more difficult for other and new payment methods to compete on price and quality, or even prevent them from entering the market. In this way, payment services with market power could gain further leeway for their pricing. Those who would suffer most would be the consumers, who, in the end, pay these higher costs indirectly through product prices.

According to market studies, PayPal is the leading provider of online payments in Germany and one of the most expensive online payment services. PayPal’s standard fee in Germany is currently 2.49 – 2.99 per cent of the payment amount plus 34–39 cents per payment, according to PayPal’s price list.

The Federal Cartel Office will now examine how much market power PayPal has and whether online merchants are dependent on offering PayPal as a payment method. If the allegations turn out to be true, PayPal could face very severe penalties.

It remains to be seen how the proceedings will end and the consequences. The Federal Cartel Office will likely impose severe penalties in the event of a violation of the prohibition of abuse to protect competition in the market and safeguard consumer interests.

Authorities have already targeted PayPal in the past

There have previously been similar allegations in other countries, particularly in the USA. In Europe, PayPal has already been fined several million euros for allegedly exploiting its dominant position.

Especially in e-commerce, it is being watched with keen interest how the current proceedings will develop and their impact on PayPal and the market for online payments. However, the Federal Cartel Office must do its job to ensure that competition in the market is not impaired and that consumer interests are protected.

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