Suspicion of hindering competition against PayPal
The lynchpin of the accusations is probably the “rules on surcharges,” according to a public statement by the German Federal Cartel Office. The authority with seat in Bonn communicates in it that these specific rules have to the content that merchants are forbidden surcharges simply. So if a seller should now charge service fees for the additional effort with PayPal, this violates the rules.
Conversely, merchants are supposed to be prohibited from giving the other payment services a discount because of the lower effort. From the US payment service’s point of view, it is important that it is treated in the same way as the others. And this also applies to the rules on the “representation of PayPal”. Here, the company stipulates that merchants should treat the payment service “on par with other payment sources.” This means that the service must be omnipresent along with the other services.
Federal Cartel Office sees threat to competition
Andreas Mundt, president of the German Federal Cartel Office, meanwhile, is annoyed by PayPal’s regulations. After all, they represent an insurmountable obstacle to competition for other services. If merchants were able to charge a surcharge for using the service, competitors could more easily assert themselves on the market. The current market for payment service providers, on the other hand, is dominated by big names, with PayPal becoming increasingly larger. There is hardly any room here for newcomers. Whether this large market power of the service also violates current competition law, one would like to examine now in detail in the authority.
PayPal possibly without alternative
As part of its review, the Federal Cartel Office would also like to take a closer look at the extent to which merchants are nowadays dependent on PayPal. In this case, they would simply not be able to avoid using the comparatively expensive service. End customers only realize how expensive it is when they want to make an expensive instant transfer to the reference account, for example. Merchants, on the other hand, have to pay a hefty commission of between 2.49 percent and 2.99 percent on every sale.
On top of that comes a flat rate, which is between 34 and 39 cents. Mundt not only fears for the competition between the payment services. In his view, it is also possible that end customers could suffer. After all, at a certain point it is no longer possible for merchants to sell their products without a corresponding price increase to cover the additional costs. Because of PayPal’s rules, this would not only affect those who use the U.S. payment service. Everyone would have to pay more.