eBay debating whether to make PayPal compulsory for all customers
eBay is already on a downward trend, but it could be about to make that trend spiral ever faster if it goes ahead with a plan to make it compulsory to use PayPal as the method of payment for every transaction on the site.
This isn’t fiction, in fact its already happening in Australia. Yahoo News reports that a PayPal-only rule will apply in the country from next month, and if successful could be rolled out worldwide across all territories.
So what’s the big fuss? Well, the biggest problem is that eBay owns PayPal, and there is some widespread condemnation that this is only being done to increase profits. PayPal is a costlier option at the eBay checkout than many others, and so any rule such as this is sure to see revenue increase.
With the competition from banks, and credit cards out of the way, PayPal will then be able to up fees and charges as and when it likes, and anyone still wishing to buy or sell on eBay will have to like it or lump it.
But many may choose the latter. We’ve already seen a sellers revolt in February of this year, which saw hardened traders either boycotting or leaving the site altogether over charge increases and security fears.
The security fears are what eBay claims is behind this move to go PayPal-only in the future. It is claimed that when using methods other than PayPal, the chances of a dispute rises four fold.
It’s certainly true that PayPal does offer traders a certain amount of safety from being involved in a dispute, but I know from personal experience that it doesn’t guarantee a fair result. And the safety net isn’t really enough to warrant this type of monopoly on online trading.
In Australia, eBay has applied for, and received immunity from the anti-monopoly Trade Practices Act, but I can’t see it being so easy if they try it in the States itself, or European countries.
eBay spokesman Usher Lieberman said:
“We are going to take learnings from [the Australian experiment] and apply them accordingly,”
So we’re relying on Australians to vent their anger and frustration at the move so that eBay realises it shouldn’t enforce the rule worldwide. And if it still goes ahead, then I can see many more traders shutting shop and moving their business elsewhere.
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May 12th, 2008
eBay’s requirement that payments be either cash or PayPal will also limit its growth from here on out.
eBay has the potential to be the B2B and B2C showcase for small exporters worldwide.
But PayPal has a limit of $10,000 per international transaction, so for big ticket items it can handle the deposit.
After that eBay’s avoidance of even mentioning that international commercial banks have been successfully using escrow accounts for hundreds of years to facilitate exports, is very puzzling.
Documentary Letters of Credit are far more secure for both buyers and sellers — and they work domestically as well as internationally — and can transfer unlimited amounts of money.
Ah well, I guess eBay just wants to sell small stuff. Someone else will have to help the B2B and B2C crowd.
May 12th, 2008
PayPal sux sht thru a straw.
May 18th, 2008
“In Australia, eBay has applied for, and received immunity from the anti-monopoly Trade Practices Act, but I can’t see it being so easy if they try it in the States itself, or European countries.”
No, it hasn’t.
They had to apply but the process is still underway. So far, submissions have been called and closed with heavy hitting responses from the ABA, RBA and major banks amongst others. Ebay now has a chance to respond and then the ACCC will make a decision. A long way off immunity being granted.
May 19th, 2008
Australians should try OZtion:
http://www.oztion.com.au/
It’s free to list, and you don’t have to use PayPal.
May 21st, 2008
Ebay has indeed received immunity from ASIC (because they informed ASIC of their intentions) for the period that their proposal is under review. My personal opinion is that ASIC should slap them with a billion dollar anti-trust fine, but I doubt ASIC has the authority or guts to hand out this sort of fine.
May 24th, 2008
“Ebay has indeed received immunity from ASIC (because they informed ASIC of their intentions) ”
No, it hasn’t.
For one thing, it has nothing to do with ASIC – that’s a completely different entity who have nothing to do with the issue! As said in my post that you tried to argue, the relevant authority is the ACCC.
Secondly, there’s no immunity, even with your attempt at qualifying “the period the proposal is under review”. In fact, they haven’t even applied the full restriction which is suggested by your claim of being “immune”. What they have done is lodge a _notification_ of what they intend to do, which is to breach current TPA laws.
If you’re going to make claims, and try to debate, maybe you should do some research in future…!
With the claims being made, if anything it looks like it’d be _easier_ in the States to get this past. There’s already a greater acceptance of Paypal there than there is in the Australian terrirtory, which is one of the reasons ebay are keen to roll it out in Australia, to get a bigger share of the action as they have elsewhere.