Finances: Federal Cartel Office initiates proceedings against Paypal

The Bundeskartellamt has initiated proceedings against the online payment service Paypal on suspicion of impeding competitors and restricting price competition.

Finances: Federal Cartel Office initiates proceedings against Paypal

The Bundeskartellamt has initiated proceedings against the online payment service Paypal on suspicion of impeding competitors and restricting price competition. The reason for this is the "rules on surcharges" and the "representation of PayPal" set out in Paypal's terms of use for Germany, the competition authority announced on Monday in Bonn.

"These clauses could restrict competition and constitute a violation of the ban on abuse," said Cartel Office President Andreas Mundt. "The victims would then be the consumers in particular, who ultimately pay these higher costs indirectly through the product prices," he said. The cartel office will now check what market power Paypal has and to what extent online retailers are dependent on offering Paypal as a payment method.

Specifically, according to the Cartel Office, PayPal dealers were prohibited from offering their goods and services at lower prices if customers choose a cheaper payment method than PayPal. They are also prohibited from expressing preferences for payment methods other than Paypal or making their use more convenient for customers.

Sufferers: the consumers

"If merchants are prevented from taking into account the different costs of the various payment methods with corresponding surcharges or discounts, other and new payment methods can hold their own less well in price and quality competition or not even come onto the market," said Mundt. Payment services with market power could thus gain further leeway for their own pricing. "The victims would then be the consumers in particular, who ultimately pay these higher costs indirectly through the product prices."

The fees to be paid by merchants for using a payment service differ significantly depending on the payment method. Retailers usually pass these fees on to the product prices, so that consumers ultimately bear the costs. According to market studies, PayPal is not only the leading provider of online payments in Germany, but also one of the most expensive online payment services, the competition authority reported.

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