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EcommerceBytes-NewsFlash, Number 1786 - May 09, 2008 - ISSN 1539-5065    1 of 6

New Developments as eBay Moves Forward with PayPal-only Plans

By Ina Steiner
May 09, 2008

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If you wondered whether sellers had legitimate concerns over eBay's new PayPal-only policy in Australia, you need only read Kevin Tyerman's submission to that country's Competition and Consumer Commission (ACCC) to understand the issues they believe are at stake. Tyerman's 7-page document - complete with footnotes and citations - is accessible on the ACCC website along with about 350 others, many of them from eBay sellers.

Tyerman's concerns include fears that consumers who don't wish to use PayPal will stop making purchases on eBay Australia, leading to a negative impact on sales; and that sellers will not be protected in multiple-item and local pick-up transactions. Tyerman is also skeptical that PayPal is more secure than others methods, citing PayPal technical problems.

In another submission, an eBay seller pointed to an anti-trust class-action lawsuit against eBay in the United States that claimed the auction marketplace monopolizes the available forms of payments that sellers can use on eBay through its subsidiary PayPal (http://www.hagens-berman.com/eBay_classaction.htm).

Yet another seller cited poor customer service and arbitrary dispute resolution as challenges that PayPal buyers and sellers face. Over 12,000 signatures appeared on an online petition protesting the policy (http://www.petitiononline.com/ebayau/petition.html).

The deadline for submissions to the ACCC was May 2nd. However, some entities were allowed an extension, and today, many new submissions were posted to the site. The Australian Bankers' Association and the Reserve Bank of Australia oppose eBay's policy, saying it would lessen competition for online payment services, and disputing eBay's claim that using PayPal would afford users better protection from fraud (http://tinyurl.com/59ly8s).

The Electronic Frontiers Australia also filed a submission opposing eBay's policy. It wrote that the policy would lead to higher product prices as sellers passed along the higher fees to consumers, making Australia sellers less competitive compared to overseas sellers who are not required to use PayPal (http://www.efa.org.au).

Despite the ACCC review, eBay is moving forward with its plans to require sellers on eBay Australia to offer PayPal exclusively. On May 8, eBay told its developer community that the change in policy would roll out in two stages: all items listed for sale on eBay.com.au on or after May 21, 2008, must offer PayPal as one of the payment methods. And all items appearing on eBay.com.au as of June 17, 2008, must be paid for using one of the following: PayPal; Pay on pick up (i.e., paid for when picking up the item); Visa/MasterCard (with transactions processed by PayPal). (http://ebaydeveloper.typepad.com/dev/2008/05/paypal-to-be-a.html)

In conjunction with the policy change, eBay is increasing PayPal Buyer Protection to a maximum of $20,000 for eligible items purchased.

eBay's experience in persuading government entities was made apparent in its Notification of Exclusive Dealing to the ACCC, which included the results of a study that concluded eBay's economic contribution to the Australian economy was $2.6 billion annually, representing around 0.27 percent of Gross Domestic Product.

eBay's knack for angering its own members was also made apparent at a recent user meeting when eBay Regional Vice President Simon Smith said, "We're not allowing people to offer unsafe choices, just like in this democracy you can't go out and buy heroin on the streets." (http://www.theinquirer.net/gb/inquirer/news/2008/05/07/paypal-akin-selling-heroin-ebay).

Users scorned eBay's comparison of heroin with other payment methods, and were cynical about a promotion the company ran one month prior to announcing the new policy. In March, eBay encouraged sellers to offer PayPal in their listings by giving them a week of free Final Value Fees and rewards of up to $10,000 (http://members.lycos.nl/testmusic/Ebay-message-promos.html). One seller said of the promotion, "eBay bribes Power Sellers in Australia to build up PayPal support."

The promotion pictured a woman holding a briefcase with the words "Top Secret," and the text read in part:

"For a limited time, eBay's top sellers will qualify for unlimited free final value fees on all their auction and fixed price listings. All you need to do is offer the most preferred payment option...PayPal. Plus if you offer PayPal on 100% of your listings during the promotional period, you'll also receive a bonus $10,000 into your PayPal account. (Look out for an email from PayPal telling you how to redeem your bonus.) Offer available from 16 to 21 March on eBay.com.au." (http://pages.ebay.com.au/hvspromo01.html).

ACCC Notification and Submissions

The original AuctionBytes Blog post on this topic garnered over 100 comments:

Comment on today's AuctionBytes Blog post here:

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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