Germany’s antitrust agency is looking into whether PayPal is getting in the way of competitors and limiting price competition.
The Federal Cartel Office says that the terms and conditions of PayPal say that merchants can’t lower the prices of their goods and services if customers choose to pay with a cheaper method than the US giant.
The regulator points to studies that show that PayPal is the most popular way to pay online in Germany and one of the most expensive. The company’s standard rate is 2.49%-2.99% of the payment amount plus 34-39% payment.
The president of the FCO, Andreas Mundt, says: “These clauses might restrict competition and violate the prohibition of abuse of a dominant position. We will now assess the extent of PayPal’s market power and in how far online sellers depend on offering PayPal as a payment method.”
Suppose merchants can’t consider the different costs of different payment methods by adding surcharges or giving discounts. In that case, it’s harder for new and various payment methods to compete on price and quality or even to get into the market.
“Powerful payment schemes could thus obtain additional pricing leeway. Consumers, in particular, would also suffer since, in the end, they are the ones indirectly paying for these higher costs via the products’ prices.”
