Economy

eBay backs down on PayPal plan

SmartCompany /

eBay has bowed to pressure from its users and scrapped a plan to force customers to use its wholly-owned payment subsidiary, PayPal.

eBay has bowed to pressure from its users and scrapped a plan to force customers to use its wholly-owned payment subsidiary, PayPal.

The move comes just days after a fiery meeting in Sydney, where eBay sellers attacked the plan and accused the company of becoming aggressive, monolithic and dictatorial.

The meeting was convened by the Australian Competition and Consumer Commission, which was investigating whether eBay should be giving legal immunity from sections of the Trade Practices Act over the PayPal plan.

The ACCC received about 700 submissions from a host of eBay users and organisations including the Reserve Bank, Australian Bankers’ Association and Google. Most submissions sharply criticised the move. The ACCC released a draft notice revoking immunity on 12 June, but was yet to make its final decision.

eBay vice president Simon Smith said in a statement that while the company disagreed with the ACCC’s draft decision, it decided to scrap the plan to “stop any further confusion and disruption among the eBay Community”.

“eBay regrets any uncertainty that this process has caused among the community and believe that today’s decision will remove further doubt.”

The president of the Professional eBay Sellers Alliance, Phil Leahy, has hailed the decision a victory for people power. “We’re proud of what the ACCC has done by stepping in and showing leadership, and we’re certainly happy that eBay has put this to bed and cleared up any confusion. Now we can all get down to business and start shipping goods.”

He admits the relationship between eBay and the PeSA became fractured over the PayPal issue, but he has already had a call from Smith and is ready to move on. “We’re very glad the fight is over. We’re looking forward to getting back to business and really providing a great experience for buyers.”

Rival auction sites OZtion and Trading Post were beneficiaries of consumer anger towards eBay and have enjoyed strong growth in recent months. OZtion was even snapped up by listed company Jumbuck Entertainment for $2 million in June.

Philip Druce, co-founder of OZtion, is pleased with eBay’s decision to abandon its PayPal plan, which he believes would have stifled innovation and been anti-competitive. He is not worried about losing the legion of disattisfied eBay customers who have flocked to the site in recent months and says user numbers have continued to grow even after the ACCC’s draft ruling on 12 June. “The growth hasn’t slowed down. We’ve still had an amazing new amount of new members every day and everything’s up – listing, sellers and buyers. We’ll continue to grow.”

 

What do you think of eBay decision? Will you start using the site again or is the relationship all over? Send your feedback here.

 

Read more on eBay, PayPal and online retail

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