Paymate wants the ACCC to investigate eBay/PayPal
Monday, July 14, 2008/
Payments company Paymate has written to the Australian Competition and Consumer Commission accusing eBay/PayPal of anti-competitive behaviour, misleading and deceptive conduct.
The managing director of Paymate, Dilip Rao, says that while he is pleased eBay has withdrawn its attempt to ban all payment methods other than PayPal, the auction site’s decision to force sellers to offer PayPal as a payment option will have a detrimental effect on his business.
In his letter, Rao claims eBay is breaching two sections of the Trade Practices Act: section 47, which deals with anti-competitive behaviour, and section 52, which deals with misleading and deceptive conduct.
Rao argues that eBay significantly restricts the ability of Paymate or other payment options to compete with PayPal by mandating that PayPal be offered by sellers, providing little or no information about alternative payment methods for buyers and sellers and telling sellers that they cannot express a preference for any particular method (he gives the example of a seller who may state “PayPal accepted but Paymate preferred”).
Rao also argues that eBay misleads consumers by promoting PayPal so heavily that some users may think it is the default payment method on the auction site. He is particularly troubled by the automatic email sent out to buyers after they have won an auction, where PayPal is aggressively promoted. “There’s no real estate devoted to other methods of payment. Nobody knows the other options,” Rao says. “To find that Paymate is a payment option you really have to drill down into the eBay site.”
He is also angered by eBay’s promotion of PayPal as the “safest” payment option and assertions in the media that customers that use PayPal are “four times less likely to result in a dispute compared to other options, such as direct debit”. In fact, the ACCC’s draft decision found that PayPal “offers similar seller protection to that provided by Paymate”.
Rao thinks the constant inference that Paymate is not as safe as PayPal will damage Paymate’s reputation with all web shoppers, not just eBay users. “I think we are going to get hurt, even outside of eBay.”
Rao is hopeful that his letter will help start dialogue between the ACCC and eBay to address some of his concerns. He will not rule out legal action, but concedes Paymate would struggle to fund its case. “We are a small company here. To take on a company like eBay with all its resources is not something we would do lightly.”
What he most wants is a level playing field. “At a minimum they owe us a bit of communication to eBay users that says ‘these (Paymate) are acceptable and safe payment options’. Just put the facts on the table and let people decide.”