RBA may weigh in on eBay case at ACCC

The Reserve Bank of Australia may lodge a submission with the ACCC on eBay’s application for an exclusive dealing exemption from the Trade Practices Act.

eBay has sought immunity from prosecution to force customers to go through the eBay-owned PayPal service when buying and selling on the online auction site.

Media reports suggest that the RBA, which has regulatory responsibilities for payments systems, is concerned over the implied lessening of competition in the online payments system.

PayPal operates under a unique banking licence from the Australian Prudential Regulatory Authority that recognises it as an authorised deposit taking institution that cannot pay interest. It claims in excess of five million registered users in Australia.

eBay is the dominant online shopping and classifieds player, with 42.19% of the total market, according to February data from online monitor Hitwise. The Trading Post website is second with a mere 2.12% of the share.

It is this sort of market dominance that has raised eyebrows at the national competition and finance regulator. eBay has sought exemption from the requirements of the Trade Practices Act on the basis that the decision will have benefits in the form of better online payment security.

The ACCC is inviting all interested parties to lodge submissions, which if the online eBay forums are any guide will be heated and angry. Thousands of eBay users are most unhappy over the restricted choices and higher transaction fees, and many have moved their business to other local auction sites.

User “espresso_capo” captured the general mood when he wrote: “Also disgusted, but not surprised. Been on eBay for 8 years, over 3000 transactions, perfect record. Am I valued by eBay corp? As a person, no. As a cash cow, yes.”

The ACCC scrutiny is seen as a test case and will be closely watched around the world by eBay and its millions of users.

If the ACCC allows eBay to go ahead, online vendors in Australia will have to use eBay’s “in-house banker” PayPal to facilitate transactions from 17June. This will be at the expense of other alternate merchant services such as direct deposit, money orders, cheques and other online systems.

Overnight eBay reported solid first quarter results with profit coming 22% higher at $US459.7 million ($489.7 million), compared to a year ago.

 

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