The online payment system PayPal may be engaging in anti-competitive practices in Germany. The German Federal Cartel Office (BKartA) stated this today in a press release. Under PayPal’s rules, merchants offering services online may not charge customers additional fees for using this payment method. PayPal is one of the most widely used online payment methods in Germany.
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PayPal Under Fire From the German Regulator: Suspected of Abusing Its Dominance and Driving Up Prices
The office sees PayPal’s rules as a possible violation of both German and European bans on agreements restricting competition and on abuse of a dominant position. Among other things, it is considering the confiscation of unlawfully obtained profits. BKartA today notified PayPal of its preliminary legal assessment. PayPal is an American company. The ban on additional fees has been in place since 2018, and according to findings so far, PayPal also enforced it, with merchants facing termination of cooperation in extreme cases. PayPal also charges merchants above-average fees, the office added.
As a result, merchants cannot pass higher costs on to paying customers and must spread them across the prices for everyone. Customers therefore have no reason to choose a cheaper payment method. According to the office’s president, Andreas Mundt, this makes it harder for cheaper competitors to gain a foothold and may lead to higher prices for goods.
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Growing Competition and an Open Dispute: What Awaits PayPal in Germany?
Mastercard, Visa and Klarna also operate in the German online payments market. The payment service Wero, backed by banks, has also recently entered the market, the antitrust office noted. “Compared with other online payment methods, PayPal’s market share is very high,” it added.
German law generally allows merchants to charge additional fees for payments via PayPal, provided they do not exceed the merchant’s actual costs. They are prohibited for consumer credit cards, SEPA transfers and direct debits. PayPal can now respond to the assessment. No final decision has been made yet. BKartA initiated the proceedings in January 2023.
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Source: ČTK
