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Australian central bank cries foul over eBay PayPal mandate

09 May 2008 1 comment

Paul Penrose

Head of Research

Finextra

Australia's central bank has stepped into the debate over eBay's proposals to make the use of PayPal mandatory for buyers and sellers on the online aution site.

In a submission to the country's competition commission, the RBA raises three issues of concern:

"The first is that it could limit the ability of new on-line payment systems to become established and for alternative systems to compete in the on-line payments space. The second is that it could restrict merchants' ability to negotiate lower fees. And the third is that it restricts choice for consumers."

The unspoken fourth concern is that it could further accelerate the disintermediation of traditional banks in the digital payments field.

You can read the RBA's submission here.

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Comments: (1)

A Finextra member

10 May 2008

I am pleased to see the Australian Government has taken swift action and is cognizant of the risks of Ebay's apparently monopolistic behaviour. As I pointed out in my blog there are serious issues with allowing such actions in the marketplace.

The outcome of allowing such behaviour would be inferior security and services and higher prices. Clear and simple.

I'm sure the financial authorities would soon cry foul if the banks united and refused to allow transactions on their accounts via paypal....

For instance the many thousands of complaints on the internet about Paypal (search paypal s?cks or paypal fraud for instance) would clearly demonstrate the hazards of being caught in the paypal business model. Reputable banks might have justifiable reasons to preclude doing business with any company which had many thousands of vehement ex-customers venting their frustrations all over the internet. I know that I actively search businesses before considering doing business with them, and banks do too. Did anyone bother in this case?

Shame on Ebay. Three cheers for the Australian banking industry.

I dare say that bridge is burned though....

The price of ethics.

Anyone want to finance an alternative? I'll do a good deal for an online auction business which would like to offer some real customer benefits. OOps I'm blegging....

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Paul Penrose

Head of Research

Finextra

Member since

06 Oct 2006

Location

London

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