Reserve Bank gives the OK to surcharge for PayPal
by Stewart Carter
You’ll pay more if you choose to pay by PayPal. That’ll be the result of a Reserve Bank of
Australia (RBA) initiative allowing Australian merchants to surcharge for PayPal transactions.
Currently, PayPal rules prohibit businesses from recovering the extra costs of PayPal
transactions by adding them on to the price.
But the RBA’s move is intended to get PayPal to abolish that rule, in much the same way as
the RBA forced credit-card companies to accept surcharging.
And if that weren’t enough bad news for the eBay owned company, the RBA is also moving to
stop eBay prohibiting customers using cheaper payment options.
The two moves were announced on the RBA’s website following a meeting of its Payment
Systems Board under the heading “No-surcharge rules in PayPal.”
“Over recent months, the Board has received a number of comments on the no-surcharge
and no-steering rules that apply to payments using the PayPal system as well as the
mandated acceptance of PayPal on eBay’s auction site.”
Where no-surcharge and no-steering rules have existed in other systems, the Board has
encouraged their removal on the grounds that these rules can diminish competition in the
payments system.
Consistent with this, the Bank will shortly be holding discussions with PayPal with a view to
seeking the removal of these rules.”
PayPal released a statement to eCommerce Report on behalf of PayPal CEO, Andrew Pipolo,
pointing out that it couldn’t really say anything ahead of the talks with the RBA.
“We do not intend to speculate, nor comment pre-emptively, on what the outcome of these
discussions might be.”
Pipolo’s statement also said PayPal would continue to be a good and co-operative corporate
citizen.
“PayPal will continue to cooperate with the Reserve Bank of Australia during discussions
relating to PayPal’s no surcharging policy.
Since launching in early 2005 PayPal has always had ongoing dialogue with Australia’s
regulators and governing bodies, and will continue to do so.”
However eBay has not always been so respectful of Australian regulators, most notably in its
recent failed attempt to give PayPal a monopoly in its local marketplace.
One of its submissions even characterized Reserve Bank concerns about PayPal as
“irrelevant.”
No doubt the company now regrets the intemperance of that remark.
Certainly a PayPal spokeswoman eCommerce Report spoke to this week was at pains to
distinguish the wholly-owned subsidiary from its parent.
“We’re in different offices. We’re in the floor below” she said.
eBay spokesman, Daniel Feiler, was also keen to emphasize the formal separation between
parent and wholly-owned subsidiary when we asked for a response to the RBA’s move.
“At this stage the RBA has asked to have discussions with PayPal and PayPal has made it
clear that they intend on meeting with the RBA. For more information you will need to speak
to PayPal.”
However the formal distinction between the two companies could ultimately prove very
significant as far as the eBay marketplace is concerned.
Because whilst the Reserve Bank undoubtedly has jurisdiction over PayPal, which is clearly a
payments system, it is not so clear that it has any power over eBay.
The Reserve has now formal power to stop eBay from requiring the businesses users to both
offer PayPal and refrain from telling their customers they prefer other payment methods.
Or in other words it may have to rely on eBay voluntarily agreeing to a no-steering rule with
PayPal in its marketplace.
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