Reserve Bank of Australia Studies PayPal Practices in Australia
The Reserve Bank of Australia's Payments System Board has announced that it has "recently been considering PayPal’s and eBay’s rules that prohibit merchants from surcharging customers for the use of PayPal and from discouraging the use of PayPal." Following its review, the Board said it was not going to impose any new regulation now on PayPal's practices because of PayPal's relatively small size in the online market.
The Board’s view is that no-surcharge rules can limit merchant choice and competition and can be detrimental to the efficiency of the payments system as a whole, particularly where merchants’ ability to decline acceptance of a particular payment instrument is constrained. Notwithstanding this view, PayPal is a relatively small player in the online market – outside of eBay, most merchants are able to decline acceptance of PayPal if the benefits of accepting it do not outweigh the costs of the restrictions. At this time, therefore, the Board is not convinced that the benefits of imposing regulation to remove the rule would outweigh the costs.
This assessment may change over time, particularly if the PayPal system grows significantly. PayPal has indicated to the Bank that it accepts that if it were to increase in size substantially, its no-surcharge rule would need to be removed for consistency with other payment systems. It has also indicated to the Bank that it will not increase its standard published fees for eBay sellers for a period of two years. Looking forward, the Bank will be collecting additional data from PayPal and other on-line payment systems on a regular basis to assist in its monitoring of market developments.
The Board has also considered eBay’s rule that mandates acceptance of PayPal by sellers on eBay. In the Board’s view this rule, combined with the no-surcharge rule, is undesirable and limits competition between payment systems. While eBay itself is not a payment system, and thus falls outside the Board’s regulatory powers, the Bank encourages eBay to reconsider its policies in this area.
Finally, the Board has been assured that eBay and PayPal’s current ‘no discouragement’ rules do not prevent sellers from expressing a preference for an alternative payment system. It will re-examine this issue if it becomes apparent that the ‘no discouragement’ policies are being implemented in such a way as to prevent sellers from exercising choice.
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