Too much market power now the Cartel Office takes on the PayPal payment service

The online payment service PayPal is very well-liked in Germany because it is easy, quick, and convenient. He is the top supplier in this market, according to numerous studies.

The Federal Cartel Office believes Paypal is using its position as the favorite to impede rivals and maintain high prices, which is a potential drawback of the strong position. The European company with its headquarters in Luxembourg is now the subject of legal action that was started on Monday by the Bonn competition authority.

Two terms of use from the German terms of service are specifically discussed. In accordance with its "rules on surcharges," the payment service forbids affiliated trading companies from offering discounts on goods and services if customers opt for a less expensive payment option than Paypal.

Similar measures have already been taken by the Cartel Office against other online retailers like Booking.com who are attempting to secure the lowest prices for themselves. Additionally, the competition watchdogs do not want to accept that PayPal prevents retailers from expressing preferences for other payment options or from making them easier for customers to use.

High fees? "These clauses may limit competition and constitute an abuse of the prohibition against abuse," warned Cartel Office President Andreas Mundt. Other payment methods would be displaced or even prevented from entering the market if merchants were prohibited from accounting for the various costs of various payment methods through surcharges or discounts.

Consumers would then suffer in particular because they are ultimately responsible for covering these higher costs through product prices, according to Mundt. At first, it took a while for PayPal to respond.

In US premarket trading, Paypal shares decreased by more than 2%, though this decline may also be a result of news of a new competing product. The Cartel Office will now investigate more closely how much online merchants' ability to accept PayPal as a payment method is reliant on it as a payment option in the following step.

According to a Statista Global Consumer Survey analysis, which is cited on the website of the Händlerbund, an industry association of online retailers, online shoppers place a high value on PayPal. By a wide margin, PayPal was rated as the most popular payment option, beating out rivals like Klarna, Amazon Pay, and the payment services from Google and Apple.

The payment is free for consumers, but Paypal charges retailers heavily. According to investigations, the company is one of the most expensive online payment services, the cartel office. The standard fee in Germany is currently between two and two and a half and ninety percent of the total payment amount, as stated in the PayPal price list.

There would also be an additional 34 to 39 cents for each payment. These costs typically aren't broken out separately on the final customer invoice, unlike the shipping fees for the packages.

Utilizing the "classic" tools of competition law, the proceedings against Paypal are being conducted. There is no application of the special rules for the digital economy, which give the Cartel Office more rights and expedite the legal process.

These are applicable to Internet businesses that have "outstanding cross-market importance" for competition. Apple, Google, Amazon, and Facebook (Meta) are currently included in this category according to the Cartel Office.

There is no application of the special rules for the digital economy, which give the Cartel Office more rights and expedite the legal process.