The ACCC has signaled today that it is likely to challenge eBay Australia’s move to require PayPal to be the exclusive payments mechanism for online transactions (well, other than cash).
“Given eBay’s position as Australia’s leading online marketplace, the notified conduct will substantially reduce competition to supply online payment services to users of online marketplaces more generally.
“The ACCC acknowledges that having PayPal as the only payment provider has the potential to deliver some benefits to users, such as increased buyer protection insurance in certain circumstances. However, the ACCC believes that consumers are in the best position to decide which payment method is most suitable for them.
So let understand this. There apparently is a market for online marketplaces (or trading) that eBay has market power in (OK, fair enough for the moment). But there is another market for the supply of online payment services to users of online marketplaces. It is that market that there will be some reduction in competition in as a result of this. The idea is that if you want to supply online payment services to people trading in an online market place, you are left with other options other than eBay. If that isn’t enough, you are foreclosed.
But are there such things as suppliers of online payment services purely to online market places. Not even PayPal is this. There is BPay, credit cards, bank deposits, cheques and all of the other things that were available to eBay users up until this latest move. And are any one of these going to leave the market for online payment services for online marketplaces (other than eBay) if they can’t be used for eBay? Surely, each is earning their fees from the wealth of other activities both online and in the economy at large. Seems very unlikely that exit will occur but maybe there is some information I do not have.
What is more, the ACCC seems to be stepping in to say that consumers need choice and can exercise that choice and so that is why eBay’s action is anti-competitive. As I noted earlier, I believe that it is for this reason that eBay is stupid. But is it really up to the ACCC to determine that? After all, if there are no competition issues, if eBay think that is what their customers want isn’t eBay both in a good position and also appropriately incentivised to make that determination?