eBay has been in legal hot water in Australia regarding a move to make their auctions PayPal and COD only. The move has been widely unpopular and billed by many as uncompetitive and unfair. The response was such that it drew the ire of the Australian public, the Australian Competition and Consumer Commission (ACCC) and so too it would seem, from a major potential player in the online transaction world.
eBay claims that the reason for the switch in payment options in Australia is to protect consumers from fraud and that the transaction security that PayPal offers is superior to other alternatives. Consumers argue that the security of Australian banks in online banking transactions is ample and that the real motivation of eBay is to draw extra fees. Up until now, eBay users had been able to accept credit card payments, direct debits, money orders and checks.
eBay took a number of steps to ensure that the transition to a PayPal / COD only eBay Australia went without a hitch, including applying for immunity from prosecution under the Trade Practices Act. In doing so, they were announcing their intentions to the Australian public and opening themselves to criticism from anyone who cared to make their objections known. The ACCC announced a call for submissions from interested parties regarding eBay’s move and amongst them was a highly critical anonymous 38-page document [2.5MB PDF].
Submissions to the ACCC become public domain, but people or businesses that make them can choose to remain anonymous, which is what the author of this document chose to do. It would be fair to say that the criticism contained in the document is shared by a great deal of Australian businesses that use eBay; especially those that have an international business model. In such cases they are forced into using PayPal and are hit with a slew of charges including cross-borders payment, a 3% rip from the exchange rate and the regular eBay charges which are not exactly cheap.
The document delved deeply into eBay’s motivations behind the plan and suggested that although COD will be acceptable, it is not a viable form of payment in most online transactions, a red herring if you will.
Increase in costs to eBay sellers and buyers
PayPal’s charges are higher than those of most other providers of online payment processing services and alternative offline payment methods. The Proposed Conduct will force all eBay sellers to purchase the services of PayPal[30], thereby causing an immediate increase in costs to those eBay sellers who currently use competing online payment processing services or an alternative offline payment method.
[30] While eBay suggests it will continue to permit eBay sellers to offer cash on delivery/pick up as an alternative payment method, cash on delivery/pick up is simply not an option for online buyers and/or online sellers in the vast majority of online transactions. Accordingly, the cash on delivery option is not likely to be a competitive constraint on PayPal in future.
As most of the documents that were submitted to the ACCC were written by regular consumers and small business owners, the 38-page monster stood out somewhat; which is perhaps what got David Bromage, who is described as” a disgruntled eBay user and model train enthusiast from Canberra” thinking. He checked the properties of the PDF and found to his surprise that it had been authored by none other than Google. It seems that some jackass had forgotten to strip the sensitive metadata from the Word Document before submission.
Why did Google decide to remain anonymous? Perhaps they were wary of appearing openly hostile towards eBay. They certainly have an interest in keeping eBay down, but whatever their motivations, their argument holds water. The ACCC has yet to make their final decision, but the wave of public dissent in the wake of eBay’s announcement could be a sign of ill portent for the auction company. [The Age]
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Tags: ebay, Op-Ed, paypal, trade
2 responses
May 31, 2008 at 7:29 pm
Instead of concentrating on ebay and their greedy bullying of the australian sellers by forcing Paypal upon them - why is everyone focusing on Google’s anonymous submission? Makes little sense to me - AND it dulls the sharpness of the story that needs be told! Australia today…the rest of the countries tomorrow! There is NO end to ebay’s greed. It has reached an all time high! What Ebay has done since Donahoe took office is SO utterly offensive it defies description. The only thing laughable about the whole matter is the stupid weak excuses given for their actions. Yeah…paypal is safe - my A….!!!!! Please…stick to the facts. Nobody really cares that Google was too gutless to come forward and speak up. They need to search their own site under “backbone” and purchase one!
10 year Ebay seller!
http://www.ACEOart.net
Jun 2, 2008 at 6:47 am
Ebay Inc. appears mostly to be doing this for Profit Reasons if you connect a few dots.
Of the English speaking countries out there, Australians used PayPal probably the least by far.
In the states it is like 85% with UK slightly less than that. In OZ it is something like 50%.
So it is a tad coincidental that OZ is the first test site to impose this force PayPal in-effect Only rule (how many people do COD, 0.5-1%?).
To see much better why eBay Australia is forcing the other 50% of Ozzies who don’t currently use PayPal, please check out this new eBay & PayPal Profit & Fee Calculator here:
http://pheebay.com/1/?eBayALTERNATIVESPheeCalculator
This calculator breaks down the profit eBay and it’s 100% owned subsidiary PayPal makes on an eBay+PayPal transaction. Try it and you will see that PayPal’s part is often 3-10%, with 5%, maybe 6% being more common.
So if eBay can make 5% more per thousands of transactions per week, it will generate quite a nice windfall for them.
Lastly, a key part of the calculator is (if used over time) to help eBay Sellers to increase their profitability by showing them which items make them more profit and which items are not worth listing or purchasing because eBay+PayPal makes just too much. And it also Shows Alternatives sites like OZtion fees side-by-side too.
If you view the new Calculator helpful, please let others know about it.
Thanks.
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