Angus Kidman07 July 2008, 1:26 PM
The public might have had a win against eBay about banning all payment methods other than PayPal, but don't expect eBay to back down completely, tail between legs.
The ACCC might have blocked eBay Australia's plans to make PayPal the only accepted payment method, but eBay sellers who now want eBay to remove the requirement to include PayPal as an option on all listings are quite possibly barking up the wrong tree, while there is a change they should be actively pushing for instead.
Perhaps flushed with a sense of victory over eBay's backdown from the plan last week, many sellers are now arguing that eBay shouldn't be able to make including PayPal as one of the payment options on all listings as a requirement. This policy came into effect as stage 1 of eBay's plan on May 21 (and has been a requirement for all newly-registered sellers since January 2007).
While stage 2 has effectively been abandoned, eBay has been very clear that the stage 1 element will remain. "Although we have decided not to move ahead with the further planned changes, eBay is pleased that all buyers can now choose PayPal along with other permitted payment methods of their choice," its backdown notice said .
In recent media interviews, local VP Simon Smith has appeared to suggest that the ACCC has effectively endorsed the stage 1 policy. That in turn has led to a new round of complaints to the ACCC, asking it to make eBay remove the "include PayPal in all listings" requirement.
However, random comments in a media interview do not ACCC policy make. A closer examination of the ACCC policy suggests that there's a subtle difference between forcing use of a single payment method, and requiring that sellers include one payment method along with others of their choosing.
What actually matters
Much of the confusion arises because by the time the ACCC issued its draft determination on June 12, eBay had already introduced the requirement that PayPal be an option on all listings. While the ACCC asked eBay not to pursue the second stage of the policy, it never offered any specific opinion on stage 1.
eBay's original request for authorisation for exemption from competition law did include both elements of the plan. However, the requirement that new sellers offer PayPal on their listings has now been in place for 18 months, and hadn't attracted any previous legal attention.
The crux of the issue is in the statutory test which the ACCC has to apply when assessing anti-competitive behaviour, and in particular the concept of "exclusive dealing". As its draft notice on eBay explains:
"The practice of exclusive dealing includes the supply of goods or services on condition that the purchaser will not acquire, or will limit the acquisition of goods or services from a competitor of the supplier, where the condition has the purpose, effect or likely effect of substantially lessening competition."
Making people only use PayPal would clearly satisfy the "will not acquire" clause, and has now been abandoned. The current argument essentially centres over whether having a policy that PayPal must be included would "limit the acquisition of goods or services from a competitor".
Sellers who don't want to have to include PayPal on listings have argued that the prominence of PayPal in payment screens means that the likelihood of a non-PayPal option being chosen is indeed limited. However, there remains a difference between not allowing someone to use alternative methods, and making some methods more visible than others. The ACCC doesn't stop stores displaying signage promoting the use of particular credit cards; why would it choose to block the promotion of PayPal if other options are made available?
Better alternatives
Where eBay might still be getting itself into hot water is by routinely pulling listings which specify a preferred method of payment. Introduced on November 16 2007, its "misleading and discouraging payments" policy blocks promotion of a particular method in a listing over alternatives, or specifying that only certain payment methods can be used by certain groups of customers (such as international buyers) . The policy has been routinely enforced on sellers who try to impose any conditions on the use of PayPal. It wouldn't be too cynical to assume that this policy was introduced in anticipation of pushing PayPal onto all buyers — and as such, it may attract the ACCC's attention when assessing the remaining policy.
The other area where eBay might be forced to modify its policies is in not allowing sellers to pass on the charges that are imposed by PayPal to buyers. In its submission to the ACCC, the Reserve Bank noted that eBay not allowing sellers to pass on these fees minimised the ability for merchants to exert competitive pressures on those fees, and that similar arrangements with credit cards had ultimately been banned.
Rather than trying to get PayPal banned altogether, sellers might do better to push for happily offering PayPal, but letting its real cost be reflected for buyers via a surcharge, who could then make their own choice about security versus cost tradeoffs. That is a scenario the ACCC has very much favoured: "The ACCC believes that consumers are in the best position to decide which payment method is most suitable for them." Maximising choice, but making the cost of that choice clear, seems the best way forward.