Possible violation of EU rules: Cartel Office: Paypal could endanger competition

Millions of Germans use PayPal when shopping online. The payment provider is usually a bad option for merchants because it is comparatively expensive. Charging customers a higher fee for this reason is prohibited. That could now change.

According to the Federal Cartel Office's assessment, Paypal's fee practices could impermissibly restrict competition among online retailers. The office has published an assessment of this. The authority initiated proceedings in January 2023. The group prohibits retailers from charging a separate fee in the terms of use if customers want to pay with Paypal. The payment service provider is often comparatively expensive.

However, the ban would prevent retailers from taking this into account in their pricing. The Cartel Office suspects that retailers would therefore add fees to all payment methods. “PayPal does not share the Federal Cartel Office’s preliminary assessment,” said a spokesman for the company. The process will be supported constructively.

Cheaper providers have a hard time

“If merchants cannot take the different costs of payment methods into account when setting their prices, this could affect competition between payment services,” said Cartel Office chief Andreas Mundt. “Other, cheaper providers would then have a harder time asserting themselves against PayPal,” he added. And that then has consequences for consumers, who could face higher costs as a result of PayPal's practice.

"According to the Federal Cartel Office's preliminary assessment, the fee ban imposed by PayPal could affect competition in several respects," said the Cartel Office. The authority can now insist that PayPal stop the practice. It could also skim off an economic advantage gained through a possible violation of antitrust law. PayPal now has the opportunity to comment on the preliminary assessment.