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Ebay Backs Down over PayPal
Posted under Latest News by Adam Guerin
It’s not often that “the little guy” has a win against a global giant. Everynow and then however, it does happen, and it’s great to write about it when it does.
Australian Ebay sellers were rejoicing over the weekend as the giant online auction site Ebay decided to back down against plans it had to force them to use PayPal.
The decision from Ebay came as the Australian Competition and Consumer Commission (ACCC) was about to make “a decision” for them anyway (suspected to go in favour of the sellers.
PayPal is owned by Ebay, and Ebay thought it would be a good idea if it forced all of it’s sellers to use it’s service exclusively on Ebay. This would prevent sellers from acceptin credit cards or direct bank transfers, which means Ebay lose out on a transaction fee.
Ebay claims however that it was for security and safety though, that all transactions go through their PayPal service which offers refunds in the event of fraud (but wait, don’t all Credit Cards do that anyway? *cough*).
However one thing that EBay is not backing down on is forcing sellers to offer PayPal as a payment option - you can still pay by credit card directly but you MUST offer PayPal as an alternative payment option.
What a lot of people don’t realise is that PayPal takes a huge cut from the sellers end. Upto 20% at times. Not only that but Ebay also takes a nice little cut (also upto 20%).
It’s not clear what the final result will be in this saga, but the ACCC has agreed to suspend it’s current investigation after Ebays announcement.
We’ll be watching.
I’ve sold things before on Ebay and they take a huge cut (it depends on volume and prices). I never realised they owned PayPal aswell - always thought it was a secure third party service!
PayPal is actually a good service, but I agree, forcing users to use it exclusively was just plain wrong.
A friend of mine runs an e-commerce site and they have stopped using PayPal becuase the % they take it a lot. They have actually found it cheaper to set up their own secure payment system using a payment provider and their bank.
We sell a LOT of stuff on Ebay - around $5k per month. Ebay takes upto 25% of it just in fees - it’s crazy. PayPal then takes a cut of the transaction cost.
At the end of the day though, the user is paying for it. We just have to add the costs and fees on top of the prices - which means its harder for us to stay competitive as people expect stuff on Ebay to be cheap.
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