The German competition watchdog has announced antitrust investigations against PayPal.
In a statement on Monday (Jan. 23), the Bundeskartellamt (BKartA) said it is probing the payment company over potentially anticompetitive terms in its user agreement applicable in Germany.
Under PayPal’s terms, BKartA said that merchants aren’t allowed to offer their goods and services at lower prices if customers choose to use a payment method that is cheaper than PayPal.
The global payment firm uses such clauses in many markets as a way to prevent businesses from incentivizing consumers to use alternative payment methods. But in Monday’s statement, Andreas Mundt, president of BKartA, spoke against the practice,
“These clauses might restrict competition and violate the prohibition of abuse of a dominant position,” Mundt said.
The release also pointed to provisions in PayPal’s terms of use that prohibit sellers from expressing a preference for payment methods other than PayPal or from favoring other methods by, for example, making their use more convenient.
“[BKartA] will now assess the extent of PayPal’s market power and in how far online sellers depend on offering PayPal as a payment method,” Mundt said. “If merchants are prevented from taking into account the differences in costs of various payment methods by imposing surcharges or granting discounts, it is more difficult for other and new payment schemes to compete successfully in terms of price and quality or to enter the market in the first place.”
BKartA noted that PayPal is not only the leading online payment scheme in Germany but also one of the most expensive. It adds that PayPal’s standard rate in Germany currently amounts to 2.49%-2.99% of the payment amount plus 34-39 cents per payment.
The antitrust regulator’s observation that German consumers have an affinity for PayPal is concordant with the findings of a PYMNTS report, “Benchmarking the World’s Digital Transformation.”
That report found that PayPal accounts for 37% of all online transactions in Germany, which it notes is also “the most digital wallet-centric” nation of those studied, with 44% of all domestic online transactions using digital wallets and 84% using PayPal.
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