Germany’s FOC regulator stated that PayPal’s users of terms are causing a possible hindrance to its competitors which has led to an investigation.
Payments giant PayPal could be in trouble as Germany’s antitrust watchdog launched an investigation into PayPal in order to examine whether the US online payment giant was using its position to restrict competition in the market.
Investigation into PayPal
Germany’s Federal Cartel Office (FCO) also noted that they would examine if the conditions set out in PayPal’s terms of use constitute a possible “hindrance of competitors and restriction of price competition”.
FCO noted that PayPal is the leading payment service in Germany but also the most expensive in the region. Speaking on the development, FCO president Andreas Mundt said:
“We will now examine what market power PayPal has and to what extent online retailers are dependent on offering PayPal as a payment method”.
Currently, the charges paid by sellers to use PayPal’s service start at 2.49 percent of the payment in addition to 0.35 euros per transaction. The FCO stated that traders aren’t allowed to offer their goods and services at lower prices if the customers choose a cheaper payment service. Besides, the traders cannot even express a preference for payment methods other than PayPal.
The FCO noted that this prevents rival services from entering the market while keeping the surcharges higher. Mundt added that such a situation keeps the customers at the receiving end because “ultimately they pay for these higher fees indirectly through the product price.”
The new legislation that arrived in 2021 gave Germany’s antitrust watchdog FCO sweeping powers for taking action against tech companies that are suspected of abusing their dominant market positions. As a result, the FCO has already opened proceedings against tech giants like Amazon, Google, and Facebook.
PayPal and Crypto
During the crypto bull run of 2020-21, PayPal made its entry into the crypto space allowing users to buy and sell digital assets on the platform. Last month in December 2022, PayPal launched its crypto offering in Luxembourg making a push in the European Union.
Furthermore, PayPal is also looking to expand its crypto services in the market. In October 2022, the payments service provider started allowing its users to swap Bitcoin from the PayPal wallet to other digital wallets.
However, as PayPal continues to make a move in the crypto space, it has to keep in tune with the growing regulatory scrutiny in the sector.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
