German competition authority to probe PayPal fees

Germany's Federal Cartel Office announced on Monday that it has launched proceedings against the online payment service PayPal on suspicion of obstructing competition and restricting competitive pricing, reported dpa.

The reason behind the move is PayPal's user conditions for premium payments and how PayPal is presented, the office said from its Bonn headquarters.

"These clauses could restrict competition and could represent an infringement of the ban on misuse," cartel office president Andreas Mundt said.

Consumers could be paying higher prices for the service indirectly through higher prices for products, he said. The office would now investigate PayPal's market power and the extent to which online traders were reliant on the payment service.

More specifically, the cartel alleges that PayPal bans traders from offering their goods and services at lower prices to customers using a payment service that is cheaper than PayPal's.

They are also banned from indicating a preference for a payment service other than that offered by PayPal and from easing their use for customers.

"If traders are prevented from taking into account the different costs of different payment methods or corresponding premiums or discounts, then other and new payment methods cannot confront the price and quality competition or not come onto the market at all," Mundt said.

There are considerable differences in the fees for online payment services in Germany, with traders passing them on to the customer. PayPal is not only the leading provider in the sector in Germany, but also one of the most expensive.