Enraged users are accusing eBay of anti-competitive profiteering after it announced PayPal would be the only payment option for online auctions from mid-June.
In a move that is remarkably similar to Microsoft's efforts in the 90s to force users of Windows to use only Internet Explorer, eBay has announced Australian shoppers must now pay through its payment service, PayPal.
Under the changes announced today, all listings on ebay.com.au from May 21 will be required to offer PayPal (the online quasi-banking service owned and operated by eBay) as a payment option, and from June 17 only PayPal and cash payment on collection will be permitted. Bank deposits, postal orders, cheques -- and any payment service not provided by eBay (such as PayMate and Google Checkout) will be completely banned.
The only exception eBay will make to this new rule is the sale of houses, vehicles and businesses.
"Essentially eBay is no longer willing to stand aside and allow payment methods that are less safe for consumers," eBay trust and safety director Alastair MacGibbon told APC. He anticipates that the change won't be noticed by many sellers and buyers: "Most people already use PayPal on eBay. Most listings have PayPal on them." Users who don't want to register for a PayPal account will be able to make one-time payments via Mastercard or Visa through the service, but sellers must all have PayPal accounts to receive payments.
There are currently 5 million Australians with PayPal accounts, but many sellers baulk at using the service because of the transaction fees involved in accepting payments (buyers don't pay to use the service to make payments).
Many sellers feel powerless with PayPal's bloody-minded focus on protecting buyers at all expense. Buyers can cancel their payment through PayPal simply by saying they never received the goods -- even if they did. "Half my PayPal funds go in chargebacks . . . which is why I no longer take PayPal," one seller wrote on eBay's discussion board today.
"There will be a vocal minority that may not understand the changes and may not appreciate the changes," MacGibbon conceded, but he insisted the switch would be beneficial for everybody: "If it's good for a person buying online, then it's good for a seller, and ultimately it's good for eBay."
eBay is heavily promoting the change as a safety measure. Its internal figures show that items paid for via bank deposits (the most widely used alternate electronic method) are four times more likely to result in disputes than items paid for via PayPal. But even if physical methods are risky, why not also offer the choice of using other electronic payment methods?
"I can only go with the numbers we've got. Clearly you have less chance of a problem if you pay with PayPal. eBay and PayPal share an enormous amount of data on fraud and other activities. By creating that closed loop system, that increases the level of safety."
Asked if that was a tad disingenuous given that Google Checkout is already blocked and thus wouldn't show up in any safety figures, MacGibbon countered: "Google and eBay don't share information about where the payment is going. Information shared on fraud is very, very important."
Of course, it has nothing to do with the fact that eBay takes a cut of every PayPal payment, effectively boosting its share of the money made on each online auction.
Given that eBay will now attract listing fees, final value fees, and PayPal fees which encompass both sale price and postage, many sellers are likely to see the move as naked profiteering. That's a narrow view, MacGibbon argued.
"This is directly addressing issues, real or perceived, that Australian buyers have. eBay clearly needs sellers to be successful and I would ask sellers to think about that. I would sincerely hope that those sellers see that this is an initiative to make buyers more confident."
The changes will also impact international listings accessed from the site: if a US item offers payment by postal order, for example, that won't be available as an option for Australian buyers, MacGibbon said.
"You are total scum"
While PayPal will increase the value of its buyer protection scheme from $3,000 to $20,000 at the same time, that may not be enough to calm an angry reaction from sellers. Sellers on eBay's discussion boards reacted savagely to the announcement, their anger further fuelled by the fact that several media outlets broke the story ahead of its official announcement on the site.
"I had not thought it was possible for eBay to behave in a more disgusting way than they already do but they have succeeded," one poster wrote. "Congratulations eBay, you are total scum." Sellers are already fuming about forthcoming changes to eBay's feedback system which will no longer allow negative feedback about buyers.
Some eBay sellers suggested on discussion boards that the change would make them quit the site. "I could not say how this will actually affect the company in the short-term," MacGibbon said. Past suggestions of boycotting eBay have tended to falter because of the lack of alternative outlets with sufficiently large traffic volumes to attract buyers.
MacGibbon said there was no current plan to copy the PayPal move in other countries, but didn't dismiss the possibility outright. "This is an Australian initiative, but eBay does clearly look at what works in markets and what doesn't." He dismissed suggestions that sellers would soon only be allowed to pay listing and transaction fees via PayPal: "I know of no such plans."
On the eBay discussion boards, some sellers suggested that it would be possible to mention alternate payment options in listings, even if these were not part of the formal checkout process. MacGibbon said that any such listings would be swiftly removed.
"eBay will enforce these provisions, because these provisions are there to protect consumers. We'd encourage people to click on the report this item button if they encounter it. If I was a consumer and I saw a person asking me to pay in a way that wasn't endorsed by the site, I would think they were a fraudster."