Imagine that you’re Alice, proud owner of the new shoe shop at your local Westfield. Bob is buying a pair of brogues. As Bob opens his wallet, suddenly Frank Lowy appears. “There’s some terrible con-men around,” he intones gravely. “Let me handle that.” He grabs Bob’s cash and pockets a fiver. “I’ll give you the rest next Wednesday,” he says, and disappears.

Alice, understandably, is mightily p-ssed off.

Sellers on eBay have been mightily p-ssed off overnight too, because the world’s biggest online marketplace has just pulled the same stunt. From 21 May, all eBay sellers must offer PayPal as a payment method. And from 17 June — unless the buyer is physically collecting the item from you or for a few big-ticket categories like real estate and motor vehicles — they must pay you via PayPal.

eBay owns PayPal. So apart from their fee for handling the sale, they’ll now also get a PayPal transaction fee. Meanwhile you don’t get your money for days. Unlike an overnight bank transfer, moving funds from PayPal to your bank takes 5 to 7 working days — despite being more expensive. You could leave the funds with PayPal, but you don’t get paid interest.

Now PayPal isn’t necessarily evil. Indeed, for small businesses setting up an online presence, it is often the most cost-effective way to accept credit card payments, and the easiest to set up technically. But clearly there’s a big question here about anti-competitive behaviour.

PayPal also has a poor reputation for dispute-handling. The internet is littered with stories about people’s accounts being frozen without warning, about consumer credit rights being ignored because PayPal claims its terms of service override them — at paypalsucks.com and here for starters.

eBay is spinning this as being “for your protection”. Their announcement uses words based on “safe” six times, “protect” 12 times, and “secure” twice. But then bullies demanding a percentage of your business takings has always been called a protection racket.

Requiring customers to use other services which you own? ACCC, are you watching?

Maybe this anti-competitive change by eBay is just the leg-up that Australian online auction house OZtion needs.

Stilgherrian blogs at stilgherrian.com

Get more Crikey, for less

It’s more than a newsletter. It’s where readers expect more – fearless journalism from a truly independent perspective. We don’t pander to anyone’s party biases. We question everything, explore the uncomfortable and dig deeper.

Join us this week for 50% off a year of Crikey.

Peter Fray
Peter Fray
Editor-in-chief of Crikey
50% off