eBay Australia isn’t making friends by requiring its sellers to use eBay-owned PayPal to receive their money. No direct bank deposits, no cheques, no money orders. Crikey pondered last Friday that it seemed a tad anti-competitive. Now the ACCC is investigating.

While PayPal certainly does the job, sellers don’t like the extra transaction fees of 1.1% to 2.4%, nor the five to seven working days it takes to access your money. If a transaction might be “risky” (PayPal’s call), they can freeze it for 21 days. During this time, says their PDS, “Any money in your PayPal account will be pooled with money from other holders of PayPal Accounts and deposited by PayPal with a licensed bank.”

In other words, PayPal banks your money and earns interest. You don’t.

According to a CNN report, US PayPal users can keep their account balances in a Money Market Account — provided they remember to opt in. Australians don’t have the choice.

eBay doesn’t report PayPal’s earnings separately. However in 2007, PayPal generated $1.8 billion in global revenue. EBay’s total 2007 revenue was $7.7 billion.

Thousands of angry eBay Australia sellers have petitioned against the move. eBay’s forums were flooded with so many comments that they were moved to a dedicated discussion board.

Some comments have been deleted, presumably for violating forum rules. Some sellers have been warned off making negative comments. But thousands remain — threatening legal action, boycotts, protests or just going ahead and offering other payment methods anyway. eBay’s response to that last suggestion is bullying: “We can remove the listing or even suspend the seller.”

The ACCC says that eBay must prove that the public benefit from this move outweighs the detriment of what could be a breach of the “third line forcing” provisions of the Trade Practices Act. eBay has requested immunity from legal action. The ACCC is accepting public comments until 2 May.

One payment option being forced out is Paymate, ironically created by eBay Australia but sidelined when its US parent bought PayPal. CEO Dilip Rao isn’t impressed: “eBay have presented no data to show that Paymate is a less safe way to buy or a less reliable way to sell on eBay compared to PayPal.”

eBay is burning bucketloads of goodwill here. So far their response is to tough it out. But any online business can be replicated with a few programmers, and goodwill is your only real asset.

Stilgherrian blogs at stilgherrian.com.

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