[LINK] Age: 'Reserve Bank could scuttle eBay's plans'

[Roger Clarke]

Reserve Bank could scuttle eBay's plans
The Age
Asher Moses and Jacob Saulwick
April 22, 2008 - 2:00PM
http://www.theage.com.au/news/biztech/reserve-bank-could-scuttle-ebays-plans/2008/04/22/1208742915911.html

eBay's plan to force all of its users on to PayPal faces opposition 
from the Reserve Bank, which is considering weighing in to the issue.

The Central Bank has long called for buyers and sellers to have as 
much choice as possible in what payment systems they use and strongly 
opposes any moves that reduce competition in the market.

The Australian Competition and Consumer Commission is investigating 
whether eBay Australia's new policy of forcing all items to be paid 
for using PayPal, which eBay owns, or cash on delivery/pick-up, 
breaches trade practice and competition laws.

PayPal performs payment processing for online sellers, allowing them 
to accept credit card payments and money transfers without having 
their own merchant credit card accounts.

But the policy, to come into effect on June 17, will mean direct bank 
deposits, cheques and money orders will all be barred.

The move by the auction site is presently limited to Australia only 
and will hit sellers with extra fees because PayPal charges them a 
fee of between 1.1 and 2.4 per cent to accept payments - usually 
using credit cards - via the service.

Several groups have expressed concern that forcing eBay users on to 
PayPal, rather than giving them the choice of which payment method to 
use, would prevent the emergence of competitors to PayPal in the 
online payments market.

The ACCC is inviting submissions from the public on the issue until 
May 2. It is understood the Reserve Bank, which has in the past 
stated it would like more competition for payments over the internet 
rather than less, is now deciding whether to make a submission.

Strong opposition from the Central Bank would almost certainly 
scuttle eBay's plans. The auction site's global chief executive, John 
Donahoe, has said the PayPal policy will be rolled out in other 
countries if it is successful here.

The Professional eBay Sellers Alliance, which includes eBay's top 
sellers who generate hundreds of millions of dollars in sales on the 
site each year, strongly opposes the changes and plans to lead a 
worldwide revolt.

Alastair MacGibbon, eBay's trust and safety director, said the 
announcement was designed to protect users as one is four times less 
likely to have a problem on eBay if one pays using PayPal than with 
other methods.

The Reserve Bank has ruled out stepping back unconditionally from 
regulating the payments system, and remains concerned about the level 
of market power held by credit card companies.

The Reserve has expressed support for new methods of payment that 
could act as competition for international card schemes. New methods 
could give merchants and customers more choice about how they make 
and receive payments.

A 2006 speech by an Assistant Governor of the Central Bank, Philip 
Lowe, documented the growth of alternative payment schemes overseas 
that had not yet been adopted in Australia.

For example, a number of countries had adopted "online debit" schemes 
that allow customers to transfer money directly from their bank 
account to the merchant without needing to use a credit card or 
scheme debit card.

Research by the Reserve has found that credit card payments are more 
costly than EFTPOS and cash, due to the fees imposed, the higher risk 
of fraud. and the length of time it takes for shopkeepers to process 
the payments.


-- 
Roger Clarke                  http://www.anu.edu.au/people/Roger.Clarke/
			            
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Visiting Professor in Info Science & Eng  Australian National University
Visiting Professor in the eCommerce Program      University of Hong Kong
Visiting Professor in the Cyberspace Law & Policy Centre      Uni of NSW