Germany’s Federal Cartel Office says PayPal’s ban on merchant surcharges may curb competition among payment providers, a concern that could affect both sellers’ pricing choices and the costs shoppers ultimately share.
The authority’s assessment is preliminary. Under PayPal’s terms, online sellers cannot add a separate fee when a shopper chooses the service at checkout. The office says the restriction may violate competition law, but no final decision has been made and PayPal can respond during the proceeding.
The office says PayPal charges merchants above-average fees compared with other payment methods. In its view, when checkout prices stay the same across payment methods, shoppers have less reason to select a lower-cost service. That may make it harder for competing providers to win business and weaken pressure on PayPal’s merchant fees.
The authority also says merchants may account for PayPal’s higher costs in the prices of goods. If sellers cannot reflect the difference only in transactions made with PayPal, customers who use other payment methods could still bear some of that expense.
The office is considering whether PayPal may have obtained economic benefits from the practice and could be required to give them up. PayPal said it disagrees with the preliminary assessment and will continue engaging constructively with the authority.
The proceeding opened Jan. 23, 2023, with a review of PayPal’s surcharge rules and how merchants present payment options. The current assessment focuses on how checkout rules may affect shoppers’ choices and competition over merchant fees. PayPal can submit its position as the authority continues its review.
