Germany’s Bundeskartellamt (Federal Cartel Office) has started proceedings against PayPay, claiming the company could be restricting price competition.

Under PayPal’s current terms, merchants cannot offer their goods and services at a lower price if customers chose to use a payment method which is cheaper than PayPal.

According to the German regulator, merchants are prevented from expressing a preference for other payment methods, even if they are more convenient for customers. Consumers may also suffer as they are indirectly paying for higher costs via the price of products.

PayPal is one of the leading online payment schemes in Germany, but the Bundeskartellamt says it is one of the most expensive. PayPal’s standard rate in Germany is up to three per cent of the payment amount plus around 40 cents per payment.

Commenting on the news Andreas Mundt, president of the Bundeskartellamt, said that the Bundeskartellamt would assess the extent of PayPal’s market influence and see how far online sellers depend on the payment method.

He added: “If merchants are prevented from taking into account the differences in costs of various payment methods by imposing surcharges or granting discounts, it is more difficult for other and new payment schemes to compete successfully in terms of price and quality or to enter the market in the first place. Powerful payment schemes could thus obtain additional pricing leeway.”

FStech has contacted PayPal for comment.

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