Stilgherrian » ebay

Crikey: eBay Australia: Who? Us? Anti-competitive?

Stilgherrian — Fri, 30 May 2008 05:43:07 +0000

[This was me in Crikey yesterday.]

Thank the gods I don’t work for the ACCC! The poor sods have to read 700+ public submissions on eBay Australia’s plan to force sellers to use PayPal — which they own. As Crikey reported, this could breach the “third line forcing” provisions of the Trade Practices Act.

Being a lazy geek rather than a tireless public servant, though, I can skim for juicy tidbits. They reveal a widespread fear of eBay bullying.

Greg Walter, for instance, runs online payment system Qpay. He dismisses eBay’s claims that PayPal is the safest and, wearing my moth-eaten network security hat, I tend to agree. But eBay sellers often fear being cut off if they use PayPal’s competitor: Qpay has just one solitary eBay seller as a customer.

Bully or not, eBay is unquestionably Australia’s biggest online-only marketplace. With almost 6 million customers it dwarfs its nearest competitor Oztion with barely 250,000. New entrants BidSell and eSwap are even tinier.

Oztion saw a 22% rise in numbers following eBay’s PayPal-only announcement — proof, says eBay, that there’s genuine competition. But Philip Leahy of the Professional eBay Sellers Alliance reckons Oztion won’t last. It’s an “eBay clone”, he told the ACCC, and there’s “a belief” that once they get a bigger market share eBay will sue them into oblivion. Paranoia?

Even the Reserve Bank has weighed in. Requiring PayPal could make it harder for new online payment systems to establish themselves, restrict merchants’ ability to negotiate lower fees, and restrict consumer choice. Reading between the lines, the central bank sees its role as ensuring that money flows smoothly through the economy. Delays and fees are friction in the pipes which must be engineered out. Computers and network efficiencies should cause transactions costs to fall. eBay’s plan causes them to rise. Markets FAIL.

eBay’s 15-page response omits mentioning their claimed $2.6 billion contribution to the Australian economy. Instead it’s all harmless little eBay. “eBay transactions comprise only [redacted by ACCC] of all online retail transactions in Australia. Given that online retail transactions themselves represent only a part of the online payments market, eBay’s contribution must necessarily be considerably smaller than that.””

The ACCC’s decision will be known mid-June, just before eBay’s planned 17 June start of the PayPal-only regime.

Stilgherrian blogs at stilgherrian.com and is still trying to sell his old crap on eBay.

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eBay responds to 700+ submissions to ACCC

Stilgherrian — Tue, 27 May 2008 23:00:10 +0000

When the Australian Competition and Consumer Commission (ACCC) decided to investigate eBay Australia’s plan to force its sellers to use PayPal for their “protection”, there were more than 700 public submissions. eBay has responded by dismissing the objections.

I’ve written about this at length previously, both here and in Crikey [1, 2], with plenty of interesting comments from readers. And I’ve just written a piece for Crikey today, to be published around 2pm Sydney time.

Meanwhile, you can read some overview pieces at Auction Bytes and The Sheet. And you can see eBay’s full 15-page response at the ACCC website: it’s the second submission on the page, from “Applicant”.

To make things just that little bit more interesting, yesterday Telstra’s Sensis division announced a free auction site at Trading Post.

[Update 1250pm: The story will now run in Crikey tomorrow (Thursday). Busy news day, apparently.]

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Am I a hypocrite for using PayPal?

Stilgherrian — Wed, 07 May 2008 22:51:13 +0000

Given what I’ve written about eBay Australia and PayPal recently, is it hypocritical to have added a “donate” button to my website which works through PayPal? I don’t think so. After all, I did say that for small businesses setting up online, PayPal is “often the most cost-effective way to accept credit card payments, and the easiest to set up technically”. And it is. I got that “donate” button set up in 10 minutes. The gripe was about eBay forcing its sellers to use PayPal, which they own. What do you think?

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eBay/PayPal discussions continue

Stilgherrian — Sat, 26 Apr 2008 03:33:23 +0000

If you don’t follow the comments feed, you’re missing a lengthy discussion evolving from my piece about eBay forcing sellers to use PayPal. Maybe they took my admonition to fight amongst yourselves yesterday a little too literally.

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eBay Australia making even fewer friends over forced PayPal

Stilgherrian — Wed, 23 Apr 2008 02:17:36 +0000

eBay Australia isn’t exactly making friends by requiring its sellers to use eBay-owned PayPal to receive their money. No more direct bank deposits, cheques, money orders or your own card merchant account. I’ve written about this twice for Crikey [1, 2], but today there’s more news: the Reserve Bank might weigh in against eBay.

Here’s how I first described the scenario:

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 pissed off.

Sellers on eBay have been mightily pissed 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.

Now as Alex Willemyns pointed out, Alice could just set up shop elsewhere. Bob could choose another shoe store. However since Westfield and eBay both dominate their respective markets, that could well be a poorer choice.

The ACCC has also pointed out 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.

Today’s Reserve Bank angle is interesting. As The Age reports:

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 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.

Reading between the lines — and without doing any further research on the point — it seems to me that the Reserve Bank sees its role as ensuring the money flows as smoothly as possible. Delays and fees are friction in the pipes which need to be engineered out.

Computers and network efficiencies should cause the cost of transactions to go down. eBay’s move causes them to go up. Market FAIL.

Now PayPal isn’t necessarily evil. Indeed, for small businesses setting up an online presence, they’re often the most cost-effective way to accept credit card payments, and the easiest to set up technically.

But delays and fees are certainly the problem. eBay sellers don’t like PayPal’s extra transaction fees of 1.1 to 2.4%, nor the 5 to 7 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 Product Disclosure Statement, “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.

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 their terms of service over-ride them — at paypalsucks.com and screw-paypal.com and here for starters.

eBay is spinning this as being “for your protection”. Their announcement uses words based on “safe” 6 times, “protect” 12 times, and “secure” twice. But then bullies demanding a percentage of your business takings has always been called a protection racket.

The CEO of PayPal competitor Paymate, Dilip Rao, isn’t impressed with the security spin either. “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,” he says. Ironically, Paymate was created by eBay Australia but sidelined when its US parent bought 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.

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I have not disappeared

Stilgherrian — Thu, 17 Apr 2008 02:24:38 +0000

No, there is no technical error. I really haven’t posted anything since Monday. Been otherwise occupied. I intend to fix that this afternoon with a mashup of my recent Crikey pieces about eBay Australia forcing its sellers to use PayPal — which they own. Meanwhile if you’re desperate for your daily dose of Stilgherrian, you could always follow my Twitter feed.

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eBay requiring sellers to use PayPal

Stilgherrian — Fri, 11 Apr 2008 01:54:32 +0000

Anti-competitive behaviour news story of the day: With a few minor exceptions, eBay will require all payments to be made via PayPal — which they own. I’ve just written a piece for Crikey, ~~which will appear around 2pm Sydney time~~ which is now online.

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3-year-old buys car on Internet

Stilgherrian — Tue, 26 Sep 2006 08:47:56 +0000

Forget identity theft, your bank account could be at risk from your own web-surfing toddlers.

News from the BBC today that 3-year-old Jack Neal used his mother’s credit card to buy a £9000 pink Nissan from eBay.

“Rachael Neal, 36, said her son was quite good at using the computer, the BBC reports. Well, yes.

The seller of the car, Paul Jones, co-director of Worcester Road Motors in Stourport-on-Severn, near Kidderminster, Worcestershire, said he had been “amused” by the bid. It’s the first time they’ve sold a car on eBay.

He saw the funny side of the event, and has re-advertised the car.