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ebaY/PayPal Hurt Sellers

Auction Voice
9 August 2005

What you don't know can hurt you, after all (Authoršs Identity witheld at their request)
When I started using ebay, I didn't know alot about it, and I didn't care. I was a buyer, and I bought little things. Records, CDs, books, they were all cheap, and the sellers were, for the most part, reliable. I haven't been on ebay much more than a year, and in that time, my opinion of ebay and their business practices has changed quite a bit.

According to a 2002 editorial featured on The Auction Guild website, ebaY/PayPal Violates Trust: "TAG predicts that once ebaY owns PayPal, ebaY will require that all sellers who sell on ebaY must offer PayPal's payment services. Since ebaY has a virtual monopoly in the OAI/OTI, we feel this will be a disaster. ebaY will monopolize the auction and trading market and will now monopolize the online payment system. They will be able to increase prices at will (as they have done with their auction and trading services, despite quarter over quarter record breaking profits). Because of their dominance, they will be able to both require use of PayPal and be able to raise PayPal fees unrestrainedly. They could have attempted this with their own payment system, Billpoint, but TAG feels they would not have dared to do so because they would have had PayPal to contend with, as a lawsuit would have surely ensued. If ebaY owns PayPal, who will there be to challenge them?"

I wish I had known this sooner. ebay used to feel like a big yard sale, where I could come and find neat things, hard-to-find items, and good deals. Now I realize that in most markets, ebay is just a place for high-volume sellers to trounce competition and abuse ebay's poorly-enforced policies and abundant loopholes. And when an honest seller goes to put something on ebay, he or she is faced with a new, more invisble foe: the Paypal-ebay connection. Paypal and ebay should be working together, don't get me wrong. I appreciate the integration into ebay, as a matter of convenience. But why isn't there such integration for other methods of payment? Bidpay, for example, has been around just as long as Paypal, but if ebay discourages Bidpay, they increase ebayšs profits. ebay has been working dilligently to encourage only their form of payment, and has worked just as hard to discourage any other form of payment.

So one day, I started selling things. A buyer told me they wanted to buy an item and pay using a credit card, so I figured I may as well sign up for a "Premier" account. The account, at that time, only charged the "credit card fee" for transactions that actually involved a credit card. That made sense to me, and it's a small price to pay, I thought, for being able to accept a more widely used, more convenient form of payment. But sometime early this year (or thereabouts), Paypal slipped one under the radar and applied the transaction fee to all payments received by Premier accounts. So now, I pay fees on transactions that non-upgraded users would get for free. But to offer credit card payments, whether or not I ever receive one, I have to pay handsomely. Many buyers, in my experience, pay from bank accounts. This used to be free for sellers, and now we are charged fees upon fees upon fees.

When Paypal was bought out, I thought (naively) that maybe Paypal would split and we'd have Paypal-regular and a new Paypal-for-ebay, which would be free and simpler and integrated completely into ebay. Instead, we have just one Paypal, and that makes for a terrible conflict of interest. ebay should not be able to oversee, regulate, and secure transactions in this fashion. It's absolutely inappropriate, and it's costing us all money. They're nickel-and-diming us without restraint, while their Executives walk off with billions of pure profit every year, simply because they can.

And now they are forcing everyone to fall in line with these fees. They are phasing out the "free" account - all ebay sellers will be required to accept credit card payments. Sure, you might think this is fair, because they will tell you "we want all our buyers to have a fair shot at buying an item." But that's absolutely ridiculous. I sell an item, I want to be in charge of how I get paid for it. I've dealt with ebay and Paypal about disputes, on both ends. They aren't good at sorting it out. I want to have the freedom to choose the methods of payment I accept, whether it's a matter of security, convenience, or fees. Once they phase out the non-upgraded accounts, it's only a matter of time before ebay decides to require Paypal as a payment option.

ebay already uses its position as an auction site to promote Paypal as secure and convenient, while discouraging other forms of payment and payment methods. ebay isn't in it for us, this is absolutely self-serving. Sellers can choose to only accept Paypal, just like they could choose to only accept money orders, but Paypal-only sellers get to have special icons by their auctions and have special search filters that screen out their competition. Paypal is being forced on the ebay market, and regardless of whether it would be as popular if these tactics weren't promoting its use, it is absolutely unfair for ebay and Paypal to do this. They are actively, unnecessarily biasing the market towards a certain payment option, wherein they are continually raising fees to increase their profits even more.

So what next? Soon enough, Paypal will be required for all sellers, and then they'll slowly begin to restrict payment options until there's only one left. They've already cornered the online auction market, and with this unfair advantage, they will skim fees and percentages off the top of millions of dollars worth of transactions every day. And they'll do it twice on every transaction, if they get their way. I find this outrageous. As a seller, it's very difficult to sell without paypal - ebay has created an environment where buyers unwittingly demand paypal, because they have been lead to believe (incorrectly) that it's the only safe, reliable way to do business. Can I risk losing whatever meager business I get by trying to get a fair shake out of the system? Or do I sit back and let them continue to take about 10% of every sale I make in their fees? The best I can do is hope that someone will step in, be it a governing agency or a competing form of payment, to end this monopoly and make the online-payment market fair again.