PayPal freezes merchant fees

PayPal will freeze fee for merchants trading through the eBay Australia website for a period of two years, the Reserve Bank of Australia disclosed yesterday in a media release.

Merchant fees at PayPal are lower (even if only a matter of cents) now compared to PayPal's entry to the Australian market in early 2005. The fees are 2.4 per cent of each transaction plus another 30 cents for low volume sellers and 1.4 per cent plus 30 cents for high volume sellers.

The reason for the freeze was not made clear but the context is the RBA's review of aspects of PayPal's pricing approach generated by the PayPal's controversial attempt last year to make its own payment service the only payment option (and steering customers away from making bank transfers). Irritated eBay sellers wrote urging the RBA to look at or even regulate PayPal, something the RBA has now done.

As part of that review the RBA has formed the view that "PayPal is a relatively small player in the online market" but did not offer any data on PayPal's business levels in Australia, something PayPal also has never done.