Competitor, users take on eBay Australia

Computerworld - EBay Inc. doesn't seem to be out of the woods yet Down Under.

Despite having officially withdrawn its plan to require sellers using its Australian auction site to use only PayPal -- a payment service owned by eBay -- as their electronic payments processor, eBay is facing a backlash from users and one rival.

Last week, Paymate Pty., an online payment processing company that competes with eBay's PayPal, lodged a formal complaint with the Australian Competition and Consumer Commission (ACCC), the commonwealth's competition watchdog, regarding what it called eBay's restrictive trade practices.

And angry eBay users are threatening to take the online auction giant to court over the "aggressive manner in which eBay continues to promote PayPal as its preferred payment method," according to a statement on the ebay user site.

Although eBay has backed off plans to require eBay Australia sellers to accept only PayPal as their online payment method, it still requires sellers to accept PayPal as one of their payment methods.

In Paymate's view, eBay's actions are anticompetitive because the company is forcing sellers to offer PayPal. Paymate also said eBay is restricting the ability of Paymate and other online payment processors to gain acceptance among users in three ways: eBay won't allow sellers to express a preference for any particular method, it promotes PayPal aggressively to buyers to imply it is the "default" payment method, and it doesn't provide sellers and buyers with information about alternative payment options.

Paymate also objects to eBay's efforts to convince buyers and sellers that PayPal is the safest, most secure online payment method, since doing that implies that other online payment options, such as Paymate, are less secure.

Paymate said such action is a breach of Australia's Trade Practices Act. Paymate is asking the ACCC to require eBay to immediately cease its conduct or face prosecution by the ACCC in Australian federal court.

"I hope the ACCC and eBay will see the sense in our submission, which helps eBay meet its goal of reducing 'bad buyer experiences' while giving buyers and sellers a free choice of payment method," said Dilip Rao, managing director of Paymate, in a statement. "We can surely trust Australians to make a sensible choice, balancing risks and costs, if they are given reasonable information on all payment options online."

It is unclear what the ACCC's would do. Attempts to reach the agency were unsuccessful.

EBay Australia spokesman Daniel Feiler said eBay refutes the claims made by Paymate to the ACCC.

"EBay promotes the use of PayPal because it is a safer way to pay on eBay.com.au," Feiler said in an e-mail. "In 2007, PayPal users were almost four times less likely to enter into a dispute on eBay.com.au when compared to people who use bank deposits, credit cards, money orders or checks."

Infuriated users are also challenging eBay over this issue. A group of eBay members is planning to take eBay to court for, among other things, its "misrepresentation, suppression of other payment methods, deletion of sellers' listings without cause, refusal to allow sellers to pass on PayPal charges and the issuing of misleading statements to further the illusion that PayPal is more secure than other established and proven payment methods."

Feiler said eBay will not speculate on any threatened legal action by a group of sellers, instead preferring to work with sellers to help eBay maintain its position as Australia's leading online marketplace.