German antitrust watchdog the Federal Cartel Office (FCO) has begun an investigation into PayPal to examine whether it is using its power to restrict market competition.
FCO noted that PayPal is the leading payment service in Germany but also the most expensive in the region.
FCO president Andreas Mundt said, “We will now examine what market power PayPal has and to what extent online retailers are dependent on offering PayPal as a payment method.”
To date, the charges paid by sellers to use the PayPal service start at 2.49% of the payment in addition to 0.35% per transaction.
The FCO stated that traders aren’t allowed to offer their goods and services at lower prices if the customers choose a cheaper payment service. This, it adds, prevents rival services from entering the market while keeping with surcharges higher.
Mundt added that such a situation keeps the customers at the receiving end because they ‘ultimately pay for these higher fees indirectly through the product price’.
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