PayPal Faces New Antitrust Lawsuit Claiming It Unfairly Stifles Competition With Stripe, Shopify

PayPal has been hit with a class action lawsuit by consumers represented by law firm Hagens Berman alleging that the fintech giant's anti-steering rules stifle competition against lower-cost payment platforms such as Stripe and Shopify. From a report: Specifically, according to an investigation conducted by the firm's consumer rights attorneys, PayPal has subjected consumers to excess charges when purchasing from online merchants that accept PayPal or Venmo. The suit states that PayPal's merchant agreements, which all merchants must sign to accept payments via its platform, leads to consumers paying more to make purchases. The attorneys charge that "if PayPal's agreements were transparent, consumers would quickly see a price difference between PayPal and Venmo and its competitors."

Specifically, per PayPal's anti-steering rules, if a retailer accepts PayPal or Venmo payments, they agree not to offer any discounts or inducements to persuade consumers to use other payment options that have a lower cost. These discounts are treated as a "surcharge" on PayPal transactions and prohibited by PayPal's anti-steering rules. Merchants also cannot tell customers that other payment methods are more cost-effective or preferred, according to the complaint, which was filed in the U.S. District Court for the Northern District of California. Merchants are also not allowed to present other forms of payment earlier in the checkout process.

Nothing new

[Bert64]

Back when paypal was owned by ebay, you would get your listing cancelled if you offered a discount (eg for cash on collection) or made any mention of paypal fees.

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[RitchCraft]

What surprises me is that Paypal has survived this long with so many other better options.

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[jonwil]

2 reasons. 1 is that PayPal has done everything in its power to stifle the "better options" (including making it almost impossible to do business on eBay and some other marketplaces without going through PayPal) and 2 is that PayPal is available in many countries that simply don't have any of the "better" alternatives.

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[tlhIngan]

What surprises me is that Paypal has survived this long with so many other better options.

What better options?

If you want two random people on the Internet to accept a credit card payment, the one getting paid must have a merchant account. Merchant accounts are not handed out willy-nilly and qualifying for one can be hard - notably, you actually have to be a business.

So two random schmoes over the Internet? Well, if they wanted to pay for stuff, you either needed cash, or cheque. Either way, it was a pain a

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[barra.ponto]

What better options?

Well, in most of Europe (world?) you just give the buyer your IBAN number.

Anti-trust returns!

[iAmWaySmarterThanYou]

The anti-trust division of the DoJ is traditionally very slow to pull the trigger but once they do, they rarely miss. They have effectively unlimited resources and can go for as long as necessary in court. Smart companies will settle out asap for the least possible pain and restrictions. The most recalcitrant who stupidly insist on fighting to the bitter end will find themselves broken up, most likely in a way they wouldn't have chosen for themselves. No, a big company can't buy their way out of this ki

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[Fly Swatter]

This could be a stepping stone to requiring a visible line item fee for paying with a credit card. As such this lawsuit will be struck down then buried.

Really?

[RazorSharp]

PayPal is pretty shady, but I do not think anything they are doing has successfully stifled Stripe or Shopify. Stripe has really taken it to PayPal in recent years.