ACCC Pre-decision Conference on eBay

Minutes

Notification N93365 lodged by eBay International A.G.
30 June 2008

The information and submissions contained in this minute are not intended to be a verbatim record of the pre-decision conference but a summary of the matters raised. A copy of this document will be placed on the ACCC's public register.

Statements made by Mr Dilip Rao (Paymate)

Mr Rao noted that Paymate has put in a written submission to the ACCC in this matter.

Mr Rao submitted that Paymate offers an equivalent level of service, including risk management, to PayPal. Mr Rao noted that this is not surprising as Paymate was originally designed in conjunction with the eBay platform when it was launched in 2001.

Mr Rao noted that consumers can make a bank account transfer using Paymate but banking rules require Paymate to wait three days before funds are cleared.

To eliminate risks for sellers, Paymate recommends that sellers only ship goods when the funds are cleared. Mr Rao noted that this (bank account payment) is the least popular service offered by Paymate.

Mr Rao noted that when bank transfer (via Internet banking) is used to make a payment, the funds usually arrive in the destination account one day after the transfer.

Mr Rao submitted that eBay's proposed conduct is about risk management, and this is very hard to sell. Mr Rao considered that a buyer that has had a bad purchasing experience will value risk management.

Mr Rao suggested that buyers and sellers are making judgments based on their perception of risk; for example, if a buyer is purchasing something for $20, they are prepared to lose it. Mr Rao submitted that on the other hand, if a buyer is purchasing something from overseas and it costs $1000, the only way to create trust and security is to use a service like Paymate.

Mr Rao noted that Paymate's service is priced so that the buyer as well as the seller incurs an additional fee to use Paymate. Mr Rao submitted that pricing determines behaviour based on perceptions of value, and people will pay extra for a service if they see value in it.

Mr Rao commented that for large number of transactions on eBay, if the transaction size is small, people either don't care about risk or might not be aware of it. Mr Rao considered that by proposing the notified conduct, eBay had decided that the consumer cannot be relied on to make decisions, and must be forced to use a broker.

Mr Rao noted that Paymate thinks having a broker adds value, but don't think PayPal is offering it. Mr Rao considered that choice is made based on price and perception of value, and buyers and sellers should be given that choice in a fully informed way.

Mr Rao stated that there is a perception that there is no choice other than to pay using PayPal and there is no information about Paymate anywhere on the site. Mr Rao submitted that this is a restrictive trade practice.

Mr Rao asked the ACCC to fomalise the draft notice.