Germany’s competition watchdog, the Bundeskartellamt, has issued a preliminary assessment challenging PayPal’s policy that prohibits merchants from applying surcharges to transactions. The authority suggests this rule may violate both German and EU competition laws by restricting market competition.
The investigation, which began on January 23, 2023, focuses on contractual clauses in place since 2018. The regulator argues that because merchants cannot pass transaction costs directly to PayPal users, the fees are effectively socialized across all customers, reducing incentives to seek cheaper payment alternatives.
PayPal currently charges merchants fees ranging from 2.49% to 2.99% per transaction, plus a fixed fee of 34 to 39 cents. The Bundeskartellamt considers these rates to be above average and notes that PayPal holds a significant market share in German payment services.
The regulator is considering two primary outcomes: ordering PayPal to remove the surcharge ban or requiring the company to surrender profits earned through the policy. PayPal has stated it disagrees with the preliminary findings but remains open to constructive dialogue with the authority.
If the Bundeskartellamt concludes that the policy breaches EU law, the decision could have implications beyond Germany. The investigation remains ongoing, and PayPal has the opportunity to formally respond to the preliminary assessment before a final ruling is issued.
