eBay rejects PayPal backlash
eBay Australia and New Zealand managing director Simon Smith explains why the company abandoned a bid to make PayPal the e-commerce website's only method of payment.
Isabelle Oderberg: Why has eBay decided to drop the PayPal action?
Simon Smith: We decided to withdraw our latest engagement from the ACCC really, just to stop any further confusion and disruption amongst the eBay community. Our goal has always been to provide users with a safer experience and we’ll continue to look for ways to do this while offering a variety of payment choices. eBay regrets any uncertainty the process has caused amongst our community.
IO: There seems to have been quite a change of heart. Previously eBay was more than happy to go to court if need be. What changed?
SS: Well, the ACCC draft notice was not what we expected. It took us a while to digest that – we disagreed with the notice. We were concerned that it was likely to be a lengthy and highly disruptive process, so we had to think about how to go forward. Therefore we concluded that it was better just to withdraw, and leave things as they are.
IO: Apparently there was a flood of submissions on Monday and that would have delayed the ACCC decision, had you not changed your mind. Did this have anything to do with your decision – were you getting feedback that the ACCC submissions were overwhelmingly not in your favour?
SS: We didn’t get any feedback about that, but we did disagree with the ACCC draft notice and we were aware of the time-frame going forward and we concluded that it was better to give up our notification now and give our community greater clarity and also allow our buyers to always have the choice of how to pay.
IO: Is it an issue that you plan to revisit in the future in Australia?
SS: We have no plans to revisit it now. Our buyers now can choose to pay with PayPal on almost all the items on ebay.com.au and also they can pay through less safe payment methods as well and we’re also going to focus on driving other things that we can do to ensure that the marketplace remains growing and healthy.
IO: But are you reserving the right to revisit this down the track if you thought that you could do it in a way that was more acceptable to the ACCC?
SS: I think we’ve learnt a lot from this process and we currently have no plans to make any further changes to our payment methods on eBay.
IO: Is this something that eBay is planning to pursue in other markets, outside Australia?
SS: We will probably look at the markets on a case by case basis. Within Australia we looked at what the drivers were - a small number of people were having bad experiences and we realised that if you pay with PayPal on ebay.com.au you are four times less likely to enter into a dispute than if you pay with credit card, bank transfer, cheques or money orders. Once we saw that, which was specific to Australia, we concluded that really it was very hard for us to do anything, but do our very best to promote PayPal here in Australia. Now, each market is based on different payment mechanisms and different situations. We chose what was, what we considered to be best for Australia. Obviously it proved to be more disruptive than we anticipated. We weren’t expecting the ACCC to issue their draft notice against us and we have listened to our community and that is why we’re withdrawing from the process here and not going any further with changes around payment mechanisms in Australia.
IO: Putting aside the issues of safety, eBay does have something to gain in restricting users to PayPal, given its ownership of the business?
SS: This has always been only about improving safety and security on eBay and I would say that the ACCC draft notice firstly says that PayPal does improve safety and security for buyers and also said that they didn’t find that our motive was anything other than improving safety and security on ebay.com.au.
IO: Do you think that any damage has been done the eBay brand?
SS: Well, when we look at the number of visitors to our site and the number of people looking for things to buy those metrics have continued to go up steadily throughout this whole process, so I think that indicates that the market place remains vibrant and healthy and people still appreciate the vast range of great value items they can buy on ebay.com.au.
IO: How is the user base expanding in Australia compared to other markets?
SS: I can’t really go into any detail of that. Our visitor base which is a publically available figure has continued to go up. We have five out of six online shoppers visit us every month, five million Australians, and you know that makes us fourth or fifth most visited site in Australia, so obviously a large and successful marketplace here.
IO: Are other markets experiencing the same growth as Australia?
SS: I can’t really go into any details on that, I’m sorry.
IO: In terms of improving awareness of the brand in Australia, what are your plans for marketing and advertising?
SS: We continue to invest in advertising here in Australia. eBay has five million Australians visiting the site every month looking specifically for things to buy. Our strategy remains advertising very heavily to attract buyers to the site, while driving innovation to ensure that those buyers have a safe and easy experience. And I think we need to remember that although we were making this change to improve safety and security the vast majority of items on eBay go through without a problem and although obviously when there is a problem it’s painful for particularly the buyers concerned that we were really looking for ways to further reduce that small number, because obviously when someone does have a bad experience that’s not good for them, it’s not good for eBay’s reputation and they’re likely to go and tell all their friends and family as well so in the long run we need to continue reducing the number of bad experience on our site even though it is already very small. I think only that we will continue to look for ways to provide our customers with a safer and easy experience while still offering them a variety of payment methods.
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