eBay's Business Ethics or Lack Thereof

C.S. Magor — Sat, 31 May 2008 18:46:29 -0700

What's the problem? In case you didn't know, eBay owns Paypal and Paypal charges some rather excessive fees. If you are using Paypal within country, the fees are a little steep. They are charged at the point of receipt, so the merchant is hit with them and they can be expensive. The fees are not capped and are a percentage of the transaction. The more the merchant earns for a sale, the more Paypal earns. If you are making a so called, "cross borders payment," the fee effectively doubles. On top of that Paypal takes a 3% cut on the exchange rate.

If I live in Australia and receive a payment of USD 1,000 from the United States, I can expect to take a hit of around USD 40. I will receive USD 960 instead of USD 1,000. Now, if I want to deposit that USD 960 into my bank account, Paypal will give me an exchange that is 3% below the market rate. A single transaction has netted them almost USD 50; that is considerably more than the cost of an international wire.

Some people can't help but use Paypal. It is the international currency of professional bloggers and it is an effective way to accept credit card transactions without a merchant account. It allows a large number of casual folks to conduct business online. I begrudgingly use it, but would switch to Google Checkout in a heartbeat if it were offered here in Japan.

The thing is that in Australia, people do have choices; very good ones, in fact. Internet banking is huge in Australia and there are plenty of secure ways for merchants to accept transactions. Not to mention the fact that accepting credit card transactions is a whole lot cheaper. There is little wonder that only 25% of Australian eBay users use Paypal.

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eBay's Business Ethics or Lack Thereof