The Maze: Germany’s competition authority told PayPal on November 11 that its ban on extra checkout fees may restrict competition. PayPal charges online stores to process payments. Its contract bars those stores from adding a surcharge, an extra fee for shoppers who choose PayPal. The Federal Cartel Office’s preliminary assessment asks whether the rule makes it harder for cheaper payment providers to compete. PayPal can respond before the authority decides.
The details
🧾 The rule sits in the merchant contract. A customer chooses PayPal at checkout and the retailer pays PayPal to handle the transaction. PayPal’s German terms bar the retailer from adding a service fee or raising shipping costs for that customer based on the payment choice. The regulator says the rule has applied since 2018, and that PayPal can end its relationship with a store that breaks it. A store can drop PayPal, but the authority says its popularity makes that a difficult choice for many retailers.
💶 The store sees a cost the shopper never sees as a line item. PayPal’s German fee schedule lists a standard domestic Checkout rate of 2.99% plus €0.39 for a euro payment. That comes to €3.38 on a €100 order. Some large retailers negotiate their own rates, and different payment methods can carry different fees. The regulator says that when stores recover PayPal’s costs through their product prices, even customers who pay another way can share the cost. A shopper who would switch for a lower price sees little reason to do so if the total is the same.
⚖️ The contract and the law set separate limits. The authority opened the case in January 2023. The November notice is a step in that case, and a PayPal spokesperson said the company disagrees. Even if the contract were to change, German consumer law requires a common, reasonable free payment option and caps a payment-method surcharge at what the retailer pays. The authority notes separate statutory bans for certain consumer cards and standard euro bank transfers and direct debits.
Our take
The case matters because payment providers sell to retailers and depend on shoppers choosing them. If a store can show customers the cost of a payment choice, a provider’s lower price to the retailer has a chance of changing what shoppers do at the checkout.
🧮 Small orders make the trade-off sharper. At the same published rate, a €20 payment costs the store about €0.99, or nearly 5% of the order. The fixed €0.39 accounts for more of a small sale than a large one. If German shops ever gain room to pass on that cost, the benefit depends on how many customers switch to a cheaper method and how many abandon the order when they see an extra charge. A fee recovered on one purchase could cost the store another purchase altogether.
🏦 A rival still has to earn a place in the checkout. The regulator points to Wero, a bank-backed payment service, alongside options such as Klarna and cards. Even with more room for stores to show price differences, a rival would need to be easy for stores to add and familiar enough for shoppers to use. For payment providers outside Germany, the case illustrates the same commercial question wherever shoppers see one price across methods. What changes in Germany will depend on the final decision.
