Payments giant PayPal is currently battling a consumer antitrust lawsuit in California. The lawsuit alleges that PayPal has entered into agreements with e-commerce merchants that artificially maintain high transaction fees. These contracts, according to the plaintiffs, prevent merchants from offering price incentives that could direct consumers to more cost-effective payment options. This lawsuit is notable as it is the first to accuse PayPal of violating U.S. competition law through its «anti-steering» rules.
The plaintiffs’ attorney, Steve Berman, claims that if consumers could see the pricing details behind PayPal’s services, they would discern a significant difference between using PayPal, Venmo, and other competing options. PayPal, which owns Venmo, is accused of imposing the highest transaction fees among payment processors.
PayPal, with over 430 million active accounts and 41 million daily transactions, is facing potential monetary damages and an injunction against alleged anti-competitive practices. The lawsuit asserts that removing PayPal’s merchant restrictions would enable sellers to competitively price transactions and allow consumers to secure discounts at checkout.