Time to break up the Paypal & Ebay monopoly

The bank you deal with is very strictly regulated and supervised by the government of your country. Each bank has extensive customer protection precautions that it has to adhere to or it will have its bank charter yanked. Most nations have an equivalent of the FDIC, the Federal Deposit Insurance Corporation which insures your deposits up to $100,000 per account per bank. Therefore if you had five accounts with five different banks and they all went under, the federal government would write you a check for $500,000. That's a government guarantee!

However, there is one bank whose deposits are swiftly exceeding even the largest banks in the world such as Mizuho, Citigroup, UBS, HSBC, Deutsche Bank, Credit Agricole, and BNP Paribas. The fascinating thing about this bank is that it operates in virtually every single nation in the world, deals with countless millions of customers, transacts billions of dollars of business and is regulated by absolutely no one but The Greed Law.

Ebay and Paypal represent a synergistic monopoly that must be broken up to safeguard the world's consumers.
Ebay and Paypal represent a synergistic monopoly that must be broken up to safeguard the world's consumers.

Paypal is in all reality a global bank which straddles every frontier on the planet. Not only are they regulated only by their own business interests, but they impose their own set of rules and regulations to your money and you have absolutely no recourse, no appeal process, no hope in hell, when they decide to take your money away from you, as is happening more and more.

Paypal can arrive at the decision that your account, for whatever reason that it solely determines according to its own internal standards, does not fit the profile of a "normal account." Maybe someone you shipped a laptop computer to decided that they didn't want to pay for it so they're making a fake claim against you; maybe you have been transferring money into one account, then putting it back in the original one; or maybe your transactions seem in Paypal's viewpoint "suspicious." For those or any other myriad reasons, Paypal can simply take your money away and give it back to you maybe someday if they feel like it... and not if it doesn't.

Don't think that it can't happen. It does. And much more frequently than anyone can imagine. There are entire forums full of disgruntled Paypal customers with horror stories about how their rightfully earned money was just single handedly appropriated by Paypal.

Paypal has become a completely ubiquitous financial partner to the vast millions of people who do business online whether as sellers or buyers. The Paypal juggernaut is virtually inescapable if you are either buying or selling off an auction site as although there are various competing options such as Moneybookers, 2Checkout, Wirecard and others, Paypal is the 800 pound gorilla in the market and the rest are just fleas on the financial primate's backside.

Ebay owns Paypal, surprise surprise, and has been pushing hard to have all the transactions on Ebay go through Paypal "for security reasons." Yes, the type of security that is received when you own a gargantuan cash cow like Paypal and can siphon away untold millions of dollars in percentages, fees, and the worst currency exchange rates this side of the famous chiselers Western Union who were actually subjected to a class action suit over their outrageous profiteering in international conversions.

It's not enough for the Paypal/Ebay conglomerate to milk users of outlandish fees which when tallied up especially in foreign currency conversion transactions can exceed 10% of the total sale. They have to carry on their business based on a platform whereby they exercise ultimate power over your money, and that is clearly unacceptable. The argument that you can deal with a competitor is the same monopolistic talk we've heard from Microsoft for decades. There is no effective competitor as you either deal with Paypal/Ebay or you are stuck with junior league fudge factories.

That's why it's time that Paypal/Ebay be split up, just like Ma Bell was turned into lots of Baby Bells a couple of decades ago. Let them compete in the open marketplace and offer reasonable fees and considerate customer treatment. The good ones will survive. The ones that continue their parent's punitive policies will just fade away. And not a moment too soon.

Oh, and I'm still including the Ebay capsule at the end of this Hub, even though I have yet to make a penny off of it!


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Comments 13 comments

dafla 8 years ago

I agree totally that it became very monopolistic when eBay bought PayPal. Having had problems with both before the merger (still not allowed to post on eBay and PayPal still owes me the $250 it stole from me, or rather "lost" out of my account), I only have a PayPal account to receive payments, and I'm not about to give them my banking info.

I think Google Checkout is going to give PayPal some big competition when it gets going well.

Hal Licino profile image

Hal Licino 8 years ago from Toronto Author

Most of the things that Google touches turn to gold, but we can only hope that they don't take over and become just as monopolistic and overbearing as Paypal. To have proper competition there should be at least 4 or 5 major players, all trying hard to get your business.

JPW 7 years ago

I've been selling on ebay for 4 years, in 2006 i quit my job to do ebay only. just about 6 months after, i started having issues with people stealing and filing false claims, leaving false feedback, and ebay and paypal are just as fraudulent as those people. last summer ebay suspend my account and paypal freeze my money for no reason. it pissed me off that the government is talking tough BS about regulation when right under their nose capitalist laws are being violated and no actions are taken. there is no question that ebay and paypal is a monopoly. if you have an ebay account and a paypal account, if one has an issue it cancel the other. this is total BS. I have a store, when one of my credit card merchant accounts has a problem, that doesn't automatically put me out of business. guess what? on ebay it is. I feel sorry for those who got hurt and have their money abducted in paypal with no explanation. somebody need to explode or do something because i too have over 1100.00 stuck in there and they told me to wait for six months for an appeal. what a load of crap. PLEASE DO SOMETHING GOVERNMENT OFFICIALS, DON'T LET THEM BRIBE YOU

Hal Licino profile image

Hal Licino 7 years ago from Toronto Author

JPW, thank you for the amazing story. I assure you that you are not alone as there are countless people who have undergone the same or even worse problems with Paypal and eBay. And there never seems to be an end in sight.

Jewels profile image

Jewels 7 years ago from Australia

Paypal definitely needs a competitor. They are making a small fortune on their fee collections alone. I do wonder what they make on the money market. They could halve the fees they take off me and I'm sure they'd still make a fortune.

Hal Licino profile image

Hal Licino 7 years ago from Toronto Author

Paypal has many competitors but none of them have reached critical mass due to Paypal's immense resources provided by the eBay backing. It is interesting to concoct a scenario whereby Paypal would be dragged in front of an Anti-Trust investigation! I'd love to see that!

Ralph 7 years ago

eBay was even worse before they bought PayPal if you can believe that. They promised security for your transactions and gave you none. It would actually be nice if PayPal could force people who sell you gold and ship you a rock to pay up but they are setup to avoid doing that despite all their claims. Anyone who gives them bank account info is insane. I've bought a few things over eBay but only once did I buy something I couldn't afford to lose (I'm talking really cheap stuff) and that one time I used a credit card to avoid the PayPal shuffle. Now they are forcing people to use PayPal. What a joke. Never buy under those circumstances because you have absolutely no protection from eBay or the sellers. PayPal will do nothing for you. With a credit card you can get a charge back if you know how. Not with PayPal. You're just stuck. And sellers get treated even worse. Someone can claim they never got what they did get and have all their money refunded if the seller was dumb enough to give them bank account info. And there are many things you on eBay you can't do without giving them bank account info. In short eBay and PayPal can screw you if you're a buyer or a seller. Sometimes I think they have people working for them to run scams so they can cheat people. It's plain ole organized crime IMO. RICO should apply and they should all go to jail.

I bought a music player that wouldn't work when I got it. PayPal wouldn't do a thing because the guy didn't have a registered bank account. But if he did have a registered bank account I could have said he mailed me a rock and PayPal might have given me a refund right from his bank account. Luckily the player started working after a couple of days. But I learned that dealing with eBay and PayPal was like handing money to the mafia and expecting to be treated fairly.

Hal Licino profile image

Hal Licino 7 years ago from Toronto Author

I could not agree more with your comments, and it is an absolute disgrace that the Federal authorities haven't stepped in years ago to end these abuses.

Beeza 7 years ago

I used ebay for a couple of years, but it got too expensive to sell items on there. I did try to list an item the other week, but ebay wanted me to accept paypal! I prefer not to use paypal, so I did not bother listing item. I sold item in my local free add paper...

Hal Licino profile image

Hal Licino 7 years ago from Toronto Author

You're well off to avoid anything to do with Paypal!

Josh 7 years ago

It is wrong and they got the whole cake if you ad or sell on Ebay you need to pay fees plus you need to pay fee as a seller with PayPal plus you can get a claim from a buyer from eBay trying to get your item from free plus keep your money with PayPal's help its just wrong

Hal Licino profile image

Hal Licino 7 years ago from Toronto Author

Which proves the point. They have a monopoly and they have to face anti-trust action. Of course everyone in Washington DC is asleep at the wheel!

Tristram Buckley 6 years ago

The lawsuit alleging monopoly and other claims is about to be filed against Ebay. Stay tuned. IMO, Ebay should be treated as a public utility in that it should be regulated. Let it make a profit but make it accountable to the public just the way our gas, electric and to a degree, telecommunications companies are.

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