PayPal Faces New Antitrust Lawsuit Claiming It Unfairly Stifles Competition With Stripe, Shopify

PayPal has been hit with a class action lawsuit by consumers represented by law firm Hagens Berman alleging that the fintech giant's anti-steering rules stifle competition against lower-cost payment platforms such as Stripe and Shopify. From a report: Specifically, according to an investigation conducted by the firm's consumer rights attorneys, PayPal has subjected consumers to excess charges when purchasing from online merchants that accept PayPal or Venmo. The suit states that PayPal's merchant agreements, which all merchants must sign to accept payments via its platform, leads to consumers paying more to make purchases. The attorneys charge that "if PayPal's agreements were transparent, consumers would quickly see a price difference between PayPal and Venmo and its competitors." Specifically, per PayPal's anti-steering rules, if a retailer accepts PayPal or Venmo payments, they agree not to offer any discounts or inducements to persuade consumers to use other payment options that have a lower cost. These discounts are treated as a "surcharge" on PayPal transactions and prohibited by PayPal's anti-steering rules. Merchants also cannot tell customers that other payment methods are more cost-effective or preferred, according to the complaint, which was filed in the U.S. District Court for the Northern District of California. Merchants are also not allowed to present other forms of payment earlier in the checkout process.

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