eBay yesterday withdrew its mandate that customers exclusively use PayPal. The auction site's decision came just weeks before consumer watchdog the ACCC was due to pass judgement on its decision.
The ACCC was due to make its final decision on 15 July.
While eBay has previously said in a statement that it "believes the consumer benefits of this initiative are worth fighting for on behalf of its buyers", the company's vice president Simon Smith today said a fight with the ACCC was not in the interest of its customers.
"When we looked at the difference between us and the ACCC ... we realised that it was not really in the interest of the marketplace to continue with what may have become a long and drawn out process," Smith told ZDNet.com.au.
The online auction site notified the Australian Competition and Consumer Commission (ACCC) in April that it intended to enter into an exclusivity deal with PayPal, omitting most other payment methods for customers from 17 June. This prompted the regulator to issue a call for submissions from the public and industry on the proposed move.
Several high profile organisations registered their concern about the deal, including the Australian Bankers Association (ABA), Reserve Bank of Australia (RBA), and the Australian Securities and Investments Commission (ASIC). An anonymous submission was also lodged, which was later revealed to have come from Google.
eBay hit back at its critics, with Smith saying that the move was in the interest of its users.
"When we looked at what drove a bad buyer experience on eBay, we found that how [buyers] paid for their item was a very important factor. When buyers paid with PayPal, they were four times less likely to enter into a dispute," said Smith.
Although Smith declined to say what percentage of eBay transactions were made through PayPal, he noted that the number of PayPal accounts was roughly equal to the number of eBay users.
eBay will continue to mandate that sellers offer PayPal as a payment option.