Paying with PayPal may cost extra
Companies are allowed to charge a surcharge for online purchases when customers pay with Paypal or Instant bank transfer. This was decided by the Federal Court of Justice (BGH) in Karlsruhe, creating legal certainty for the first time. In principle, a surcharge is prohibited, for example, when paying by direct debit or credit card. However, since Paypal and Instant bank transfer provide an additional service, such as checking the customer's creditworthiness, the company is allowed to charge the customer the extra costs.
This is the first time the Federal Court of Justice has clarified whether companies are allowed to charge additional fees for certain types of payment. In principle, Section 270a of the German Civil Code prohibits such charges when consumers pay by direct debit, credit card or bank transfer. However, the situation with other common methods such as payment by Paypal or Instant bank transfer has not yet been determined.
The Competition Office took legal action on behalf of the Munich-based long-distance bus operator Flixbus, which for a time charged an additional fee for payment via Paypal or Instant bank transfer. Depending on the ticket price, customers had to pay additional costs if they paid by Paypal, for example. In the meantime, the company has refrained from pricing the payment methods separately.
In December 2018, the Regional Court of Munich I agreed with the opinion of the Competition Office. The Munich Higher Regional Court, on the other hand, dismissed the Competition Office's action in October 2019, but allowed an appeal to the Federal Supreme Court. The Competition Office appealed to the Federal Supreme Court, arguing that the ultimate aim was to create legal clarity for companies and customers.
The costs for transactions on the Internet are usually borne by the company offering the payment methods, for example a fashion store. The long-distance bus provider Flixbus had now tried to pass the fee on to the customers through the additional costs. The decisive factor for the BGH's ruling was now what these fees were charged for. Costs for the mere transfer were not additional, but for other services - such as a credit check associated with the payment - they were.
On the contrary, it would be unfair to pass on the costs to all customers
Flixbus argued at the hearing in December 2020 that consumers are not dependent on paying via Paypal or Instant bank transfer. Accordingly, there was no discrimination. Rather, it would be unfair if the costs were otherwise passed on to all customers and not only to those who would also use the services. The Competition Office disagreed, saying that customers primarily want to transfer money and that a credit check makes sense for companies in particular.
To pay via Paypal, you need an account with the US company. If a consumer uses it to pay online, Paypal collects the amount by direct debit or via the monthly credit card statement if there is insufficient credit. Since 2018, Paypal has prohibited its affiliated merchants from taking additional fees for payments with Paypal.
Meanwhile, Instant bank transfer from Munich belongs to the Swedish payment service provider Klarna. In principle, it enables a quick transfer, where the company gets between companies like Flixbus and the customer and pushes a transfer. Paypal as well as Instant bank transfer are payment methods that have become established in online shopping. Therefore, a clarification was important.
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