eBay 2008 Annual Report Download - page 45

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In several jurisdictions, we have taken actions designed to improve the safety of transactions on our websites.
Beginning in June 2008, we have required users in the UK to offer PayPal as a payment alternative on most
transactions on our localized UK website, and since October 2008, we require sellers on eBay.com to accept one or
more accepted payment methods (currently PayPal, credit or debit cards processed through Internet merchant
accounts, and/or ProPay) and no longer allow any forms of paper payment, including checks and money orders, to be
used in the U.S. for most categories of items. While these initiatives are intended to improve and make safer our users’
buying experience and/or increase activity on our sites, certain users may be negatively affected by or react negatively
to these changes. We currently face inquiries from government regulators in various jurisdictions related to such
actions. For example, the Reserve Bank of Australia is currently reviewing our policy requiring sellers to offer PayPal
as a payment alternative on most transactions on our localized Australian website and precluding them from imposing
a surcharge or any other fee for accepting PayPal or other payment methods. We may face similar inquiries from other
government regulators in the future. Any negative reaction to these changes by our users or government authorities
could, among other things, force us to change our operating practices in ways that could harm our business, operating
results and profitability. In addition, certain competitors may offer or continue to offer free shipping or other
transaction related services, which could be impractical or inefficient for eBay sellers to match. New technologies may
increase the competitive pressures by enabling our competitors to offer a lower cost service.
Although we have established Internet traffic arrangements with several large online services and search
engine companies, these arrangements may not be renewed on commercially reasonable terms or these companies
may decide to promote competitive services. Even if these arrangements are renewed, they may not result in
increased usage of our services. In addition, companies that control user access to transactions through network
access, Internet browsers, or search engines, could promote our competitors, channel current or potential users to
their vertically integrated electronic commerce sites or their advertisers’ sites, attempt to restrict our access, or
charge us substantial fees for inclusion. Search engines are increasingly becoming a starting point for online
shopping, and as the costs of operating an online store decline, online sellers may increasingly sell goods through
multiple channels, which could reduce the number and value of transactions these sellers conduct through our sites.
PayPal
The markets for PayPal’s product are intensely competitive and are subject to rapid technological change,
including but not limited to: mobile payments, electronic funds transfer networks starting to allow Internet access,
cross-border access to networks, creation of new networks, expansion of prepaid cards, and bill pay networks.
PayPal competes with existing online and offline payment methods, including, among others:
• credit card merchant processors that offer their services to online merchants, including American Express,
Cardservice International, Chase Paymentech, First Data, and Wells Fargo; and payment gateways,
including CyberSource and Authorize.net (which has merged with CyberSource);
• money remitters such as MoneyGram and Western Union;
• bill payment services, including CheckFree;
• processors that provide online merchants the ability to offer their customers the option of paying for
purchases from their bank account, including Certegy, eBillMe, Revolution Money and TeleCheck, a
subsidiary of First Data, or to pay on credit;
• providers of traditional payment methods, particularly credit cards, checks, money orders, and Automated
Clearing House transactions;
• issuers of stored value targeted at online payments, including VisaBuxx, NetSpend and GreenDot;
• mobile payments, including Obopay, TextPayMe (a subsidiary of Amazon), Crandy, LUUP and Payforit;
• Amazon Payments, which offers online merchants the ability to accept credit card- and bank-funded
payments from Amazon’s base of online customers on the merchant’s own website; and;
• Google Checkout, which enables the online payment of merchants using credit cards.
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