eBay's Paypal Rule Causes an Uproar in Australia

EBay Inc. is exploring whether to require customers to use its online payment service PayPal, a move that has angered users and prompted antitrust scrutiny in Australia, where a PayPal-only rule takes effect next month.
It's unclear whether eBay will institute a similar policy in the United States and other countries. However, the online auction company often tries big changes in smaller markets before expanding them worldwide, and says it is open to that in this case.

"We are going to take learnings from it and apply them accordingly," said eBay spokesman Usher Lieberman.

EBay says it wants to reduce disputes and restore trust in its marketplace with the PayPal-only plan. Because eBay and PayPal can share information on each transaction, eBay says use of PayPal allows it to stop fraud more efficiently than outside payment services. Pressing that safety argument in a heated discussion with Australian users, an eBay executive compared the new rule to banning the sale of heroin on street corners.

But critics lament that PayPal is costlier than other payment options, and they suspect eBay is just interested in increasing PayPal's revenue. Australian banks say the plan will eliminate competition for the sake of exaggerated benefits.

"Competition will be restricted, innovation and development will be constrained, new entry will be discouraged and PayPal will be able to increase fees and charges to eBay users," the Australian Bankers Association said in a filing with regulators Thursday.

Because eBay sellers are commonly independent merchants who don't accept credit cards, PayPal acts as a go-between. Buyers use their credit cards and bank account information to make payments, and PayPal relays the funds to sellers' PayPal accounts, charging them 30 cents plus a commission — up to 4.4 percent in Australia. The second-most common method of payment on eBay Australia, bank transfers, cost 20 cents each.

Australia's bankers group says PayPal is not as immune to fraud as eBay claims. While PayPal does keep bank and credit card account information secret between trading partners, the bankers group decried that it does not verify identity as banks do.

EBay's financial reports indicate that PayPal, while hardly fraud-proof, is getting better at cracking down. Its loss rate is 0.24 percent, down from 0.33 percent a year ago. That means that for every $100 transacted with the service, PayPal has to eat 24 cents because of fraud. That is slightly lower than the rates seen in credit and debit card transactions involving the top 20 online retailers, said Avivah Litan, a payments security analyst with Gartner Inc.

EBay contends that when users opt for methods like bank transfers, their transactions are four times more likely to result in a disputed payment. EBay says reducing that risk will attract new buyers to the site.

And, the company adds, it doesn't stand to profit directly from the PayPal rule. It claims its investments in new buyer protections could outweigh any gains from increased PayPal fees. For instance, under Australia's new plan, if a buyer doesn't get what he or she paid for via PayPal, eBay will refund the buyer up to 20,000 Australian dollars ($18,600).

To make the PayPal rule possible, eBay has applied for — and automatically gets — immunity from Australia's anti-monopoly Trade Practices Act. But the Australian Competition and Consumer Commission, which is investigating, could revoke that immunity if it finds the plan will harm the marketplace. A decision is expected soon.

Critics say eBay is just trying to fatten its bottom line. Growth in eBay's core auction listings has slowed in recent quarters, pushing eBay to expand other parts of its business, which includes PayPal, classifieds sites and online telecommunications service Skype. And eBay has already taken other steps viewed as protecting PayPal, such as banning Google Inc.'s rival Checkout service on alleged safety concerns months after it was launched in 2006.

Sellers in Australia are "absolutely furious" and resent that they are subjects of an experiment, said Phil Leahy, president of the 600-member Australia chapter of the Professional eBay Sellers Alliance.

Leahy sells DVDs, movies and CDs through eBay, a high-volume, low-margin business. He says using PayPal instead of bank transfers would cost him $4,700 per month, based on his January sales numbers of $332,000. "It's the difference between making money and not making money," he said.

Leahy estimates Australian buyers use PayPal about 50 percent of the time — eBay would not confirm the figure — versus an 85 percent rate in the United States. He said bank transfers are used in 30 percent of transactions. The rest are conducted with bank and personal checks, money orders, or cash on delivery, all of which are banned under eBay's new plan unless the payments are exchanged in person. That happens rarely.

Shaun O'Brien, a seller of home theater accessories, said many Australians trust their banking system more than online services like PayPal. He worries buyers will leave when they are deprived of a choice.

"Australians here have been heavily educated against putting credit card details online," O'Brien said. "There are plenty of customers out there that refuse to use PayPal."

The Australian experiment could lead to a less-stringent step: Perhaps eBay will require all sellers to at least offer PayPal as a payment choice. No matter how it turns out, however, eBay surely has more big plans for PayPal, which has grown steadily since the auction company bought the payment service in 2002. Last year it accounted for $1.9 billion in revenue, 25 percent of eBay's total.

In fact, eBay's top e-commerce executive, Rajiv Dutta, PayPal's former president, said last year he was convinced PayPal would someday be bigger than eBay's better-known auction and marketplace business.

Ancient stone tools found on Australia mine site

A large cache of stone tools estimated to be up to 35,000 years old has been discovered on the site of one of Australia's largest iron ore mines, sparking calls on Monday for the site's preservation.

Archaeologists uncovered the tools on the site of the A$1 billion ($920 million) Hope Downs iron ore mine, about 310 kilometres (192 miles) south of Port Hedland, in western Australia's ore-rich Pilbara region.

"We have always known this is an important part of our history, that our ancestors lived here," Slim Parker, a senior elder of the local Martidja Banyjima people, told Australia's Fairfax newspapers.

"Our stories and songs tells us this. It is a good feeling to know archaeologists have proved what we say is true. It makes us feel strong. Now we want this place preserved. It is part of our heritage and our culture," Parker said.

Archaeologist consultant Neale Draper said the Hope Downs site could prove to be one of Australia's most significant historical finds, and could yield more material up to 40,000 years old.

The stone tools, mostly makeshift blades and cutting implements, were found in a rock overhang. Carbon dating tests indicated some were much older than charcoal remnants from ancient campfires.

"The oldest-dated stone artifacts are a core, and associated flakes that have a radiocarbon age estimate of 35,000 years," U.S. archaeologist W. Boone Law said, referring to an implement resembling a stone spike.

He said the site was of international historical significance.

The Hope Downs mine, jointly run by Rio Tinto (RIO.AX>, the world's second-biggest ore miner, and Hancock Prospecting, is expected to have a yearly capacity of 30 million metric tons when a two-stage project is completed. Production from stage one began last year.

DISCUSSIONS ONGOING

Discussions are underway between the mine companies and the indigenous owners of the land, who wanted sensitive areas where Aborigines had lived for more than 1,000 generations protected from mining.

"We've been talking to them about altering the mine plan and I think have reached a tentative understanding to do that. It's off to the side of an expansion to the Hope Downs mine," a Rio Tinto spokesman told Reuters.

"In terms of any impact on the mine, it's rather hypothetical at this stage. We've reached a tentative understanding. There is not an actual mine there yet."

He said the company alerted indigenous people to the site after heritage surveys identified the overhang as of possible interest.

"We stopped work a couple of months ago and called in the archaeologists," the spokesman said.

Aboriginal culture and mining occasionally clash in Australia and the previous conservative government stalled for months before allowing construction of a A$12 billion LNG plant near 30,000-year-old Aboriginal rock carvings on the Burrup Peninsula, also in Western Australia.

Former prime minister Bob Hawke halted construction of a uranium mine at Coronation Hill in 1991 because of its association with a mythical creation beast called the Bula, sacred to the Jawoyn people in the outback Northern Territory.

Investigation of the Hope Downs site could also help in the understanding of climate change and how Aborigines had coped with an evolving climate, scientists said.

Australia says sorry to Stolen Generations

Australia apologized on Wednesday for the historic mistreatment of Aborigines, heralding a new era in race relations and moving indigenous people to tears as huge crowds cheered across the nation.
Prime Minister Kevin Rudd led the parliamentary apology to members of the Stolen Generations of aborigines, who were forcibly taken from their families and communities when they were young children under old assimilation policies.

In unprecedented scenes for Australia's parliament, a huge crowd of more than 7,000 people gathered on the lawns outside to watch as the apology was broadcast live to giant screens, with Aborigines and supporters cheering as Rudd said "sorry."

"It makes the indigenous community feel, for the first time in a real long time, really feel part of Australia, that it's embraced by the whole Australian nation," Stolen Generation elder Mark Bin Bakar told Reuters.

"It's about us coming together as a country, acknowledging our past and moving on, accepting each other as brothers and sisters of this nation," he said.

Others paused at city squares, town halls and schools around the country to watch the speech, which is expected to open a new era of reconciliation between indigenous and white Australians.

In Sydney's inner-city suburb of Redfern, home to a large aboriginal community, hundreds stood in heavy rain and cheered each of the three times Rudd said "sorry."

"Sorry heals the heart, and it goes deep," said Redfern aboriginal activist Rhonda Dixon-Grovenor.

The parliamentary apology comes 11 years after a report into past assimilation policies found between one in three and one in 10 aboriginal children had been taken from their families between 1910 and 1970.

The report urged a national apology to those affected, known as the Stolen Generations, but the then conservative government under prime minister John Howard rejected the finding and offered only a statement of regret.

"Today, the parliament has come together to right a great wrong," Rudd said.

"We apologize for the laws and policies of successive parliaments and governments that have inflicted profound grief, suffering and loss on these our fellow Australians."

SORRY

Rudd made the apology the first item of parliamentary business for centre-left Labor, which won power in November last year, ending almost 12 years of conservative rule.

He said "sorry" three times to the Stolen Generations and their families, saying the old policies were a stain on Australia's soul which would never be repeated.

About 100 members of the Stolen Generations were in parliament to hear the government apologize, some wiping away tears as Rudd spoke.

Howard, who lost his parliamentary seat last November, did not attend the celebrations, but the other four living former prime ministers did attend, including conservative Prime Minister Malcolm Fraser, who governed from 1975 to 1983.

"I just wish the idea of an apology had been put before me," Fraser told Sky television.

Australia has about 460,000 indigenous Aborigines and Torres Strait Islanders, who make up about 2 percent of the 21 million population. There are no aboriginal members in the national parliament.

Aborigines are the most disadvantaged group in Australia, with a life expectancy 17 years less than other Australians, and far higher rates of infant mortality, unemployment, imprisonment, alcohol and drug abuse and domestic violence.

Rudd promised to end the gap in life expectancy within a generation, and to work to end aboriginal inequality. He announced a plan on Wednesday to ensure all young aboriginal children are enrolled in pre-school.

Rudd also announced new plans to improve indigenous housing, and give aborigines constitutional recognition as the original owners of Australia.