PayPal, a major player in Germany’s online retail market, is facing scrutiny from the country’s antitrust regulator over alleged anticompetitive practices. At issue is the company’s policy prohibiting merchants from adding surcharges when customers choose PayPal at checkout, despite the relatively high fees it charges sellers compared with other payment methods.
According to Global Banking & Finance Review, PayPal was available on more than 85 % of German websites using payment service providers as of September 2026. It also accounted for more than a quarter of Germany’s total online payment revenue in 2025. Last year, the country became the launch market for PayPal’s digital wallet.
Higher Merchant Fees
Merchants that accept PayPal agree to contractual terms prohibiting them from charging customers extra for using the service. They are also barred from discouraging PayPal payments or making alternative payment methods more convenient. These restrictions have been in place since 2018.
PayPal typically charges merchants between 2.49% to 2.99% of each transaction, plus a fixed fee of 34 to 39 cents, per UA.news. Larger merchants may negotiate individual rates, however, meaning actual costs can vary.
The Bundeskartellamt, Germany’s Federal Cartel Office, argues that PayPal’s market position makes it difficult for merchants to drop the service, even when less expensive alternatives are available. Its president, Andreas Mundt, has warned that the combination of PayPal’s popularity and relatively high merchant fees could make it hard for competing providers to attract business, potentially contributing to higher prices for consumers.
PayPal had no immediate comment on the allegations. The regulators has invited the company to respondent to its preliminary findings.
Ramifications Around the World
The Bundeskartellamt is considering requiring PayPal to turn over any profits generated through the practices under investigation. It also believes the restrictions could violate EU competition law. A finding of infringement could have implications beyond Germany, potentially prompting broader scrutiny of PayPal’s merchant agreements across Europe.
In the U.S. PayPal generally has more latitude to establish contractual conditions for merchants using its services, including restrictions on payment-specific surcharges. Federal law does not broadly prohibit payment providers from imposing such restrictions on merchants.
