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Munich court: PayPal within scope of German surcharge rules

Out-Law News | 17 Dec 2018 | 3:17 pm | 1 min. read

Businesses in Germany that rely on PayPal for processing consumer transactions cannot reclaim the processing charge from consumers, a court in Munich has ruled.

The ruling has helped to clarify the scope of Germany's laws on payment surcharges, said Igor Barabash of Pinsent Masons, the law firm behind Out-Law.com.

On 13 January 2018 a new section of the German Civil Code was introduced to ban online businesses from applying cost-covering surcharges when accepting many common types of payment. The rules, which only concern business-to-consumer transactions and which implement rules in the EU's second Payment Services Directive (PSD2), apply to all SEPA credit transfers and direct debits, as well as debit and credit card transactions processed via a four-party scheme, such as payments made using Visa, Mastercard and Girocard, which are popular in Germany. 

Previously, online retailers were able to recover the costs they incurred when accepting certain payments from buyers provided that they provided alternative common and reasonable means of payments to those customers for free.

In a ruling last week, the district court of Munich confirmed that payments via PayPal and via 'Sofortüberweisung', which is a third party product in Germany that enables immediate transfer of funds, are subject to the new rules as well.

The Munich court was considering the scope of the payment surcharging rules after the Centre for Protection against Unfair Competition (Wettbewerbszentrale) complained that FlixMobility, which has a share of about 75% of the German long distance travel bus market, was imposing a surcharge on online bookings.

Barabash said: "It is surprising that FlixMobility let things come as far as court with regard to use of 'Sofortüberweisung' given that this payment method is based on a SEPA-transfer and is subject to the PDS2 regime. With regard to PayPal, the ruling is only logical and corresponds with the aim of the PSD2 to ensure that payment surcharges for common and market standard payment options shall not be forwarded to the customer."

"Given that the price competition between German online shops is quite fierce, retailers are likely to have to bear those charges themselves as they will find it difficult to pass the charges onto consumers through increased prices of their products and services," he said.