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Nochex open letter disses eBay and bans

by Bob Crabtree on 13 July 2006, 00:58

Quick Link: HEXUS.net/qaga6

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To cynics, eBay's take over in 2002 of the PayPal online payment system was only ever going to have one outcome. The real surprise to us is that it's taken so long to become controversial. Now, though, eBay has started to ban the use of online purchasing systems other than PayPal, putting the soft smelly stuff and the air-con on collision course.

Last week, eBay banned the use of Google Checkout - the new e-commerce system introduced by the world's favourite search-engine company. It then followed up a couple of days later with a ban on the long-establish, Leeds-based operator Nochex, which describes itself as, "the UK’s leading independent provider of secure online card payments".

Nochex CEO Martin Greenbank has responded with an open letter calling into doubt eBay faith in its own business model and highlighting the way that top eBay executives have been abandoning ship, saying this has caused share prices to tumble.

He also plays what he clearly thinks must be a trump card, the possible intervention of the EU Competition Commission, doing so in the knowledge that the commission was about to land Microsoft with a second enormous fine - for not complying with its last ruling. The fine was announced yesterday as being for 280 million Euros, nearly £195m!.

But, rather than further précis what Greenbank's says, we thought we'd give you the pleasure of reading his letter yourself,

Nochex caught between eBay and Google

Nochex, the UK's leading independent online payment services provider has been banned from eBay, along with Google and a string of other payment service providers.

Martin Greenbank, CEO of Nochex said, "We discovered the ban, which was made without consultation with us, or our customers. It looks like a knee-jerk reaction as it was made within two days of the Google Checkout launch. The ban comes on top of reports in the New York Times (http://www.nytimes.com/2006/07/10/technology/10ebay.html?_r=2&oref=slogin&oref=slogin) that eBay are losing key executives and have seen 45% of their share value wiped out, so eBay may well be rattled.

"But our main concern is for our customers who are denied the choice of using a well-proven, cost-effective, secure payment services provider with a UK-based support service. That is an important ingredient in giving UK businesses the confidence to grow an ecommerce business effectively."

"eBay has updated their accepted payment policy to exclude Nochex and Google along with a host of other players to effectively limit payment options to their own PayPal, or a few much smaller, lesser known providers. And we have seen media reports that sellers who continue to promote the Google option will be excluded from eBay. We don't know yet whether the veto will be extended to other payment providers."

"I really wonder what the EU Competition Commission will make of this move as they are already mounting an enquiry into competition within the payment cards industry. I would have thought this would be a relatively easy add-on? This move certainly reduces the payment services options available, especially if an online trader or buyer wants to use a provider with an established UK-based support service."

"Fortunately, our core business is in providing online traders with cost effective all-in-one Merchant Accounts. During this year we have experienced fantastic growth with an increased number of eMoney merchant accounts being opened, and we are currently seeing an even greater increase in new merchant account applications. This growth appears to be driven by traders migrating from eBay."

"Whether that made us more of a threat to eBay's own payment service provider, I don't know. Judging from the outrage already being expressed on eBay's own customer forum, they may have scored a significant own goal by acting in such an anti-competitive manner. We are expecting a continued increase in Merchant Applications as sellers migrate from eBay and setup shop on their own"

"The UK payment industry is demonstrating unprecedented growth and we see Google's entrance into the market as a positive sign, which will in turn, create a competitive market and give greater consumer choice."

Nochex – FactFile

* Nochex is an independent, privately-held company based in Leeds, England.
* Founded in 1999, Nochex has been providing individuals and small businesses with a secure, reliable electronic payment service in the UK since January 2001.
* The payment system was initially adopted by UK auction website users for person-to-person payments, but is now more active providing affordable internet merchant services and online payment services for web-shop owners, primarily for small and medium sized businesses selling online in the UK.
* Nochex is focussed on providing a reliable, trust-worthy internet payment system that is both competitive and, most importantly, secure, with good customer support services.
* A key benefit is that Nochex is easy to use, so more sales transactions are completed through Nochex than many other online service providers, boosting our ecommerce clients’ sales by as much as 24%.
* Nochex has around one million registered users in the UK, and continues to increase rapidly.

Thoughts on eBay's actions, Google Checkout or Nochex' response? Then share them with us in the HEXUS.community.

UPDATE - July 13, 23:00

HEXUS.headline - eBay accepting Nochex again. For now!

All very mysterious!

HEXUS.links

HEXUS.community - discussion thread about this article
Guardian Unlimited - eBay bans Google Checkout
The Register - eBay buys PayPal
Associated Press - EBay Buys PayPal in $1.3B Stock Deal



HEXUS Forums :: 21 Comments

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If I could I'd probably remove the Paypal payment option from my auctions, but there are so many people using it I'd probably lose out on a lot of bids.

Tis a shame eBay feels they have to ban the competition. If they lowered their fees I'm sure people would choose to use paypal because of the integration with eBay.

They must make a killing on the fees
Paypal sucks ass :( I quite liked NoChex!

I wonder if ebay could be considered a monopoly?
Stand by for the launch of G-Bid… that's all I can say….
hmm well I am in two minds about this.

One the one hand, this means less choice of payment for buyers, which could ultimately mean less (potential) customers for ebay and ebay traders, especially if traders decide not to accept paypal now.

On the other hand, as a result of there being fewer payment methods the chance of being defrauded could drop (easier to manage fewer payment options), more sellers might accept paypal, and with more focus placed on paypal ebay might be forced to ‘fix’ the security problems that it currently faces with paypal.

hmm personally I use paypal for 99% of my transactions on ebay (sales and purchases), and have only ever had one problem ( a disputed payment from a customer) which was resolved within a few weeks (I got my money back, he was in the wrong :)). So for me, it's not a problem. Nochex I only ever used when I couldnt use paypal (because you could use it at 16 with a debit card), so its not a big loss to me. Others like Fastpay, bidpay etc I never really used..like I say paypal works fine for me :)

Also I don't think theres anything illegal or morally wrong with this - ebay is a business after all, and they should be able to do what they see fit (within the law) to help their business grow. If this means eliminating the competition then great as far as I'm concerned..I personally think the anti-competition laws are stupid, and Microsoft shouldnt have been fined..but thats another issue :)
….so you're happy with paypals excessive fees, and their (documented) inability to deal with fraud and protect sellers? What's to stop ebay jacking up paypal fees now they've got an ‘exclusive’ on their site? None of this can be good for you and I.