Germany's cartel office says PayPal's surcharge ban may be illegal

Germany's cartel office says PayPal's surcharge ban may be illegal

11 November 2026: Germany's competition authority has told PayPal that its rule forbidding online shops from charging customers extra for paying with PayPal may break German and EU competition law, because it stops merchants passing on fees the authority describes as above average. If the view holds, shops in Germany could start pricing PayPal checkout differently from cards, Klarna or the banks' new Wero service.

Not yet independently verified. This is a preliminary assessment, not a decision, and it rests on the Bundeskartellamt's own release; we have not seen a response from PayPal. We will update this when it can be confirmed, and remove this note.

The rule under attack

Since 2018 PayPal's terms have prohibited merchants that accept it from adding a surcharge for its use. According to the Bundeskartellamt, PayPal has enforced the prohibition and can end the business relationship with a merchant who breaks it. German law would otherwise allow a surcharge on PayPal as long as it does not exceed the merchant's actual cost, while surcharges are banned outright by law for consumer credit cards, SEPA transfers and direct debits.

The office's current findings are that PayPal charges above-average merchant fees compared with other payment methods and has a very high market share among online payment methods. Because the cost cannot be passed on to the PayPal users who cause it, merchants spread it across every customer through their prices, including people who pay another way, and PayPal users see no reason to choose something cheaper.

Why the authority thinks competition suffers

"PayPal is a comparatively expensive payment service for merchants," said Andreas Mundt, the Bundeskartellamt's president. He argued that if merchants cannot reflect the cost of each payment method in their prices, cheaper providers "would find it more difficult to gain an edge over PayPal."

The preliminary assessment is that the prohibition is a possible breach of the ban on anti-competitive agreements, Section 1 of the German competition act (GWB) and Article 101(1) TFEU, and of the ban on abusive practices, Sections 19 and 20 GWB and Article 102 TFEU. The office is also considering ordering PayPal to give up the economic benefit it gained from the possible infringement, under Section 34 GWB. The release names PayPal Holdings, PayPal (Europe) S.a r.l. et Cie, S.C.A. and PayPal Limited as the parties.

What happens next for merchants

PayPal can now comment on the assessment, and the authority stresses this is not a final decision. The proceeding has been open since 23 January 2023, and no date is given for a ruling. Nothing changes for German shops yet: the surcharge ban stays in PayPal's terms until a decision, a settlement or a change by PayPal itself.

For e-commerce teams the case is worth tracking now rather than after a ruling. A shop that wants to steer customers to cheaper methods would need its checkout and pricing software able to show a payment-method surcharge, capped at actual cost, and its payment mix data ready to work that cost out. Our catalogue lists 14 payment processing software products.

Sources

• Bundeskartellamt: PayPal could be impeding competition between payment services (press release), 11 November 2026