New MasterCard Rule To Impact PayPal?
MasterCard's proposal to stop e-tailers taking credit card payments via third-party firms like PayPal defies the Internet's promise "that anyone could set up shop and get paid", says Gartner analyst, Avivah Litan. From May 1, unless a change is effected, MasterCard's 15,000 issuers will not be allowed to use third-party services to process credit card transactions. While MasterCard says the new rule will not affect those occasionally using third-party services to sell goods online, but those trading "on a continuous basis", the move will hit small e-tailers the hardest, due to their inability to fund online merchant accounts.In Litan's view, "it's not a level playing field any more if this rule goes through", but MasterCard's Alex Lau, counters that the move is to protect banks and consumers from online fraud and ID theft. Litan believes the change is aimed at online gaming sites that have more cases of
MasterCard's move is unsettling in view that when PayPal filed for an IPO, analysts warned that if eBay curtailed the use of PayPal on its site, PayPal's business could be adversely affected. Litan confirms that MasterCard holders "could have a harder time using their cards at many sites, including auction sites, that use PayPal, and similar services", in particular on eBay, where PayPal accounts for about 28 per cent of transactions. To date, PayPal is "the biggest third-party [processing] service, with about 13 million registered users", according to USA Related Links
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