Germany’s Federal Cartel Office, known as the Bundeskartellamt, said in a preliminary assessment that PayPal’s prohibition on merchants passing transaction costs to customers may restrict competition between payment services and violate German and EU competition law. PayPal’s contractual surcharge ban has been in place since 2018, and the authority opened proceedings on January 23, 2023. It says PayPal’s fees of 2.49% to 2.99% per transaction, plus 34 to 39 cents, are above average and that the rules force merchants to spread those costs across all customers, including users of cheaper payment methods. The authority is considering ordering PayPal to lift the ban and surrender profits linked to the practice. German law generally permits merchants to impose PayPal surcharges up to their actual costs, although statutory restrictions apply to certain other payment methods, including consumer credit cards and SEPA transfers. PayPal said it disagrees with the preliminary assessment but is willing to engage constructively and can respond before any final decision.