German merchants can charge fees for payment service providers

The German Federal Court of Justice (BGH) has announced allowing German merchants to charge an extra fee for online payments with payment providers such as PayPal.

Charges for paying by bank transfer, direct debit, or credit card are prohibited by law in Germany. However, money is required for the involvement of a service provider who takes on additional services, such as checking the creditworthiness.

With PayPal as well as with Klarna instant transfers, the merchant pays a fee per transaction. After the BGH ruling, the merchant is now theoretically free to pass on the fee directly to consumers who use one of the two online payment services. In practice, however, this is rarely the case, the effects for consumers are therefore minor.

Klarna did not want to comment on the judgment, according to Handelsblatt. PayPal has stated that nothing would change in practice for customers. The payment service adjusted its general terms and conditions at the beginning of 2018, stating that merchants are not allowed to charge their customers surcharges for the use of PayPal, although according to the judgment it would now be theoretically possible.

Paypal has agreed individually with large merchants whose relationship with PayPal is not regulated by the terms and conditions. Previously, German regulation states that agreements on fees for the use of cashless means of payment are not allowed.

The BGH has now decided that this rule does not apply to payments via PayPal and Klarna transfers. On the basis of the decision of the BGH, companies can now consider whether and how to deal with these costs.