A PYMNTS Company

PayPal Ends Federal Antitrust Challenge to Merchant Payment Rules

By  |  August 13, 2026
PayPal

PayPal Holdings Inc. secured the dismissal of a consumer antitrust lawsuit challenging restrictions in its merchant agreements, after a federal judge concluded the plaintiffs had not established the direct injury needed to pursue their case.

    Get the Full Story

    Complete the form to unlock this article and enjoy unlimited free access to all PYMNTS content — no additional logins required.

    yesSubscribe to our daily newsletter, PYMNTS Today.

    By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions.

    Judge Jeffrey S. White of the U.S. District Court for the Northern District of California dismissed the federal claims with prejudice, according to Bloomberg Law. The Aug. 13 report said the ruling represented the third time the court had rejected claims brought by consumers against the payments company.

    The dispute arose from allegations that PayPal’s contracts with merchants harmed shoppers by restricting how sellers could steer customers among payment choices. The consumers argued those arrangements ultimately resulted in higher prices for online purchases, according to Bloomberg Law.

    The latest ruling turned on whether the consumers themselves had suffered an injury sufficiently connected to the conduct they challenged. White found that their allegations still did not meet that requirement, Bloomberg Law reported.

    The judge said the plaintiffs had failed to show injuries that were “sufficiently direct and nonspeculative,” according to Bloomberg Law’s account of the court order. The consumers initially sued PayPal in 2023.

    Related: PayPal Defeats Antitrust Challenge to Merchant Payment Rules

    By dismissing the federal claims with prejudice, the court prevented the plaintiffs from trying to revise those claims again in the district court. That distinguishes the ruling from an ordinary dismissal that leaves room for another amended complaint.

    The outcome also underscores the role that standing can play in private antitrust litigation. Plaintiffs challenging allegedly anticompetitive business practices must do more than identify conduct they contend reduces competition; they must also establish an injury with a sufficiently direct connection to the alleged violation.

    White did not dispose of the remaining state claims on the same basis. Instead, he dismissed those claims without prejudice because the federal court lacked subject-matter jurisdiction over them, according to Bloomberg Law. The judge then closed the case.

    The decision gives PayPal a final victory over the federal claims in the district court without requiring a broader ruling that merchant anti-steering provisions are necessarily permissible under antitrust law. Rather, the case ended because these plaintiffs failed to establish the standing necessary to proceed with their challenge.

    Source: Bloomberg Law