By Mike Scarcella

Nov 6 (Reuters) - PayPal PYPL.O has persuaded a federal judge in California to dismiss a nationwide consumer lawsuit that accused the online payments giant of inflating transaction costs by illegally blocking retailers from offering discounts for cheaper payment methods.

U.S. District Judge Jeffrey White in Oakland on Wednesday said the plaintiffs in the proposed class action had not shown that PayPal wields sufficient market power, a necessary threshold in lawsuits alleging violations of antitrust law, or that consumers suffered any direct harm.

The lawsuit claimed PayPal’s contracts with merchants led to higher retail prices across the e-commerce market. White dismissed the plaintiffs' federal antitrust claim and related allegations under various state laws.

The judge said the plaintiffs can file an amended lawsuit by December 12.

San Jose-based PayPal had no immediate comment on Wednesday, and lawyers for the plaintiffs did not immediately respond to a request for comment.

The lawsuit said PayPal, which owns the peer-to-peer payments app Venmo, imposes the highest transaction fees among payment processors.

The complaint said it was seeking class action status on behalf of millions of PayPal users.

PayPal has denied any wrongdoing, telling the court that the company’s merchant provisions 「simply seek to ensure equal treatment and a level playing field.」

In seeking dismissal of the case, PayPal told White that the lawsuit failed to show that the company’s practices were causing consumers to pay more for goods and services.

White said the lawsuit lacked details about rival payment platforms. He also said the claims of injuries were speculative.

The case is Sabol v. PayPal Holdings Inc, U.S. District Court for the Northern District of California, No. 4:23-cv-05100.

For plaintiff: Ben Harrington of Hagens Berman Sobol Shapiro, and Brian Clark of Lockridge Grindal Nauen

For PayPal: Adam Hakki, Richard Schwed and Patrick Hein of A&O Shearman

Read more:

Visa, Mastercard agree to $199.5 million settlement in merchants’ class action

Apple, Visa and Mastercard win dismissal of merchant antitrust lawsuit over payment fees

Mastercard defeats mobile wallet platform’s antitrust lawsuit

(Reporting by Mike Scarcella)