The ACCC has received more than 600 submissions opposing Ebay's plans
Auction website eBay has delayed plans to make Australian users pay for items solely via the firm's Paypal service after the country's regulator objected.
The Australian Consumer and Competition Commission (ACCC) said competition could be hurt if eBay went ahead with the switch to a single payment method.
EBay said the plan would provide buyers and sellers with more security and said it would lodge an appeal.
The company had planned to introduce the change on 17 June.
Australia was to be the first country to see the roll-out of eBay's Paypal-only plan, which would effectively block other payment services from seeking a share of the lucrative online market.
But the ACCC's draft notification warned that the strategy could "lessen competition".
EBay has moved the planned launch date to 15 July in order for both eBay and other interested parties to lodge submissions to the ACCC.
ACCC chairman, Graeme Samuel, said eBay's dominant position in online trading meant its plans posed a threat to healthy competition.
"Given eBay's position as Australia's leading online marketplace, the notified conduct will substantially reduce competition to supply online payment services," said Mr Samuel.
Mr Samuel said the ACCC did not believe the benefits outweighed the "anti-competitive effects".
EBay has said it was disappointed with the ACCC's statement and would challenge it.
"EBay believes the consumer benefits of this initiative are worth fighting for on behalf of its buyers," said the California-based company in a statement.
The ACCC has so far received more than 600 complaints opposing Ebay's plans.