Yahoo! PayDirect

» see paydirect.yahoo.com as it lived, on the wayback machine

~ the obituary ~

yahoo launched paydirect in march 2000 after buying a small electronic-billing company called arthas.com. the back-end ran on cibc national bank, a florida subsidiary of the canadian bank. it was yahoo's bid to take the person-to-person payments slot that paypal was filling on ebay at the same moment. in november 2001 yahoo swapped cibc for hsbc holdings, a bigger banking partner that let the service expand to the uk. for four years paydirect sat next to yahoo auctions as the recommended way to pay a stranger you had bought something from.

it never caught on. paypal had ebay. ebay had buyers and sellers who already trusted paypal. yahoo auctions did not have either at the scale that mattered, and outside of yahoo auctions there was no obvious reason to use paydirect over paypal. on 22 november 2004 yahoo turned off the service. a yahoo spokesman gave reuters the obit line: "without the large user base to support paydirect, the business doesn't scale."

paydirect did not reach turkey at the consumer layer. neither of its bank partners served turkish accounts, and yahoo auctions itself was not big enough in turkey for paydirect to matter as a local product. i was a teenager in ankara across 2000-2004, on ttnet dial-up moving to broadband. paying for things online was not a problem i had, because no one i knew owned a card that worked on a us-coded payments page. paydirect lived its whole life on a side of the internet i was looking at but could not actually pay into.

~ the case file ~

~ how it landed ~

arthas.com was a 1999 san francisco startup doing electronic billing for utility companies. yahoo paid an undisclosed sum for it in early 2000 and rebuilt the engine into a consumer payments product. the launch positioned paydirect against billpoint, which was ebay's own homegrown payments tool at the time, and against paypal, which was clearly the threat. yahoo had the traffic. yahoo had the brand. what it did not have was the auction marketplace where person-to-person payments actually got used.

~ how it actually ended ~

paypal got bought by ebay in october 2002 for $1.5 billion. billpoint died inside ebay. paydirect kept running because yahoo wanted to keep the option open, but the underlying logic was already decided. by 2004 paypal had tens of millions of accounts and paydirect was below the threshold yahoo was willing to subsidize. the shutdown was a quiet press note rather than a public funeral. balances had to be cashed out by january 2005. account holders moved on, almost all of them to paypal.

~ what came after ~

the consumer-payments space stayed an open problem in the post-paydirect years. google checkout came in 2006 and died in 2013, while amazon payments stayed a sidecar. apple pay and google pay later solved the in-store half of the question. the person-to-person half went to venmo in the us with zelle and cashapp behind it. wise and revolut took europe. paypal absorbed venmo in 2013 and kept the crown anyway. yahoo's attempt sits in the back end of a long list of payment products that could not break paypal's network effect.

@}-->--

              )
             (_)
            .-'-.
            |   |
            |   |
            |   |
            |   |
          __|   |__   .-.
       .-'  |   |  `-:   :
      :     `---'     :-'
       `-._       _.-'
           '""""""

« previous  ·  random  ·  next »