By Bailing on P-to-P, Yahoo Also Abandons Remittance Market

Yahoo Finance's decision to shutter its 4-year-old PayDirect person-to-person payment service means it is also discontinuing a service it started up only 10 months ago to allow electronic remittances from domestic users to recipients overseas. The new international payment service was an effort by Yahoo Finance, a unit of Sunnyvale, Calif.-based Yahoo Inc., to break into the burgeoning market for remittances to foreign shores, a rapidly growing business dominated currently by services such as First Data Corp.'s Western Union Financial Services Inc. Yahoo announced last Friday it is pulling out of the person-to-person processing business, and clarified today that the decision includes the remittance market. According to a spokesperson, the company wants to “concentrate on core priorities key to our future growth.” The company refuses to release numbers for the remittance business, and will not indicate whether or by how much the business fell short of expectations in the brief time it was in operation. Unlike PayDirect, the international service did not require recipients to be enrolled. It also allowed payments to be delivered via wire or prepaid ATM card, so recipients also did not need bank accounts or access to the Internet. The company's World Card-branded ATM cards could be used at any of the 800,000 Cirrus-branded machines outside of the U.S. Wires could be sent to any of 60,000 foreign MoneyGram offices. Fees depended on payment method and destination. For the ATM option, senders paid a fee ranging from $5.95 to $8.95 per transaction, and the recipient paid a $1.50 withdrawal fee; for MoneyGram, they paid anywhere from $9.95 to $18.95 per payment. Senders enrolled at the PayDirect Web site, giving account and identification information and setting up an encrypted password. The enrollment gave users access to both the domestic and international person-to-person payment services. Senders who chose the ATM option funded the card by giving Yahoo a bank account or credit card number. HSBC Holdings PLC handled back-end settlement for ACH debits and credit card transactions. At the PayDirect Web site, users recharged the prepaid ATM account. For both the ATM and money-wire options, PayDirect set up a prepaid calling-card account for senders with five free minutes each time senders initiate a transaction. Senders could use the account to notify recipients that money is coming. Yahoo is keeping PayDirect live with full functionality until Nov. 22. At that time, it will limit usage to viewing accounts and defunding them. The company is asking users to fully defund their accounts by Feb. 15. From that point, the site will allow account viewing only until May 15, when the service will shut down completely. Yahoo has no plans to return to either the person-to-person or remittance markets any time soon, says the spokesperson.