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Saturday 4th September 2010

Yahoo Alters Fee Model For P2P Payments

Yahoo is offering a free version of its P2P payment system, Yahoo! PayDirect, for family and friends who want to transfer money online without using credit cards to fund the exchanges. Just eight months ago, Yahoo introduced fees for PayDirect, a move News.com sees as a "partial reversal [that] is testimony to an industry in flux". Since then, Yahoo had charged all PayDirect subscribers, even if they did not use a credit card, until last week, when PayDirect was split into two pricing options. Business users of PayDirect will now be charged 30 cents plus 2.5 per cent of the cost of each transaction made with the service.

As of last month, about 1 million Yahoo visitors were paying for online services, and the new fee structure is comparable to other P2P payment providers such as PayPal, according to News.com. PayPal, which is awaiting federal approval for its acquisition by eBay, reported today that a standard waiting period under antitrust laws, had elapsed without any requests from the Department of Justice for further information. The eBay-PayPal merger, which depends on regulatory approval, is due to close by Q4, 2002, but Yahoo is positioning its PayDirect service to fill any voids that may result if eBay was to restrict PayPal's service.

But the bank-owned card associations "could be the dark horses in the P2P payments industry", given their global systems and moves to develop P2P payments in Europe, Lafferty Publications recently noted. IDC analyst, Aaron McPherson also predicts US banks to eventually get more involved in P2P payments, even if "they haven't yet found a model that works", as "PayPal has proven there's a [profitable] market". With TowerGroup analyst, Beth Robertson, seeing the P2P payments industry as resembling a Trojan horse in "seeming to be one thing, yet with countless others emerging from it", the winners have yet to emerge.

Related Links
PayPal Reports Profits, Growth For Q2 2002
Yahoo, HSBC Extend PayDirect P2P Service
Card Firms 'Could Be Dark Horses In P2P'

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