Citing a lack of user support, Yahoo is shutting down its bid to compete with PayPal, announcing that PayDirect would close in November.
"Without the large user base to support PayDirect, the business doesn't scale," said an unidentified company spokesman in a press announcement October 22. PayDirect will continue through November 22, but users won't be able to make new accounts or send or receive money from people not current PayDirect customers, Yahoo said.
Yahoo's move comes a year after Citigroup, the financial services giant, shut down its own attempt to compete with PayPal, a service known as c2it, for the same basic reason – too few accounts.
PayPal is a formidable online payment presence, dominating that market with an estimated 56.7 million accounts at the end of the third quarter of 2004, a 61 percent hike over the same period in 2003.
PayDirect users will be able to see account records and withdraw remaining balances until February 15, 2005, after which date they will only have options of seeing past transactions or closing their accounts, Yahoo said.
