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Yahoo to scrap online-payment service

Company's PayDirect will begin shutting down in November and will close completely in May.

Yahoo is shutting down PayDirect, an online payment service similar to eBay's PayPal.

In a notice on , Yahoo said it will begin to shutter the service on Nov. 22. Beginning on that date, the Web portal will no longer let people open new accounts or send and receive payments from non-PayDirect users.

Transactions prior to Nov. 22 will be processed if the recipients accept the payments within 30 days. After that, Yahoo will cancel all payments. People will have until Feb. 15, 2005, to withdraw unused funds and check transaction records. By May 15, the entire site will shut down, the notice said.

"We are discontinuing PayDirect as part of our efforts to focus the company on core priorities," Yahoo spokesman Brian Nelson said Friday.

Yahoo launched PayDirect in 2000 as a payment system for its online auctions customers. The company acquired payment technology provider Arthas months earlier to jump-start the efforts.

Since then, Yahoo has retreated from parts of its auctions business. In 2002, the company said it would close its European auction business and point its customers to industry giant eBay. Yahoo still runs its United States-based auction site and accepts PayPal payments.

PayDirect has gone through its own share of changes. The service was originally free, but Yahoo began tacking fees onto the service in 2001 to expand its nonadvertising revenue. Eight months later, it retreated from its mandatory fees and restored PayDirect as a free service.