Driven in part by the popularity of online auctions, the Web's top destinations have been introducing person-to-person payment services. More than just offering a convenience, these services give the companies a new and more direct relationship with their customers -- and their customers' money -- and help position them for the further evolution of their business models.
By
The new service will allow Yahoo!'s registered U.S.-based customers -- at least those 18 years or older with a credit or debit card -- to establish a Yahoo! PayDirect account and request, receive, send, and make payments over the Internet. The accounts are linked to the customer's existing credit and debit cards.
Banking and fund transfer capabilities for the service will be handled by CIBC National Bank, which will actually hold and manage the accounts, enabling "the secure movement of consumer money," which adds the assurance of "a major financial institution" that customers aren't just leaving their money with a bunch of yahoos. As promised when Arthas was first acquired, PayDirect will initially be part of Yahoo! Auctions, with plans to "thread it throughout Yahoo!'s network of integrated commerce services."
Others play the person-to-person payment game
Yahoo! is not alone in its bid to offer bill payment and money transfer services to online buyers and sellers.
In June, eBay (Nasdaq: EBAY), the quintessential person-to-person e-commerce service, introduced Electronic Check, a service offering of Billpoint, a company it acquired in May 1999. A strategic alliance announced last March, between eBay and Wells Fargo & Company (NYSE: WFC) combined Billpoint's online person-to-person credit card payments with Wells' payment processing and customer services infrastructure. With the vast majority of eBay transactions historically completed by check or money order, the companies cited the "exploding need" for such services.
Also in June, Excite@Home (Nasdaq: ATHM) announced an expansion of its relationship with First Data Corp. (NYSE: FDC) to offer payment and transaction services. First Data will be promoted across the Excite Network as the preferred provider of person-to-person online payments, with its Western Union MoneyZap offering direct transfers between users of Excite Classifieds and the Bluemountain.com greeting card site. First Data payment and services will also be integrated into Excite TV, Excite@Home's forthcoming interactive set-top service.
A July alliance between Citigroup (NYSE: C) and America Online (NYSE: AOL) will this fall build payment and money transfer features into AOL.com, CompuServe, Netscape Netcenter, AOLTV, Digital City, the AIM and ICQ instant messengers, and the main AOL service. Users will be able to draw dough directly from their bank accounts for person-to-person transfers or for shopping with AOL merchant partners. The deal also calls for the cross promotion of both companies' various products and services.
The person-to-person business proposition
The huge popularity of auctions is one of the drivers of all the person-to-person payment action by the portals and other Net destinations. In addition to allowing faster transactions -- no more waiting for snail-mail money orders and for checks to clear, or perhaps bounce -- these realtime credit-card like services afford customers a greater degree of confidence, which lowers the buying threshold. Easy, secure, drop-of-a-hat payments are a key to the Web's development as a commerce platform.
In addition, because they require a valid credit card, billing and payment services give the free sites in particular a new, more direct relationship with their customers, and with their customer's money. This can make it easier to offer premium services in the future, which Yahoo!, for one, has indicated was on the table. And so more than just a new level of convenience to their customers, these services help position the companies for the further evolution of their business models.
Your Turn:
Have you used person-to-person payment services, or other bill paying services on the Web? Does the idea appeal to you? And what do these services mean for the sites that offer them? One thing's certain: it'll cost ya nothin' to share your Foolish 2¢ on the Yahoo! or eBay discussion boards.
Related Links:
RSS Headlines
Fool UK
