About 20 HSBC Bank USA employees in Buffalo will be reassigned after the person-to-person Internet service they ran for Yahoo! is shut down by the search engine company.
Sunnyvale, Calif.-based Yahoo! decided to close the three-year-old Yahoo! PayDirect from HSBC service because it wasn't getting enough business to compete with leader PayPal. The company will instead focus on its primary businesses, including its popular search engine and Web "portal."
The service will begin shutting down Nov. 22, when users will no longer be able to add money to their accounts or send money, although they will still be able to transfer money out to their regular bank and close the PayDirect account. After Feb. 15, 2005, all remaining accounts will be closed and money refunded.
The service and Web site will be completely discontinued as of May 15.
A Yahoo! spokesman said the business needed to have a large user base to achieve scale, and as the company surveyed its members to assess what they wanted, "it became clear that PayDirect was not essential for Yahoo! users."
"We're going to be really able to focus on our core priorities and core growth areas of our business," he said.
The affected HSBC employees will continue to work on the service until active use is phased out at the end of November. At that time, they will be transferred to other projects, said bank spokeswoman Kathleen Rizzo Young.
"They are a talented bunch and in great demand," she said.
The person-to-person payments business has grown dramatically in recent years as a result of the Internet, which has created a new means by which to send money without using a check or cash. That's been particularly valuable for Internet auction sites such as San Jose, Calif.-based Ebay, which relies on prompt payment to satisfy its users. Ebay even acquired the oldest and largest person-to-person firm, Palo Alto, Calif.-based PayPal, in 2002.
PayDirect was first launched by Yahoo! in July 2000 in conjunction with Canadian International Bank of Commerce, but was later switched to HSBC. The current system was developed in Buffalo by HSBC Bank USA together with Yahoo! and was launched July 31, 2001.
The service included both an international funds transfer option to wire money abroad, as well as the ability to send money directly from one person to another electronically. Both are being closed.