BidPay Abruptly Closes Online-Payment Service

BidPay.com sent an email to users on Wednesday informing them it was discontinuing operations effective December 31, 2007, but gave no reason. It was 2 years ago this month that First Data Corporation abruptly closed BidPay before selling it to CyberSource Corporation.

A disappointed eBay seller wrote to AuctionBytes, "It's sad to see Bidpay leaving us out in the cold once again. We have used Bidpay on a daily basis for our international buyers and I am currently wondering what we will replace Bidpay with, and on top of that make sure that they new payment service should be a payment service that is not against eBay's policy."

BidPay President David Hansen told AuctionBytes it was a corporate decision to close the online payment service, and a major league disappointment. Hansen had also been President of BidPay under First Data Corporation's ownership.

How well BidPay was able to compete on eBay against the online auction site's own PayPal payment service is questionable. eBay heavily promotes PayPal to its buyers and sellers and offers protection to buyers only for PayPal-funded transactions. According to SEC documents, CyberSource reported that BidPay.com's third-quarter revenue in 2007 was approximately $120,000 and generated losses.

This year, BidPay expanded its service beyond eBay into ecommerce storefronts, and just twelve weeks ago, it launched an API that allowed developers to integrate BidPay into their shopping carts and ecommerce platforms. But in November, CyberSource acquired a service called Authorize.net that already addressed the needs of small merchants, making BidPay's off-eBay service redundant and, likely, inconsequential.

BidPay was one of the few online payment services eBay allowed sellers to accept aside from its own PayPal service. For eBay sellers who don't want to accept PayPal and may be too small to get their own credit-card merchant account, this may be a major setback. Off-eBay merchants do have the choice of using services like Google Checkout, and, as of this month, Amazon Payments.

Effective 5:00 P.M. PST, December 25, 2007, BidPay will cease accepting payments. From January 1, 2008 through 11:59 P.M. PST, January 31, 2008, registered users will have read-only access to their BidPay account information, and customer support services will be available through January 31, 2008 by contacting support@bidbay.com.