Yahoo Inc. stands out as the only major Internet brand without a payment service, but that may change now that the company has hired Scott Thompson from PayPal Inc. as its new CEO.
“I don’t see how payments can’t be important here, with someone with as much payments experience and someone who has developed essentially a new network” for PayPal, says Beth Robertson, director of payments research at Javelin Strategy and Research.
Yahoo, of Sunnyvale, Calif., announced Jan. 4 that it had recruited Thompson to fill the CEO position that has been vacant since Carol Bartz was ousted in September.
Yahoo's main rival in the search-engine competition, Google Inc., already has branched out into payments with Google Checkout and Google Wallet. Amazon.com Inc. also has established a presence in payments.
Yahoo lost a foothold in payments last year when Alibaba Group Holding Ltd., a Chinese company in which Yahoo owned a 40% stake, transferred ownership of its payments unit, Alipay, to meet licensing requirements in China. Yahoo said the transfer of Alipay was initiated without its knowledge.
Yahoo once had a bill-payment service, which it shut down in 2007. The service routed payments through CheckFree Corp., which Fiserv Inc. bought at the end of that year.
On a conference call with Yahoo investors Jan. 4, Thompson said mobile devices would be critical to serving Yahoo’s base of 700 million users.
“Mobile, I think, is a really big question for Yahoo and a really big opportunity for this business,” Thompson said.
Under Thompson, PayPal has branched out to point-of-sale payments, expanded its work in mobile payments, and has explored other initiatives to take its payment system beyond electronic commerce.
“Scott has had a very strong influence on the growth and direction of PayPal,” says Paul Grill, partner at First Annapolis Consulting Inc., of Linthicum, Md. “The question is what steps does [PayPal] need to take to implement its broader vision more fully."
