Cyber Monday, one of the largest online shopping days of 2007 (November 26), brought in over a whopping $700 million in online sales, according to Loren Baker, Editor of Search Engine Journal.

But not through Yahoo Stores (now known as Yahoo Merchant Solutions), which suffered a dramatic loss in revenue from over 10,000 online merchants which use Yahoo Stores to power their ecommerce systems.

According to Baker’s posting, Yahoo suffered technical problems that prevented some shoppers from completing purchases on November 26. A message on the Yahoo Merchant Solutions System Status page characterized the problem as an Error Message During Checkout at 8:31 a.m.

At 5:12 p.m., Yahoo posted it was still investigating the issue, apologizing for the ongoing service interruption for our V3 checkout users (Checkout Manager).

Yahoo published another update at 6:51 p.m., reporting it had made configuration changes:  All merchants are able to accept orders at this time with slower than expected performance. We are continuing to investigate and make additional changes to optimize the checkout experience. Additional updates will be provided as they become available.

Merchants were, understandably, outraged and for good reason. The next day, thousands of them were trying to get answers from Yahoo! regarding payment system outage that left their online cash registers closed on such a critical day.

Yahoo’s shopping check-out service buckled under what the company called “heavy holiday traffic,” preventing as many as half of Yahoo’s 40,000 online merchant customers from processing any transactions for more than 11 hours.

Rich Riley, Senior VP of Yahoo’s Online Channel Division, posted on statement on the Yahoo blog: “We have apologized to our merchant partners for the impact that this service interruption had on their business and their customers at this busy time of year. As a token of our commitment to them, we have communicated with them our intent to waive all sales transaction fees for the month of November.”

Yahoo seems to have everything back on line, but the damage may already be done as far as partner relationships are concerned.