CyberSource sold to Visa for $2 Billion

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CyberSource sold to Visa for $2 Billion

Category : Blog

Source: ANDREW MARTIN | NY Times | April 21, 2010

(Editor’s note: CyberSource owns Authorize.Net – BJK)

Betting that electronic payments will increasingly replace cash, Visa announced on Wednesday that it would pay $2 billion to buy CyberSource, which facilitates payments for big online merchants.

The acquisition is the largest in Visa’s history and positions the credit card giant to increase its leading position in e-commerce. Currently, more than 40 percent of online payments are routed through Visa’s network.

At the same time, Visa hopes to use its vast global network to spread CyberSource’s technology outside of the United States.

CyberSource provides a payment gateway for online merchants, connecting them to networks like Visa and MasterCard. In essence, it is the online equivalent of the terminals used to swipe credit and debit cards at brick-and-mortar stores. The company provides additional services like fraud prevention and security for merchants.

CyberSource, based in Mountain View, Calif., handles about 25 percent of online transactions in the United States. Its clients include Home Depot and Google.

Joseph W. Saunders, Visa’s chief executive, said his company was concerned about maintaining its market share amid competition from PayPal and other e-commerce companies. “This is somewhat in reaction to it,” he said in a conference call.



Dean McAdams Paralegal

April 29, 2010 at 4:05 am

Thanks for the update. I seriously must wonder whether this continued consolidation of the financial services sector is good for small businesses or consumers. dm

Steve Sotis | eProcessing Network, LLC

May 22, 2010 at 3:56 pm

Practical eCommerce interviewed Michael Walsh, President and CEO of CyberSource, about Visa’s announced purchase of CyberSource and Authorize.Net. Walsh was asked, “Does Visa or CyberSource have plans to get into the reseller or merchant account business when the transaction closes?” and his response was, “Visa doesn’t issue credit cards”.

A response to a question that has nothing to do with the question is an obvious indication that the responder needs to avoid the question which, in this case, means that yes, Visa and CyberSource clearly do have plans to “get into the reseller or merchant account business when the transaction closes”.

Easily 50% of the phone calls coming into ePN’s Tech Support queue are merchants asking (screaming?) questions like , “Why did this transaction decline”, “Where are my deposits?” and “Why am I being charged these fees?”. ePN’s Tech Support agents are trained to direct such queries back to each merchants sales office, giving sales offices opportunities to improve their retention rates.

Try calling into AuthNet as a disgruntled merchant and watch them transfer you to their merchant account department. Listen in on CyberSource’s past few earnings calls and listen to Walsh talk about the growing importance of the merchant account revenue stream.

Can I get another show of hands as to how many of you remember AuthNet’s full-page ad in The GreenSheet when PayPal bought VeriSign’s gateway? The ad targeted YOU, with AuthNet claiming you would lose your merchant accounts to PayPal if you didn’t move your accounts off of VeriSign and over to AuthNet.

So, we’ve come full circle here, right?


June 25, 2010 at 10:56 am

Yes, I wonder too if this isn’t bad for businesses, especially small businesses.

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