Notes of Note from John F. Ince

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.

“It also happens to be consistent with what we think our long-term strategies ought to be,” he said.

Jim McCarthy, Visa’s global head of product, said the main drivers for success in online payments were security and convenience. He said the acquisition of CyberSource would enable Visa to provide merchants and consumers with “a more frictionless experience” for online services and ultimately, mobile payments.

via Visa Buys CyberSource for $2 Billion – NYTimes.com.

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