Visa Pays $2 Billion For CyberSource And One Mobile Life Preserver
Written by Evan SchumanApril 22nd, 2010
When Visa announced on Wednesday (April 21) that it was spending $2 billion for CyberSource, it was buying more than a security company. It was even buying more than additional online access to a lengthy list of retail chains, including Home Depot, Overstock, Burlington Coat Factory and Finish Line.
Visa already has lots of access to lower cost security options, and the world's largest payment card brand has even better access to huge retailers. We didn't say affectionate access, but it is access nonetheless. No, this deal is partially about E-Commerce and mostly about Mobile Commerce, with perhaps a few million dollars worth of PayPal paranoia thrown in.
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One Comment | Read Visa Pays $2 Billion For CyberSource And One Mobile Life Preserver
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-Christine
April 23rd, 2010 at 10:36 am
With Visa’s intention to get into the gateway and acquiring business, there really was no other choice other than CyberSource. No other provider has the merchant base that would have met Visa’s needs. And with the stickiness of gateways, they had to acquire. That begs the question, what is MasterCard going to do now?
I think the same evolution that has occurred in the wireless business during the past 15 years is well on it’s way in the payments industry. Carriers use to acquire and maintain business based upon minute plans, calling plans, geography (regional or national) and other small value adds such as night and weekend minutes or text messaging. That value differentiator is no longer there, it’s now the phone and the applications on the device. I personally would never have considered using AT&T if it were not for the iphone.
Gateways are the equivalent of the smart phone in the payments industry. Innovations will be built within, on top and around them. The ability for acquirers and ISO’s to capture and retain business will depend on their ability to build and or package these value added applications, which will be challenging if they don’t have a dynamic gateway.
Visa and the card brands and acquirers will need to do something else to get into the developer space and combat Paypal X. Apps have greatly amplified the value of the iPhone and that of course is the hope of Paypal.
MasterCard recently launched Labs, and AMEX spent 300 million on Revolution Money, which I still don’t understand how that made sense. So it appears that the message is out, the question is whether they can make something work.