Bill McKiernan founded a credit card payment gateway company back in 1994 when the concept of an online “buy” button was new. Fast-forward to 2009 and his company, Cybersource, is a publicly-traded (NASDAQ: CYBS) credit-card-processing colossus. It acts as the payment gateway for such companies as Avis car rental, Facebook and Fandango, among thousands of other notable companies.
In November 2007, Cybersource acquired Authorize.Net, another early-day payment gateway company. Authorize.Net focuses on smaller online businesses and had grown to over 200,000 merchant customers at the time of the acquisition.
Combined, Cybersource posted revenues of over $229 million in 2008 and recorded over 1.5 billion separate transactions. McKiernan, a Harvard MBA graduate, has witnessed first-hand the rise of online businesses and we spoke with him about the state of ecommerce in early 2009.
PeC: How are ecommerce sales holding up in the recession?
McKiernan: “Broad, secular trends are benefiting ecommerce businesses currently. The recession has created more bargain-conscious consumers who are seeking better prices from online merchants versus, say, what they get in the local mall. We’re also seeing more individuals supplementing their income with niche online start-ups, which are creating more products for online consumers to choose from. And larger merchants are recognizing that it is more cost effective to sell online than in a physical location. In short, we’re seeing more shops online, more products online and more consumers shopping for them online.”
PeC: So, revenues are increasing for Cybersource, even during the recession?
McKiernan: “Yes. Same store sales grew for us dramatically in 2008 and we signed up over 106,000 new merchants during the year. In the 4th quarter of 2008, we also saw a sharp increase in gross transaction volume and in the dollar amount per transaction.”
PeC: Changing the subject, we’re hearing from smaller merchants who say they are being charged for onerous PCI compliance fees when the dollar volume of their business doesn’t justify full PCI compliance. Are various merchant account providers taking advantage of smaller merchants with unfair PCI compliance fees?
McKiernan: “Of course. And, many of these same merchant account providers are also taking advantage with high transaction fees, statement fees and so forth. Merchants need to exercise care in their choice of merchant account providers. Many providers, including my company, place great value on long-term customer relations where we act as trusted advisors. Companies that overcharge and exploit their customers will unfortunately always be around.”