There is no bigger name in the credit card business than Visa, and there are no bigger names in the payment gateway business than CyberSource and its subsidiary, Authorize.Net. Later this year, all of those companies will likely be combined as Visa and CyberSource announced recently that Visa intends to purchase that company. To explain the transaction and its impact on ecommerce merchants, we spoke with Michael Walsh, president and CEO of CyberSource, and John Bodine, its vice president of small business sales.
Practical eCommerce: Why did Visa buy CyberSource?
Michael Walsh: “This deal is about driving growth in ecommerce and delivering value to merchants and financial institutions in the ecommerce ecosystem. By joining forces with the largest payment brand in the world we’ll be able to deliver more innovation to the ecommerce marketplace than we have ever before.”
PeC: The press release that was issued by both companies alluded to Visa’s financial strength as a factor in accelerating the growth of CyberSource and its Authorize.Net division. What investments do you see Visa making to accelerate CyberSource’s growth?
Walsh: “Well, I think the investments are really going to align to the CyberSource strategy with perhaps one or two additions. That strategy is around a few key areas: expanding the ecommerce marketplace globally; enhancing fraud capabilities (we feel like the combination is going to provide a lot of opportunities to continue to innovate in the area of fraud management); and payment data security, which is an area of focus for CyberSource, and we believe this combination will allow us to innovate in that area in some significant ways. Another possible addition that we have talked about is innovating around the mobile payment space. We’re looking at opportunities there as well.”
PeC: You mentioned global expansion. Is that penetrating the use of credit card use in other countries, or is that providing a platform to accommodate the payment system that they’re used to, or both?
Walsh: “I think it’s going to be both. Both Visa and CyberSource believe that, as a result of this combination, we will be able to achieve a better performing Visa transaction. But, it is true that in certain geographies around the world, non-credit card payment methods are the preferred methods, and CyberSource does offer an open platform that supports all of the appropriate payment methods in the geographies that we serve. Visa understands that, and they see value in that, so we believe that we’ll continue to innovate in both Visa credit card transactions, debit card transactions, and prepaid transactions, but also non-credit payment instruments as well.”
PeC: Could you talk about your plans with mobile?
Walsh: “Today, CyberSource does not have a proprietary mobile payments offering, but the platform is built in such a way that adding new mobile capabilities would be fairly seamless. It’s a little early to get into too much detail there, as we are just sort of starting these discussions with Visa, but we think that adding the platform to what they’re thinking about in the area of mobile presents a significant opportunity.”
PeC: For small merchants concerned with PCI compliance, hosted payment solutions may help them. Does CyberSource or Visa have plans for a hosted payment solution?
Walsh: “We actually offer that service today. CyberSource has had a suite of offerings around hosted payment acceptance for several years. We do believe that there are going to be opportunities to enhance those capabilities as a result of this combination.
“The point you make about smaller merchants having difficulty maintaining PCI compliance is valid. We think our offerings give them the ability to do that in a cost-effective way, and we’ll continue to focus on that as a result of this combination.
“There’s a hosted order page, and (not to get too technical here) there’s something called a silent order post that essentially allows a merchant to maintain the page itself but the data fields themselves are actually hosted. So, the page is within the merchant environment but the data fields that contain payment data are actually in our environment. So it really gives them more flexibility around an integrated user experience or customer experience on their website.”
PeC: How will this transaction affect smaller merchants that work with Authorize.Net?
Walsh: “I’m going to let John Bodine, who manages our small business segment, address that.”
John Bodine: “In the short term nothing changes. I think merchants will continue to experience the same reliable service, and customer support, and innovative product offerings that they had come to expect from Authorize.Net and CyberSource over the years.
“Over time, there are definitely opportunities to expand the solution set that we offer, not only to merchants, but to consumers, our resellers, and our integration partners, thanks to this new relationship between CyberSource and Visa. Things like global payment processing, increased fraud tools, maybe tax solutions. Bringing a lot of the tools from the CyberSource enterprise platform over to this small business or Authorized.Net merchant base and from Visa, adds things like Visa debits, the prepaid and credit product support for their right-click solution, which allows better consumer storage and check-out functionality; and more PCI compliance solutions.
“But, in the short term, merchants won’t see anything out of the ordinary. They’ll continue to experience the same solutions and reliability that they have today, and in the future, over time, they’re going to see a lot more coming from Visa and CyberSource directly.”
PeC: What does the transaction do to Visa’s relationship with other payment gateways, and CyberSource’s relationship with other issuers, such as MasterCard?
Walsh: “Both companies are aligned around the fact that the openness of the CyberSource platform has been a key to our success, and we’re committed to maintaining that approach. Merchants need the capability to offer multiple payment types and that won’t change. As it relates to Visa working with other gateways, there are no expected changes there either. This really is about just adding ecommerce capabilities to the Visa brand and accelerating growth in the ecommerce segment.”
PeC: Authorize.Net’s business, as we understand it, has been built on the reseller network. Does Visa or CyberSource have plans to get into the reseller or merchant account business when the transaction closes?
Walsh: “Visa doesn’t issue credit cards. Their client banks do. Again, this deal is about driving ecommerce growth and delivering value to both merchants as well financial institutions. The plan is to align our priorities to serve those two objectives of driving value to merchants and financial institutions.”
Bodine: “One of the key growth factors is definitely our reseller channel, and that’s been from day one. I agree with Mike, this only strengthens and builds relationships. There’s nothing in Visa’s plans to hinder, or halt, or to stem the strength of those relationships.
“The average length of a reseller agreement with Authorize.Net is over nine years. So, while the industry has changed and players come and go, we’ve shown over time that we can continue to provide the value and the product and solutions that resellers are looking for. Visa understands that. It’s been the strength of the business from the get-go, and will continue to be going forward.”
PeC: Any last thoughts for our readers?
Walsh: “I would just reiterate that they shouldn’t expect any change in strategy from CyberSource and the Authorize.Net brands. We believe that this will only enhance our ability to continue to deliver value faster. We’ll have more resources available to us as part of Visa. We’ll be able to leverage the global network that Visa has built over the last several years. So, this will be a positive for our end merchants as well as our partner ecosystem of resellers and affiliates, and we’re very excited about it.”