Archive for the 'Industry News' Category

From the press release:

Electronic payment company CyberSource Corp. said Monday it will acquire Authorize.Net, a provider of electronic merchant services, for $565 million in cash and stock.

Under the terms of the deal, Authorize.Net shareholders will receive 1.1611 shares of CyberSource (nasdaq: CYBS - news - people ) common stock for every share of Authorize.Net. They will also share a payout of approximately $125 million in cash.

Based on its March 31 share count, the transaction values Authorize.Net at roughly $19.49 per share, representing a 16 percent premium to Friday’s closing price.

The deal is expected to add to CyberSource fourth-quarter 2023 earnings, excluding certain expenses.

Bill McKiernan will remain chairman and CEO of the combined company, while Scott Cruickshank will remain president and COO of CyberSource, and Roy Banks will remain president of Authorize.Net.

Robert Donahue, a current Authorize.Net board member, will join the board of directors of CyberSource, while Cruickshank agreed to resign from the board.

Authorize.Net, formerly known as Lightbridge (nasdaq: LTBG - news - people ), was founded in Provo, Utah in Nov. 1996. It is currently based in Marlborough, Mass. In 2023 , Authorize.Net earned $24.8 million, or 88 cents per share, and generated $95.6 million in revenue.

It will be interesting to see what a large company with a commerce background will do with a commodity like Authorize.Net. Authorize.Net already is the industry leading payment gateway provider but still could use some help fixing bugs and innovating new features. If Cybersource makes Authorize.Net a priority and outs resources behind it there is no reason to believe their market share wouldn’t continue to grow. Time will tell.

Not being PCI compliant in the state of Minnesota will now cost you more then your merchant account. Last week the state passed a law that virtually made PCI compliance mandatory for online merchants. The law itself does not directly reference the PCI standards outlined by the major credit card issuers (Visa, MasterCard, American Express, etc) but it clearly is modeled after their standards.

It is important to note that this law only affects merchants, in the state of Minnesota, who handle credit card information. The merchant who are most affected by this are the ones who store credit card information on the web server although it does extend to other areas as well. Ecommerce sites that do not store their customer credit card information will find being compliant easy to accomplish assuming common best practices are used (SSL, etc). Also, the law is slightly different then the PCI Data Security Standard and does not mean merchants can ignore it if they are already compliant with Minnesota’s law.

Texas is also considering implementing a similar law and it should be passed shortly.

Read the law
PCI Website.

Technorati Tags: PCI DSS, payment card industry, visa, mastercard, american express, discover card, SSL, ecommerce

First Data, the largest player in the merchant services industry by far, has been sold to Kohlberg Kravis Roberts & Co for $29 Billion.This kind of sale would be the equivalent of Microsoft being sold GE.

You can read more about it in their official press release.

Technorati Tags: First Data

MasterCard has announced a new program where small businesses can order personalized MasterCard branded gift cards. These are similar to the gift cards currently available for purchase through local banks and some stores. The cards can be redeemed anywhere MasterCard check cards are accepted. The gift card can be customized with a company logo, a recipient’s name, and an embossed message. Cards are available in denominations of $10 up to $500.

You can order these gift cards online at http://www.mastercardgiftcard.com/.

Technorati Tags: MasterCard, gift cards, check cards, small business

Currently, if your business wanted to accept all four major credit cards you would go to a company that set up Visa and MasterCard together for you and then also help you set up a Discover Card account and an American Express account. Essentially you would have established three relationships. Although Visa and MasterCard are two separate companies the way they operate allows processing banks to wrap them up into one package with the same rate structures. The result of this is that you will be very hard pressed to find a merchant that accepts Visa but not MasterCard and vise versa.

What you won’t be hard pressed to find is a merchant that accept Visa and MasterCard but doesn’t accept Discover Card. This is because of Discover Card’s low level of usage relative to Visa and MasterCard. Most merchants work under the assumption, and rightly so, that anyone with a Discover Card also has a Visa or MasterCard. So why bother dealing with another company with extra rates and fees when you can just have one relationship that takes care of your needs?

To combat this problem Discover is moving to a new business model. Starting in November Discover Card will allow the same processing banks that establish merchant accounts for Visa and MasterCard to include Discover Card. The processing bank will be able to set their own rates just like they do with Visa and MasterCard (currently Discover Card has a set fee program which means every merchant has the same rate structure to work from). This means that when you establish a new merchant account, you can get one quote that will cover three major credit cards. You also only have one relationship to manage and one monthly statement. It also means there is potential for Discover Card rates to be more attractive then they were in the past as now competition can cause the pricing to go down.

This new program will start in November with First Data and this will expand as other processors have already signed up and more are on the way. This should increase Discover Card’s reach dramatically. Maybe in the not-too-distant future Discover Card will be as synonymous as Visa and MasterCard?

Technorati Tags: Visa, MasterCard, Discover Card, credit cards, processing bank