The headline that shook things up yesterday is Visa’s intention to purchase Cybersource for $2 billion. While few saw this coming (though former Visa Chief Executive Carl Pascarella has been a Cybersource Board Member for just over a year), it makes a lot of sense. A great article on it can be found at Payments Views here – it is definitely worth the read. But one comment toward the end got me thinking a bit:
Of course, as a gateway provider, CyberSource must continue to support products and payment systems that compete directly or indirectly with Visa, both within the US and beyond (e.g., e-checks, PayPal, MasterCard, Bill Me Later, ELV in Germany, etc.). If they disadvantage competitors’ offerings, their value to merchants will be severely diminished and they’ll quickly lose volume. Having said that, Visa clearly understands and acknowledges that.
I guess I look at it a bit differently. To me, this seems like the perfect thing for a market dominant provider to do – more margin for payments run through Visa, and even for payments run through alternative channels, Visa still gets a cut.
I guess the only thing left to decide is, how is MasterCard going to respond? The once happy days of riding Visa’s coattails are long gone. MasterCard needs to have similar functionality in its arsenal. And with the capital to do it, thanks to the public markets, we should should see something play out in the next year.
Whose your bet?
