By David Fish, Sr. Analyst, Credit Advisory Service(Merchant Services)
In a further validation of the ecommerce gateway business model,MasterCard has matched step with primary competitor Visa byacquiring DataCash, a UK-based payment service provider (PSP),which securely enables internet merchants’ card payment processing.Readers will remember that Visa announced its acquisition ofCyberSource, which offers comparable services, six monthsago.
For both card brands this is a bold move into direct merchantservices, enhancing their competitive offerings for ecommerce, butalso potentially alienating their acquiring partners who have theirown gateway services in the market.When the Visa/CyberSource dealwas announced, many in the merchant acquiring industry interpretedthe move as something of an encroachment by a largely neutralplayer upon a very competitive space.Visa was quick to assure theacquiring community that the deal was really more aboutCyberSource’s risk management capabilities and delivery of othervalue-added services that the gateway model facilitates, and thatthey were not looking to compete with their acquirers and ISOs.Theysaid this was defensive against PayPal and other alternativeproviders in the ecommerce ecosystem.
Now that MasterCard has matched step, and added to their alreadysignificant presence in the gateway space, what can we as industryobservers infer from the card network’s very substantial movestoward the ecommerce processing business?Were these strategicacquisitions inevitable?If so, do they come at the expense of thetraditional payment acquirers and merchant service providers whohave acted as agents of these networks to build their brandacceptance footprints globally?Do these developments speak to theacquiring community’s ability to penetrate the ecommerce marketwith innovative products and services, or their ability to providemerchants with protections against fraud and data theft, or theirgeographical limitations in a world of growing global commerce?
If these questions have provoked your thoughts (or ire), let’shave a discussion!