CNET también está disponible en español.

Ir a español

Don't show this again

Tech Industry

Can deal revive CyberCash?

After a couple years of frequent "Big firm buys Net firm" deals, Internet-only payment service CyberCash reaches out and grabs ICVerify.

CyberCash CEO Bill Melton pulled a fast one with last week's wrong-way acquisition of ICVerify.

After a couple years of frequent "Big firm buys Net firm" deals, Internet-only payment service CyberCash reached out and grabbed ICVerify, a company with 250,000 physical locations using its credit card processing software.

The acquisition indicates how closely Internet commerce and online payments are linked to real-world retail and card transactions. A continuum, call it a sliding scale of comfort, is emerging between processing payments in encrypted form over the Internet or over the secure financial networks that traditionally handle them.

Frankly, I've had CyberCash tagged as acquisition bait, not as a buyer. It hit the Internet market too soon--its business plan was predicated on Internet commerce taking off in 1996. Since its IPO in early 1996, when it was among the first Internet firms to go public, CyberCash has raised new cash twice to stay alive. It lost $26 million in both 1997 and 1996, but at least it generated $4.4 million in revenue last year--up from a paltry $127,000 in 1996.

Today CyberCash has a look of strategic desperation--for every payment opportunity, it has an angle. That's praiseworthy.

CyberCash retains a great Internet brand name, which is the asset someone else still could covet in a buy-out. The company raised $15 million last month for acquisitions, with another $15 million to come if CyberCash's stock price stays up.

After laboring in Internet payments since 1994, CyberCash has signed up about 3,000 merchants to connect their Internet storefronts to the secure credit card network. ICVerify, which launched its Internet software last month, has 5,000 Net merchants, although many simply use ICVerify's standard software for Net payments too.

CyberCash clearly bought ICVerify for its channel to merchants, which opens a host of new prospects and offers a product to complement CyberCash's service.

CyberCash company is also pursuing more aggressively Internet merchants, not to mention financial institutions and billers. To sign up new Net retailers, CyberCash has forged ties to companies that merchants turn to if they want to open a Net store front: ISPs for hosting, vendors for store-building tools, Web site developers, and credit card processors. Maureen Loftus, senior vice president of merchant services, says CyberCash, which also tinkered with rates to boost revenue, can add 1,000 new merchants a month.