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Credit card process threatens Buy.com

The ailing online retailer has warned that it may go out of business because it may not be able to process credit card transactions.

On the brink of being rescued by its founder, ailing online retailer Buy.com has warned that it may go out of business because it may not be able to process credit card transactions.

In documents filed with the Securities and Exchange Commission, Buy.com said that the company that handles its credit card transactions is scheduled to sever its relationship with Buy.com as of Sept. 1.

"If we are unable to secure a new credit card processing relationship on acceptable terms, it is unlikely that we would be able to continue as a going concern," according to a quarterly report filed by Buy.com on Monday.

Credit cards account for about 90 percent of Buy.com's revenue, the Aliso Viejo, Calif.-based company said in its report. The name of the credit card-processing company or the reason why the relationship was ending was not included in the filing.

Calls to Buy.com were not returned Tuesday.

Buy.com was once among the elite of Internet shopping sites. But for the past year, the company has languished amid layoffs, lawsuits, executive shake-ups and, this month, a delistment from the Nasdaq.

A possible reprieve came this month when the company announced that founder Scott Blum had agreed to buy the company for about $23.2 million, or 17 cents per share. The deal, which Buy.com management has already endorsed, is subject to shareholder approval.

How that deal will be affected should Buy.com lose the ability to accept credit cards is uncertain. Buy.com said it expected the merger to close Nov. 30. Should the merger fall through, and Buy.com not be able to find an additional source of financing, the company said it doubted that it could stay in business.