A recent report from eBay sheds some new light on its payments arm, set to go solo later this year.
CyberCash is seeking a buyer to take it into mainstream payment services.
It was born in the dot-com excitement when no one knew how Internet commerce would play out. But as the medium matured and many physical world practices moved to the web, its business case became less compelling. In March, CyberCash Inc. filed for reorganization to give it time to find a buyer that could integrate its electronic payment services into a broader suite of products. “We wanted to be not quite so dependent on the growth of the Internet,” says John Karnes, executive vice president and CFO.
It started out-as its name implies-as e-money. But it had a hard time making a case for why e-retailers should accept CyberCash when they could take credit cards.
CyberCash is processing as many as 400,000 transactions a day-far short of the 1 million a day the company needs to break even. So last year, CyberCash cast about for a merger partner. It settled on Network 1 Financial Corp., a credit card processor. But it was unable to raise funding to make the merger possible. “It was probably the worst time in history to be looking for funding,” Karnes says. The parties called off the merger in March. “We decided to do the next best thing-an asset sale,” Karnes says.
CyberCash filed for Chapter 11 bankruptcy protection, then sought permission to hold an auction of assets. It did so on April 11. A consortium of VeriSign Inc. and First Data Merchant Services submitted the high bid of $20.4 million. The court must approve the sale. One thing is now clear: CyberCash will no longer be just the new money for the new economy.