Visa seeks online growth with CyberSource

NEW YORK (Reuters) - Visa Inc said on Wednesday that it has agreed to buy CyberSource Corp, a technology company that processes online payments, in a bid to increase its e-commerce business.

Visa, the world's largest credit and debit card processor, will pay $26 a share, or about $2 billion, for CyberSource.

The deal, which is expected to close in Visa's fiscal fourth quarter, will dilute its earnings for that quarter by about 4 cents to 5 cents a share.

Visa said the deal would increase the amount of online payments it processes and the resulting business for its client banks, which issue Visa credit and debit cards.

E-commerce is an area of increasing focus and competition for Visa and its rival MasterCard Inc, as more consumers shift their shopping habits online, often to competitors such as eBay Inc's PayPal unit.

"We're paying attention to PayPal, as well as other companies that are getting into the e-commerce space, and we are obviously concerned that that would have an effect on our market share ... This is somewhat in reaction to it," Visa Chairman and Chief Executive Joseph Saunders said on a conference call on Wednesday.

But the deal also helps Visa's efforts to expand into emerging markets where more consumers still use cash and checks rather than plastic.

"CyberSource's key market opportunities are international, specifically Asia and Latin America. This will be a significant focus, effective immediately," Saunders said.

Last week Ajay Banga, who will become MasterCard's next chief executive in July, also named emerging markets and innovation in e-commerce as priorities for the company. MasterCard said it has created a new global research-and-development arm to work on such innovation.

CyberSource, which has an 11-year partnership with Visa, currently helps process about 25 percent of all online commerce transactions in the United States. Its 295,000 merchant clients include British Airways, Home Depot, Facebook and Google.

CyberSource's president and chief executive, Michael Walsh, is expected to remain with Visa and continue to oversee his company's operations after the deal closes.

(Reporting by Maria Aspan, editing by Maureen Bavdek)