CyberSource Corp. says it hopes that bulking up its risk management software offerings and putting new emphasis on fraud detection will help it generate more value from its electronic payment services business.

Risk management services are a means "to get more value out of payment processing to take it above the commodity level," said Jeff King, director of product management at CyberSource. "Payment transaction processing is relatively a commodity, but there is plenty of room … there" to cross-sell services like risk management.

The Mountain View, Calif., company is expected to introduce a new suite of risk management software today called Enterprise Risk Management Solution. Some components of the suite - like a customizable Web interface - are new, and others bundle together tools the company had already offered.

The product comes on the heels of the demise of a competitor in its other major business line, payment authorization and settlement.

In early March one of its main rivals in payment processing, CyberCash Inc. of Reston, Va., declared bankruptcy, and its assets were bought a month later by another rival, Verisign Inc., also of Mountain View.

But the elimination of a major competitor did not lift CyberSource's stock price; the shares have traded for less than $3 for most of the year and closed at $TK on Friday, down/up TK% from the week earlier's close of $1.62. Verisign, whose stock is bolstered by its lucrative Web domain name registry, has traded at around $50 since May.

Raimundo C. Archibold, an analyst at J.P. Morgan Securities in New York, said payment processing is a "foot in the door" for CyberSource to sell other transaction services like fraud screening. "CyberSource is going to get paid more for risk management than they would for payment services, so they would like to focus more on risk management and let that become the lead, as opposed to payments."

Kenneth Kerr, a senior research analyst at GartnerGroup Financial Services, agreed that payment processing is "not a real money maker at this point" for most companies. "It's difficult to try to run this business just on the transaction part of it alone."

CyberSource said it is hoping that its new software suite will give its profits a healthy shot in the arm. The company previously charged as little as $5,000, plus transaction fees, for fraud scoring, Mr. King said. By contrast, he said, users of the new software could shell out as much as $110,000 each, plus subscription fees, which could translate into significant money, as more than 500 customers currently use its fraud scoring system.

Last year fraud losses on Internet payments topped $1.6 billion, according to Meridien Research, a Newton, Mass., research firm.

Online fraud has been growing sharply since the mid-1990s, Mr. King said. "What we are seeing as far as fraudsters out there is, it's not just some kids with credit card generators. We've got sophisticated gangs of criminals out there."

Merchants doing business online must contend increasingly with criminal activities as diverse as money laundering, jewel heists, theft of identification data and high-value shipments, property scams, and sophisticated credit card generators run out of huge database warehouses.

As a result, costs have skyrocketed for business - and not just because of loss of goods, shipping costs, chargeback fees, and higher discount rates, Mr. King said. Higher operating costs because of stricter business practices have resulted in declining orders, higher customer service costs, costly manual order review and processing, and revenue and financial reconciliation inefficiency, he said.

"Fraud protection tends to force organizations to put restrictive business practices into place that potentially cause operating costs to go up," he said. Risk management software "automates the order acceptance process, decreases fraud, and increases the efficiency of the organization."

CyberSource says its Enterprise Risk Management suite is designed to let businesses control four key aspects of online fraud management - decision management, fraud screening, case management, and risk analysis.

The software integrates new Web-based tools with existing company products, such as an Internet fraud screen it co-developed with Visa U.S.A. The screen uses data validation, artificial intelligence pattern matching, a neural network, and data aggregation to examine, in less than a second, more than 150 factors that may signal a fraud associated with a purchase, Mr. King said.

The highest-profile new product in the suite is CyberSource Fraud Manager, a Web-based interface that lets merchants customize fraud rules for specific product, industry, and unique environmental variables.

Mr. Kerr of GartnerGroup said that CyberSource is "giving companies the ability to micro- or macromanage the transaction process to reduce fraud."

For the most part, he said, CyberSource has not taken its fraud prevention service in a completely new direction.

"They are trying to put a little more emphasis on fraud services," Mr. Kerr said. "If they had not tried to make a big splash with an announcement, it would have looked like an upgrade to their existing solution and not a big deal."

CyberSource is expected to announce its second-quarter earnings on July 17.

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