A small software company in Utah has set its sights on becoming a one- stop shop for merchants on the Internet, hoping to eclipse some credit card processors along the way.

Digital Courier Technologies Inc., which develops content such as weather information and book-selling for Internet portals, wants to become card processor of choice for banks and independent sales organizations looking to sign on-line merchant accounts.

From Web page design to information content to transaction processing, Digital Courier wants to supply everything a bank or ISO needs to get its merchant clients on the Web.

Our "software gives the promise of encapsulating all of those steps and taking the intermediaries out of the process," said Mitchell Edwards, chief financial officer of Digital Courier.

The Park City, Utah, company said its software can help automate the underwriting process, giving a guiding hand to banks and ISOs skittish about signing Web merchants.

Merchant-acquirers that venture into the business typically charge steep discount fees to offset the risks-one reason Digital Courier can compete, Mr. Edwards said.

"Smaller Internet merchants will typically be taken to the cleaners on credit card clearing fees," Mr. Edwards said.

But banks and ISOs can pass along savings, because the software "saves the financial institution money and worry about being defrauded on the Internet."

Such talk may sound brash, especially with large acquirers such as Bank One Corp.'s Paymentech affiliate and super-ISO Cardservice International scooping up Internet merchants by the score.

But as a supplier to Internet portals, Digital Courier is building some cachet of its own. The company has agreements with America Online Inc. and Excite Inc., for example.

Investors have taken note. Dulles, Va.-based AOL holds a 3% stake in Digital Courier. George Soros' hedge fund, Soros Fund Management, owned less than 5% before selling its shares this year, the company said.

Digital Courier this month made two announcements to expand its processing arm.

Without revealing financial terms, the company bought Access Services Inc., a privately held credit card processor in Atlanta. Digital Courier also said it would lease processing software from ACI Worldwide-a subsidiary of Transaction Systems Architects Inc. of Omaha-to handle the processing of transactions.

In February, Digital Courier announced its intent to buy Databank International SKB of St. Kitts for $50 million in stock. The firm specializes in handling international credit card transactions.

Digital Courier said it was especially drawn to Databank's antifraud capabilities.

It followed up in March with an announcement to buy Secure-Bank, a Clearwater, Fla.-based Internet processor that provides anti-fraud measures for domestic card transactions.

These deals, expected to close by June 30, would give Digital Courier a merchant base of 640 and a monthly average of more than two million transactions and $26 million in sales.

There is plenty of growing room for smaller processors hungry for Internet business, said Michael Butts, executive vice president and chief operating officer of creditcards.com, a Los Angeles-based ISO serving Internet merchants.

"Bigger players are sort of like an ocean liner, and they can't adapt to things on a dime," Mr. Butts said.

"Risk underwriting is the single biggest issue banks face, relative to the Net," said Paul Martaus, president of Martaus & Associates of Mountain Home, Ark. "It's difficult when you've got guys selling potentially multimillion-dollar services out of a garage. How do you know he's real?"

Mr. Edwards said the ability to automate the verification process is why banks are going "ga-ga" over DataBank and Secure-bank's anti-fraud software.

Typical of many Internet companies, Digital Courier has yet to make a profit, having lost $12 million in the last six months of 1998. But with Databank and Secure-Bank, Digital Courier predicts it will move into the black this year, with monthly revenues averaging from $1.5 million to $2 million.

"With respect to Internet payment processing, we think at the end of the day, it will be our company and the credit card companies-period," Mr. Edwards said.

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