VeriSign Inc. is hoping to raise the profile of its Internet payments business now that CyberCash, one of its biggest rivals, is mired in bankruptcy proceedings.

Mountain View, Calif.-based VeriSign, a pioneer in digital certificates, got into Internet payments with its December 1999 acquisition of Signio Inc., a business and consumer payments company. Payments now account for a small portion of VeriSign’s revenue, most of which comes from its Web domain name registry.

CyberCash, in Reston, Va., had agreed to be acquired by McLean, Va.-based Network 1 Inc., another Web payments company, but terminated the deal and filed for Chapter 11 bankruptcy protection this month after failing to come up with the money for closing costs, fees to investment bankers, and severance fees for layoffs.

VeriSign says it now sees an opportunity to expand its payments business, even though CyberCash says it will continue to support its customer base of more than 27,500 Internet merchants and 100,000 software users.

“It’s an opportunity for us to market our payment service as a stable offering to customers who are worried about having a stable solution in the future,” said a VeriSign spokesman.

But John H. Karnes, CyberCash’s chief financial officer, said VeriSign won’t have an easy time of it.

VeriSign, he said, “assumes that their services can conveniently be substituted for ours, and for most of our merchants, that just isn’t the case.” He added that the CyberCash brand and the difficulty of converting to another system would “keep someone like VeriSign from pillaging our customers.

VeriSign says it will use revenues from its domain name registry to bolster its payment and other offerings. The registry business accounted for about 60% of the company’s $475 million of revenue in 2000, while payments generated about $4 million, according to Robert Fagin, an Internet infrastructure analyst with Bear, Stearns & Co. in New York.

“We want the customer to understand when they go with VeriSign’s payments group that we are a big company. We are able to draw upon the entire business to support payment services,” the VeriSign spokesman said.

VeriSign’s ability to generate revenue from domain names and to cross-sell its digital certificate and payment services gives it an “enormous advantage,” said Joe Marino, principal analyst at Current Analysis in Sterling, Va.

“The logic of payment services is it’s a commodity,” he said. “Maybe when there’s enough commerce going, you can actually have outsourced payments be self-supporting, but certainly not at this stage of market development.”

VeriSign’s stock closed Friday at $41.63, down 17% from last Friday.

VeriSign will continue to support its growing payments business with “substantial investment,” the spokesman said. It now has 15,100 merchants, 5,000 of which were added in the fourth quarter, and processed $1.3 billion of e-commerce settlements last year.

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