Visa Inc. is furthering its e-commerce strategy by buying a payment platform for online games.
The card network announced Feb. 9 plans to buy PlaySpan Inc. for $190 million in an all-cash deal that furthers a strategy set in motion last year with its $2 billion purchase of CyberSource Corp., a Mountain View, Calif.-based provider of payment processing and risk management services (
The PlaySpan deal gives Visa the technology to support a bigger role in growing markets such as online games, smartphone apps and social media. It also gives Visa a platform to support micropayments, says Beth Robertson, the director of payments research at Javelin Strategy and Research.
“On balance, that is positive although, since those markets are developing, PlaySpan does not have a broad, established share,” she says. “Visa and CyberSource will have to contribute their resources to build that.”
Most funds that move through Visa’s network today are generated from consumer spending at merchant sites. Visa’s presence in e-commerce, though strong, “is not as significant,” Thomas C. McCrohan, managing director for equity research at Janney Montgomery Scott in Philadelphia, said in a note to investors published Feb. 9.
“CyberSource was a clear message that Visa sees e-commerce as an important battleground,” he wrote. PlaySpan’s technology lets game and mobile-app developers sell content through “in-app purchases” in 180 countries, meaning users would not have to shut down the game to buy things through another window or device.
Santa Clara., Calif.-based PlaySpan says it sells a virtual currency that players may use to pay fees and make purchases within many popular computer games, including FarmVille and EverQuest. Players can use cards loaded with the currency in stores as an alternative to using a credit card online. Facebook Inc. also uses PlaySpan’s monetization service to give its Facebook Credits users payment options.
Zilvinas Bareisis, a senior analyst at Celent, questions the wisdom of entering the online game space today. “I think the biggest question is going to be: How regulated it will become?” he says. “What will happen as it starts growing?”
Virtual currency is inherently tough to track, Bareisis says, making it riskier than conventional payments. “All I’m saying is, it’s something to watch out for,” he says.
Karl Mehta, PlaySpan’s chief executive, said in an e-mail the Visa purchase is a “great endorsement” that “allows us to take it to a broader set of merchants beyond our initial focus and success with Digital Media publishers.”
A Visa spokesperson says no job losses are expected as part of the deal. He says he could provide no further details on it.
Visa expects to close the deal by March 31.
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