• by Gavin O'Malley  @mp_gavin, April 21, 2010

Watch out, PayPal. Visa has agreed to buy online payment processing company CyberSource for about $2 billion, the companies said Wednesday.

CyberSource provides electronic payment, risk management and payment security software to online merchants. A huge player in the world of ecommerce, clients include British Airways, Home Depot, Facebook, Google and many small businesses.

The two companies have partnered since 1999, and currently collaborate on risk models built into CyberSource's automated fraud management solutions.

Visa Chairman and CEO Joseph Saunders on Wednesday acknowledged the growing significance of ecommerce, and the competition he faces going forward. "We're paying attention to PayPal, as well as other companies that are getting into the ecommerce space, and we are obviously concerned that that would have an effect on our market share," he said on a conference call.

CyberSource claims to play a role in processing roughly 25% of all ecommerce dollars transacted in the United States. Meanwhile, through its CyberSource and Authorize.Net branded properties, the company claims to serve more than 295,000 merchants.

Visa believes the acquisition will increase the usage of Visa debit, prepaid and credit products for online purchases.

"Online commerce continues to grow rapidly, and this acquisition will enable Visa to offer new and enhanced services that will better meet the growing demand among merchants globally," Saunders said Wednesday.

As the majority of CyberSource's revenues are presently generated stateside, the companies also believe the deal opens opportunities for global growth.

CyberSource's president and CEO, Michael Walsh, will continue to oversee the company's operations, while its executive chairman and founder, William McKiernan, will join Visa as an executive advisor to assist in the integration of the two businesses.

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