Just like so many others in the space do, CyberSource (NASDAQ CYBS) closed down BidPay abruptly and without notice. The question of course everyone is asking is: Why? About two years ago, CyberSource realized that it was faltering. There are so many Fortune 500’s out there (500 to be exact), but of those, there aren’t too many who would even bother to consider dropping their current solution and moving to an antiquated solution like CyberSource. They had to do something to try and recapture some momentum as they didn’t want to find themselves where they were 5 years ago (headed towards bankruptcy).

They quickly realized that while their risk management tools did little to help small merchants with fraud, they still had a name out there in the space that they could use, so they turned to the small business arena. They soon came out with a small business package, in the hopes that they could parlay many of those clients into the more lucrative business of consulting services which CybersSource finds is not only much more profitable, but accounts for a good chunk of change they didn’t even know existed a few years back. Unfortunately, they quickly realized that very few small business clients had any interest in paying thousands for integration on a service they ultimately would spend $30 a month for. The unexpected challenge for CyberSource was that small business requires even more support than the larger players, maybe not on a case by case basis, but definitely overall.

What ended up happening is CyberSource came to the conclusion that in fact once a small business was locked into their processing system, they often didn’t want to or would think about changing. When it comes down to it, the average merchant simply wont change payment gateways or providers and interrupt their payment flow when their revenues were at stake. One bad move could be disastrous, so thousands upon thousands of small business owners found themselves stuck with a poor risk management tool and an even worse customer support oriented company.

Of course for CyberSource, it didn’t matter. Over the next few years, they quickly began looking for more large quantity small business owner relationships they could funnel more merchants into. They signed a lucrative contract with MIVA which CyberSource now controls and anyone who has ever used MIVA Payments, otherwise known as CyberSource, will tell you that support is nonexistent. Then came BidPay and while merchants demanded more and more, CyberSource was unwilling to put the money behind these clients and couldn’t attract any one of them to its other profitable units. Then of course came the biggie, with the acquisition of Authorize.net, now 200,000+ merchants are forced to settle with hour-long support wait times, poor service, and even poorer solutions, as CyberSource tries to monetize the platform without spending money on badly needed resources.

The funny side of the story is that Wall Street isn’t pay attention to this latest CyberSource move. While yes, Authorize.Net gave CyberSource access to hundreds of thousands of business owners, the reality is that it came at a big price. More so, unlike other solutions, Authorize.Net was built on the premise of ease of integration, which means ease of moving to other providers. I would imagine that a good 40,000 to 60,000 merchants drop the Authorize.Net platform over the next year making CyberSource realize, you can’t turn your back on your small customers forever.