two best-known online payment services, have been busy doing battle
with each other over the last year, but now they, along with Visa,
MasterCard and American Express, will have to contend with a new
rival in the online payment market in the US. Steve Case, better
known as the co-founder of internet service provider America Online
(AOL), has teamed up with a group of financial and technology
companies to launch Revolution Money, a new online credit card and
money exchange platform.
Case says that Revolution Money, formerly known as GratisCard, will
“transform the payment industry by drastically altering the
economics of internet-based technology” in order to generate
significant consumer and merchant benefits. The concept of
Revolution Money is centred on a secure online credit card,
RevolutionCard, which comes with much lower interchange fees for
merchants, and a free online money transfer service known as
Revolution MoneyExchange.
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Lower interchange fee
Case says that RevolutionCard is the industry’s first anonymous,
PIN-protected credit card, and will offer merchants an interchange
fee of 0.5 percent, compared to an average interchange fee of 1.9
percent. According to Case, an estimated $56 billion of interchange
fees was paid to credit card companies in the US in 2006.
RevolutionCard’s lower rate will enable merchants to make
significant cost savings and offer customers new and immediate
rewards, the company says, and RevolutionCard can be easily
integrated into existing POS terminals and can be accepted through
existing payment processors or directly through Revolution Money.
The card offers instant customer approvals and merchants are able
to issue co-branded PIN-protected RevolutionCards on the spot in
their stores and through their websites.
“Traditional, and even online, incumbents have been charging what
adds up to billions of dollars of fees every year that ultimately
comes out of consumers’ pockets,” said Case, chairman and CEO of
Revolution, the parent company of Revolution Money. “So we have
built an innovative Web 2.0 company based on the latest technology
to disrupt the decades-old system with the goal of offering the
industry’s most accessible, easy-to-use and secure payment system
that puts money back where it belongs, in consumers’
pockets.”
Jason Hogg, founder and CEO of Revolution Money, said: “Today,
merchants, and ultimately consumers, pay an enormous sum just to
have the convenience of using a credit card. Revolution Money’s
proprietary operating system uses the internet to circumvent the
traditional interchange system, providing a drastically reduced fee
structure that could create billions of dollars of merchant and
consumer savings – essentially flipping the industry on its
head.”
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By GlobalDataRevolutionCard is also launching card distribution programmes and
marketing programmes in multiple segments, including airlines,
cable, petroleum and convenience stores, energy products and
services, apparel and footwear, online, health care, computers,
electronics and sports. Northwest Airlines is one of Revolution
Money’s largest acceptance partners. Revolution Money has also
established strategic partnerships with several merchant acquirers
and processors, such as Fifth Third Processing Solutions.
Anonymous card
RevolutionCard has been designed as an anonymous credit card that
will not incorporate the cardholder’s name or account number.
Revolution Money says that this will help in the fight against
identity theft and fraudulent charges, but given the regulatory
attention paid to anonymous prepaid cards in the US, it remains to
be seen whether this will be viable.
Also, the lower merchant fee will likely mean tighter profit
margins, but considering that merchants in the US are still locking
horns with the credit card companies and networks over interchange
fees, RevolutionCard could prove to offer a more attractive
proposition.
Revolution Money has an executive team with extensive experience
within the US payment and banking industry, giving it a strong
foundation from which to launch.
