Today's big payments story is Revolution Money (formerly GratisCard) a new internet payment system backed by AOL co-founder Steve Case, among other high profile supporters, including former Treasury Secretary Lawrence Summers, former Charles Schwab CEO David Pottruck, former Fannie Mae CEO and former director of the Office of Management and Budget, Franklin Raines, and former MasterCard CEO Russell Hogg. Revolution Money has raised $50 million in venture funding through Case's investment firm Revolution LLC, as well as Citi, Morgan Stanley, and Deutsche Bank AG.
Jason Hogg (son of Russell), founder and CEO, is quoted as saying "I
find the existing infrastructure of credit cards to be archaic, …
We're taking control out of the hands of the card associations and
putting it in the hands of the merchants and consumers."
Revolution Money offers two products: Revolution MoneyExchange and RevolutionCard. A third product, RevolutionGift, is "coming soon."
- Revolution MoneyExchange allows users to transfer money to other users or online merchants for free (competing against PayPal).
- RevolutionCard offers cardholders an anonymous credit card
utilizing PIN-based encryption, with no name or account number on the
card, promising reduced fraud risk. - RevolutionCard offers merchants an interchange fee of only 0.5 % (vs. the industry average of 1.9%) and enables merchants to offer instant issuance at the point of sale and instant rewards. Thus far, the card is accepted at 100,000 merchants and can be used in ATMs.
American Banker observes that Revolution Money is entering an increasingly crowded market of new payment schemes challenging the dominant players MasterCard and VISA. Nick Holland, senior analyst at Aite Group observes "I put it down as a curiosity at this point. If Steve Case wasn't involved, I don't think it would get much attention."
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