Tuesday, February 12, 2008
The RevolutionCard, a PIN-based interchange-free card, can now be accepted by Fifth Third Processing Solutions' merchant customers across the United States through Fifth Third's Jeanie network.
"Fifth Third is particularly relevant to us now for two reasons," said Jason Hogg, Chief Executive Officer and founder of Revolution Money. "First, they are a very innovative organization. And they provide us the foundation to rapidly increase our merchant base and to work with other acquirers and large independent retailers."
RevolutionCard is accepted by over 150,000 retailer sites, but the company's goal is to reach 1 million by the end of 2008, Hogg said.
"One of the keys to rapidly expanding our base is our ability to seamlessly integrate with our partners," Hogg said. "When I say 1 million merchants, that's not a pipe dream. We are well on our way. Our partnership with Fifth Third Processing Solutions was the first critical step."
Under the agreement, Fifth Third will provide gateway processing services that will enable other merchants and ATM processors to also efficiently connect to Revolution Money and to offer the RevolutionCard to their merchant customers.
RevolutionCard has unique attributes. "This is MasterCard meets PayPal without the charges," Hogg said.
"I saw three pressure points in the industry," he added. "From a consumer's standpoint there was a growing concern about identity theft. From a merchant's standpoint there was great and growing frustration by interchange increases – increases of 300% – and that frustration was hared by both online and offline retailers.
"And third, there was a lot of payment fragmentation. You used to have to have one debit card and one credit card and a PayPal account and another stored value card. It seemed obvious that there was a need for one thing to address all those needs."
According to Revolution Money, its product reduces merchants' credit card fees by up to 80%, and its PIN-based system reduces unauthorized transactions. RevolutionCard charges merchants 0.5% of the sale price per transaction processed – much lower than the 1.9% average charged by traditional credit card companies.
The customer name and account number is not embossed on the card which, the company said, helps prevent identity theft. Consumers can preload their cards with up to $15,000 (loaded electronically from the user's bank account), and interest rates are pegged to the cardholder's credit rating.
Other cards charge 2% to 8% for online transfers of money; RevolutionCard online payments are free, according to the company.
Revolution Money receives no income from person-to-person payments but sees this service as a way to win users. "The free money exchange for peer-to-peer transactions will help gain rapid proliferation of people on the platform," Hogg said. He would not reveal the number of Revolution cardholders but said the company has experienced "significant rapid consumer acceptance."
Hogg reported that RevolutionCard has a number of deals in the works with vertical market partners to offer incentives to users. He cited a pending cable company partnership that may offer consumers free premium services in exchange for paying their monthly bills with the RevolutionCard.
Revolution Money is a subsidiary of Revolution LLC, which is headed by Steve Case, the founder of America Online Inc. Another AOL alumnus, Ted Leonsis, is Revolution Money's Chairman.
Board members include former Treasury Secretary Lawrence Summers; David Pottruck, the former CEO of Charles Schwab Corp.; Franklin Raines, the former CEO of Fannie Mae and former director of the Office of Management and Budget; and Jason Hogg's father, Russell Hogg, the former President and CEO of MasterCard Worldwide.
Revolution Money is also backed by $50 million in venture capital from financial powerhouses like Citigroup, Morgan Stanley, and Deutsche Bank AG.
Hogg said the timing of its September 2007 launch was "fortuitous, given the state of the economy. Many merchants will find that interchange-free payment solutions have a positive and significant effect on their bottom line."
Revolution Money plans additional partnerships with acquirers in the near future.
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