Former AOL chairman Steve Case is trying to revolutionize the credit card industry, using his D.C.-based investment firm, appropriately named Revolution LLC, to launch a web-based credit card company that will allow merchants to circumvent the transaction fees they pay to traditional credit card companies.
Instead of paying credit card networks an average of 1.9 percent per transaction — a fee that nets them about $56 billion annually — merchants who use Revolution Money’s RevolutionCard will pay only .5 percent per transaction, the company announced Monday.
Revolution Money’s Board of Directors includes such industry titans as Ted Leonsis, owner of the Washington Capitals and Mystics and part owner of the Wizards, Larry Summers, former U.S. Treasury secretary and Russell Hogg, former CEO of MasterCard International, among others.
“Other people have tried to set up web-based credit cards before, but we’re the only ones who work within the existing infrastructure — you can still swipe your card through the box,” said Revolution Money CEO Jason Hogg. “But we’re more a Web 2.0 payment company than a traditional credit card company.”
Consumers can register for cards onlineat www.revolutioncard.com or have participating merchants issue PIN-protected cards on the spot, with credit limits matched to customers’ credit ratings.
Because merchants have a financial incentive to use the card, the company is banking on them offering rewards to customers who use RevolutionCards to encourage registration.
Revolution Money has already partnered with Northwest Airlines and will launch card distribution programs with cable and petroleum companies, among others, Hogg said.
Later this year, the company will launch Revolution MoneyExchange, a free online money transfer system that will allow users to make instant online payments to anyone with an account. Users will also be able to make payments to each other via AOL instant message.
“We are trying to be to the social networks what PayPal is to EBay, but without the fees,” Hogg said.
Users can funnel money from their MoneyExchange account into their bank accounts or transfer it to their RevolutionCard.
The company also plans to set up RevolutionCard ATMs before the end of the year, Hogg said.
