Internet Pioneer Case Promotes RevolutionCard to Audience of Bankers

Entrepreneur Steve Case, whose founding of America Online Inc. helped popularize the Internet, told an audience of bankers on Monday that his new venture is set to shake up electronic payments by dramatically slashing costs for merchants and consumers. Case's remarks came on the same day that venture, St. Petersburg, Fla.-based Revolution Money Inc., announced a $42 million funding round from an investor group including an affiliate of The Goldman Sachs Group Inc., Citigroup Inc., and Morgan Stanley. Case, now chairman and chief executive of investment firm Revolution LLC, told attendees at NACHA's Payments 2009 conference in Orlando, Fla., that the new funding will help propel Revolution Money in its efforts to sign both merchants and issuing banks for the RevolutionCard. He appealed to his audience to support the card, indicating the company will be signing more issuers soon. “Together we can usher in a new era in payments that can benefit everyone,” he said. Introduced in 2007, the card is a PIN-protected credit card that works both online and at the point of sale. The product relies on a platform built by Revolution Money and is issued by First Bank & Trust, Brookings, S.D., with a variety of underwriting partners. Case cited what he sees as the card's superior security against fraud compared to other credit cards and its potential popularity with consumers, who he said stand to reap instant, tangible rewards for usage. Unlike other credit cards, the RevolutionCard bears no identifying information or account numbers, and transactions are authenticated by a cardholder PIN. In September, Revolution Money introduced its MoneyExchange RevolutionCard, a reloadable card that can be used for free online person-to-person payments to other account holders, for point-of-sale purchases, and for ATM transactions. Merchants could afford lower prices and more lucrative rewards, Case argued, because of the RevolutionCard's ultra-low acceptance cost. The company's merchant fee, some 50 basis points on each transaction, undercuts bank card pricing by about 75% at a time when merchants and consumers are struggling in the economic downturn, Case said. Referring to the world's largest retailer, he said, “We estimate Revolution Money could save Wal-Mart more than $1 billion per year.” Overall, Case cited data indicating that bank card issuers earn some $50 billion annually in interchange income. “Can you imagine the impact [in today's economy] if we could give most of that $50 billion back to merchants and consumers?” he asked. Lending more impetus to Revolution Money was a deal announced last week with Chase Paymentech Solutions LLC under which the massive processor will act as a gateway for the product. Case told Digital Transactions News he expects the deal will increase merchant adoption by making it easier for Chase merchants to integrate the card into their checkouts and point-of-sale systems. Chase will also help market the card to its clients, he said. Revolution Money has similar agreements in place with RBS WorldPay and Fifth Third Processing Solutions. The card is currently accepted at about 650,000 merchant locations, short of the 1 million goal the company set for the end of 2008 (Digital Transactions News, Oct. 9, 2008).