Revolution Money AIMs to Combine Money Transfer, Credit, Debit and More

Revolution Money, the new payment platform launched earlier this week by Revolution LLC, is best described as “PayPal meets American Express, but without the fees,” company President and CEO Jason Hogg told insideARM.com.

Revolution Money’s first two offerings are Revolution MoneyExchange, a free money transfer service for online transactions, and RevolutionCard, an anonymous, PIN-protected credit card.

“We’re focused on providing a solution that leverages 2007 technology and combines debit, credit, stored value, gift card and money transfer all on a single platform,” Hogg said. “We’re using Web 2.0 technology that also works in the bricks and mortar world.”

Among the most dramatic uses of the Web 2.0 technology is the partnership with AOL that enables AOL instant messaging users to send and receive funds via the Revolution MoneyExchange AIM plug-in.

With 65 million users, AIM provides the largest social network today, according to Hogg, who expects Revolution to announce partnerships with other social networks within the next few months. “We’re leveraging the power of the Internet,” Hogg said.

Beyond using AIM and other social networks, Revolution also plans to benefit from “aggregating eyes.” While Hogg wouldn’t give any specifics beyond the term, that usually is used to refer to revenue streams from advertisements, clicks or viewership through some type of online portal or partnership.

“We will be announcing a number of partnerships in the near future that will help make this a profitable venture,” Hogg said.

The RevolutionCard has already meant profitable partnerships for some merchants and consumers. In a pilot with the Philadelphia Flyers, fans apply for a RevolutionCard at a kiosk in the team’s stadium, receive the card within minutes, and immediately use it at stadium concession stands. During a promotional period, cardholders received a signed jersey, which Hogg said was valued at $355.

The promotion was funded by the Flyers from interchange savings, according to Hogg. The RevolutionCard doesn’t charge merchants an interchange fee, typically 1.9 percent or more of each purchase. Instead, the Revolution Card is funded via a 0.5 percent discount rate.

Hogg said that interchange keeps going up, even though the expense of operating the card payment networks of MasterCard and Visa should be coming down in tandem with the falling cost of technology.

Any rewards or incentives for using the RevolutionCard are very different from those with other credit cards, Hogg added. He expects to have partnerships with service stations, a major cable company and other merchants, which will offer the rewards, such as 10 cents off a gallon of gas or a free pay per view, based on use of the card at the specific merchant. Hogg sees such a program as a better choice than card-run loyalty programs featuring airline miles or points regardless of where a card is used.

“Merchants know their consumers better than anyone,” Hogg said. So he expects to see a quick expansion of the merchants and customer base in the next few months.