AOL co-founder backs new online payment firm
SAN FRANCISCO (Reuters) - Steve Case, the founder of the AOL Internet service, is backing a new online payment company that promises to let users transfer funds for free and offer a credit card with sharply lower fees for merchants.
The new venture, Revolution Money, said it will let users transfer money to individuals and online merchants for free through its Revolution MoneyExchange service. The payment system is in a pilot stage.
Revolution Money will go up against popular online payment systems such as industry leader PayPal from eBay Inc and one offered by Web-based retailer Amazon.com Inc.
An initial partner will be AOL, which will let users make payments and fund transfers through its AIM instant messaging service for free, Revolution said.
The company also said it will offer RevolutionCard, a credit card with an interchange fee of 0.5 percent, compared with an average of 1.9 percent for other cards.
Interchange fees are those a merchant pays to a credit card company when a customer makes a purchase.
Revolution said it could offer a lower rate because of its Internet-based payment system, adding that the savings could be passed on to consumers.
Users can also obtain an anonymous credit card with no name or account number on it, something that could cut the risk of identity theft, fraud and problems stemming from lost or stolen cards, Revolution said.
The company is backed by Case's investment firm, Revolution LLC, which led a $50 million round of venture capital funding that also included Citi and Morgan Stanley.
Case co-founded AOL, originally America Online, and later merged the company with Time Warner Inc. He resigned from Time-Warner's board in 2005 to focus on Revolution.