Revolution Money Inc., the alternative payment network, said it has signed three deals through which it will make good on its promise to have its cards accepted at 1 million merchants by yearend.
The St. Petersburg, Fla., company's RevolutionCard is now accepted at nearly 300,000 retailers, many of them signed up by the merchant acquiring unit of Fifth Third Bancorp under a partnership that started in February. On Friday the payment company announced a similar arrangement with CardinalCommerce Corp. of Cleveland, which authenticates online payments for more than 30,000 merchants.
Duncan Evans, a senior vice president at Revolution Money and the general manager of its card network, said in an interview that the company has signed deals with two other merchant acquirers. He would not identify them but said that they, along with CardinalCommerce, have put Revolution Money "on track to reach our target" for merchant acceptance this year.
Of course, recruiting merchants is only half the battle for an upstart network; it must also make consumers want the cards in their wallets. Since its founding last year, Revolution Money (a unit of AOL co-founder Steve Case's Revolution LLC) has largely relied on having merchants offer people incentives to sign up for and use the cards.
Mr. Evans stood by that strategy, saying that Revolution Money has signed "a number of additional programs with major national and online retailers" that will be rolled out starting late this year. "Primarily we are looking to work with merchants to create programs to give consumers a reason to apply for a RevolutionCard," he said.
Still, Revolution Money is also trying to put its cards directly in the hands of consumers who use MoneyExchange, its other main offering. The service allows people to send one another money online for free. Last week Revolution Money introduced a reloadable stored-value debit card that combines the security features and low merchant fees of the RevolutionCard with the money transfer service. Mr. Evans said MoneyExchange is now a "second distribution channel" for his company's cards.
Though the MoneyExchange-linked cards are different from the other Revolution cards, which also carry a line of credit, holders of both types of cards have access to the same merchant discounts and incentives, he said. "I think you will see, whether it's in the form of communications with our customers or communications and promotion of the programs that we're launching with merchants, some more widespread awareness of the programs," he said.
Mr. Evans would not say how many cardholders Revolution Money has or which retailers he hoped to reach through the partnership with CardinalCommerce (whose clients include Travelocity, Dell Computer, Yahoo! Travel, Continental Airlines, Xerox, and American Eagle Outfitters).
Starting next month Revolution Money will join PayPal, Bill Me Later, and Google Checkout as one of 13 payment options available to CardinalCommerce's merchant customers. Matt McDowell, CardinalCommerce's vice president of merchant services, said his company had been impressed by Revolution Money's "extremely low" transaction rates for merchants, its security system, its funding, and its marketing.
"As a new payment type comes out, we have a responsibility to our customers to make sure is it a legitimate payment brand," he said. Revolution Money has "been around for a while," is "really well funded" with "a nice brick-and-mortar presence," and is now "evolving into the e-commerce space."
But it remains the merchant's decision whether to accept the card, Mr. McDowell said.
"Every merchant that we connect to today has the ability to turn it on really easily," but "they still have to make the corporate decision" of "is that a payment type that we're going to enable and accept?"
Adil Moussa, an analyst at Aite Group LLC, said the deal with CardinalCommerce will help the payment network "on the merchant side by getting more acceptance. … For Revolution Money it's a good way to get themselves almost out there."
But low cardholder awareness remains a problem for the company, and the new MoneyExchange-linked card may not be enough to address it, Mr. Moussa said.
"Revolution Money will really have to come up with something that makes people want to adopt their product," he said.
For consumers, "the only value proposition they have is it's a safe and secure account, and you can make peer-to-peer payments," which "could be an interesting model, but I don't know if I would apply for one tomorrow."
