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Revolution Money Inc. has become the latest credit card company to shut down a slice of cardholder accounts, an unusual move for a fledging network trying to gain share and visibility.
September 16 -
Revolution Money Inc., a fledgling consumer finance company that until now has been known primarily for its free person-to-person transfer system, is poised to deliver to the mainstream its other main product, a credit card with low fees for merchants.
February 6 -
Revolution Money Inc., a new online payment venture, is betting that its system for sending funds through instant messaging software, and its roster of backers, will help it stand out among the alternative transaction providers that are trying to attract users.
September 25
The credit card company Revolution Money Inc. is turning its attention to the consumer market.
The St. Petersburg, Fla., company announced Tuesday that Fifth Third Bancorp has agreed to issue its cards, which require users to enter a PIN to authenticate transactions.
Jason Hogg, Revolution Money's founder and chief executive, said the Cincinnati banking company will be his firm's preferred partner for prime and superprime credit.
"Fifth Third sets a cornerstone relationship for us to launch our programs and begin to build our consumer base," Hogg said in an interview Tuesday.
Revolution Money, which was started in September 2007, has attracted nearly 1 million merchants to its network, Hogg said, and is on track to reach 2 million by the third quarter of 2010.
The partnership with Fifth Third, the No. 11 card issuer by portfolio size, is a strong vote of confidence in the Revolution Money system, Hogg said. "They're not only joining our network. They are fully using our system of record to manage the life cycle of the account."
Jon Groch, Fifth Third's director of bank card services, said that as an issuer, Fifth Third will have a role with Revolution Money that is similar to its role as an issuer of Visa Inc. and MasterCard Inc. cards. "One of the biggest roles is setting the credit policies and the risk parameters as we lend money to these customers. That's all on us."
But Fifth Third does not plan to cross-sell the RevolutionCard to its customers, relying instead on Revolution's merchant partners to promote it to their customers, he said.
"The underlying premise whether this is going to be successful long-term is whether the merchant base gets behind this card and gives all our customers reason to use the card," Groch said. "We thought it made sense for us to give it a shot."
Tony Hayes, a partner in the Oliver Wyman consulting firm owned by Marsh & McLennan Cos. Inc., said the Revolution Money alliance gives Fifth Third another program to pilot test and learn from, and a way to hedge its bets as the payments market continues to shift.
"One of the challenges Revolution Money faces is trying to build a two-sided market, which is getting more merchants to accept their cards and getting more people to issue their cards, both in parallel, both at scale. And the reality is that it's a very, very hard nut to crack, as many people have experienced," said Hayes, who is the chairman of SourceMedia Inc.'s annual ATM, Debit and Prepaid Forum taking place this week in Las Vegas.
"Other companies have gone down this road," he said, such as "the original Debitman. Getting acceptance was easier; getting issuance was harder."
Indeed, Revolution Money made its Fifth Third announcement a day after the former Debitman, now Tempo Payments Inc., announced a new business model built around the use of affinity groups such as environmental activists to promote consumer adoption of its decoupled debit card.
Hogg said Revolution Money plans to announced a series of alliances in the next 90 days with retail chains and online shopping portals to promote adoption.
Murphy Oil Corp., for instance, plans to offer consumers a discount of 13 cents per gallon for using the card, which charges an interchange rate of only 50 basis points per transaction, which Hogg said is 80% below the rates charged by Visa Inc. and MasterCard Inc.
Revolution Money also will announce programs with BJ's Wholesale Club Inc., TJX Cos. Inc. and Walgreen Co., Hogg said.
"We have achieved significant enough acceptance for us to demonstrate the utility of the cards," he said. "Having merchants supporting our cards by redirecting interchange savings is coming to fruition."
