Steve Case, the founder and former chief executive of the once-dominant internet service provide AOL, is backing a new online payment company that claims to let users transfer funds for free and offer a credit card with sharply lower fees for traders.
Called Revolution Money, the company 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, owned by online auction monolith eBay, and one offered by web-based retailer Amazon.
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 per cent, compared with an average of 1.9 per cent 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 (24.8 million) round of venture capital funding that also included Citi and Morgan Stanley.
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