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• Is there room for another payment processor in the market? There’s already the market leader PayPal, followed by Google and Amazon and a slew of open source solutions. AOL co-founder Steve Case thinks there is room for one more with his latest venture Revolution Money. First announced in 2007, Case announced today that he has raised a Seres C round of $42M from a Goldman Sachs affiliate, Citigroup and Morgan Stanley as well as individual investors Case (himself), Revolution Money Chairman Ted Leonsis, former Charles Schwab Chief Executive David Pottruck and former JP Morgan Vice Chairman David Golden. WSJ
• Case says he can stir up the industry by cutting payment processing costs by up to 75% for merchants who get involved with his platform. He is aiming directly at Visa and MasterCard, as well as knocking PayPal off the top. Here is the gist:

RevolutionCard is a general-use credit card that charges no interchange fees and only a half-percent processing fee per transaction to accept – compared to a 1.5% to 4% fee charged by traditional companies. Merchants turn some of these savings into customer loyalty and cash-back programs. For example, cardholders can save three cents per gallon at the nearly 1,000 Murphy USA and Murphy Express gas stations typically located in Wal-Mart Supercenter parking areas across 20 states. RevolutionCard is accepted at more than 650,000 merchant locations and 85% of all ATMs throughout the U.S.

Revolution MoneyExchange is a free online peer-to-peer payments service that enables users to exchange money for free. Users can also access their online funds at all merchants and ATMs on the RevolutionCard Network. Leonsis said MoneyExchange essentially serves as a customer acquisition mechanism for the company. Once consumers register for MoneyExchange the company can pitch RevolutionCard.

• Leonsis, who is also an owner of the National Hockey League’s Washington Capitols, is offering his season ticket holders an autographed jersey if they use Revolution Money to renew their seats. It can potentially save him $8,000 per person if they do so.  The company is already aggressively targeting new retailers and expects to reach 80% of the merchant community in three years.
• Currently, participating retail locations include Barnes & Noble, Bed Bath & Beyond, Bloomingdale’s, Buy.com, CVS, KOHL’s, Macy’s, Marshalls, Walgreen’s, Nordstrom, Office Depot, Office Max, T.J. Maxx and Whole Foods.
• Is this really going to be the next big thing? Not sure that I truly believe in Case or his concept. Leonsis was quoted as saying “It’s such a big opportunity and big play. There hasn’t been a new entrant since PayPal, which was about a dozen years ago.” He must have a boatload of confidence to not even mention Google and Amazon’s payment platforms as potential threats to his venture which is nearing 3 years old and I’ve never heard a peep about it. Furthermore, let’s not forget BillMeLater, eBay’s latest billion dollar acquition, which as of 2007 already had a 28% market share for online payment processing. Whether or not retailers save big money, at the end of the day it’s going to be about consumer convenience and $$$ in the pocket. If there is a guarantee that retailers will be slashing prices for a lengthy defined amount of time for using Revolution Money (terrible name by the way), they may see some adoption in this down economy. In addition, the Revolution Card idea seems like it will be as popular as the PayPal bank cards (ever seen anyone using one of those?). Nice job with your press and your big money backers Case, but I think this may have worked right around the time you were owning the dial-up game.

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