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Can Steve Case and Revolution Money Entice Small Biz Away From PayPal?
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By Rich Karpinski

Can Web 2.0 technology help small businesses cut credit card and money transfer fees?

That's the pitch from AOL founder Steve Case and the new startup he's backing: Revolution Money.




The company is offering consumers a free online money transfer service -- an obvious PayPal competitor -- as well as a low-fee, PIN-protected combination credit card/debit card.

The platform could be a big boon to small business merchants. The credit card offers what Revolution is calling "significantly lower interchange fees for merchants" as well as fee-free online money exchange.

On the money transfer side, consumers set up a Revolution MoneyExchange account online and can then begin transferring money for free. Today, the service is invitation-only, but will be opened up more widely later this year.

As for RevolutionCard, the company aims to reduce credit card merchant fees from a typical 1.9 percent to just 0.5 percent, creating savings for merchants that they can either swallow or pass along to consumers.

Says Jason Hogg, founder and CEO of Revolution Money:

Today, merchants, and ultimately consumers, pay an enormous sum just to have the convenience of using a credit card. Revolution Money's proprietary operating system uses the Internet to circumvent the traditional interchange system, providing a drastically reduced fee structure that could create billions of dollars of merchant and consumer savings – essentially flipping the industry on its head.


For merchants, RevolutionCard can be accepted through existing payment processors or directly through Revolution Money, the company said.

Using the Web and innovative products to reduce merchant fees is a slam dunk for small businesses. It remains to be seen how big the uptake will be with consumers. Free money transfer is great, but with PayPal owned and embedded into eBay, competitors will have a tough time making inroads. As for the Revolution Card, credit card marketing is a notoriously challenging business. Will lower merchant fees and added security and Internet management spur adoption of the card? It's an experiment worth watching for small business merchants.

What do you think? Would a PayPal competitor for free money transfer help your small businesses bottom line? How about reduced merchant fees? Do you think this venture will fly? Let us know in the comments section.

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