As usual, VentureBeat had a good post on a cool company. I was reading about Revolution Money, the new service designed to help consumers and merchants save money and make it easier to buy things online. I was particularly interested in the Revolution Money Exchange product – it sounds really cool. The basic story for both of these products, as far as I can tell, is to radically slash the fees that customers pay to transfer money and to make it cheaper for merchants to accept non-cash payments. I think the Money Exchange product could be really interesting – it’s squarely aimed at the person-to-person market and the social networking use case. The site doesn’t make it clear to me how I would actually fund my RME account, but I assume there’s some simple way to actually get money into the account. The card sounds like a good product, too – I’m not sure why I would want it as a consumer, but I can certainly see why merchants would want to accept it given that it’s offering interchange rates at about 25% of industry standards.
Customer acquisition in the payments space is very costly – There hasn’t been a consumer-oriented payments product that hasn’t faced very steep customer acquisition costs. Credit cards, PayPal, Google Checkout, and pretty much every payment-related product has had to face this issue. The $50 million they raised is just a small drop in the bucket. It’s going to take a lot more money than that to get to meaningful adoption.
Merchants are going to love this – interchange fees are a big deal. Interchange fees are a big deal and they take a bite out of what merchants take home at the end of the day. Payment alternatives that lower interchange and don’t require costly infrastructure upgrades (I’m assuming that the Revolution card doesn’t require some proprietary terminal, communications network, or other financial non-starter for merchants). The trick, though, is whether consumers will want the card. Sure, merchants can push it and encourage their customers to use it. But will the promise of anonymity and security be enough to get consumers? One feature that does sound cool is the fact that the APR is a function of your creditworthiness to some degree. In negotiating with credit card companies in the past, I’ve always found it relatively easy to push back on high APRs – I’m curious to see what Revolution is doing differently.
All in all, I’m curious to see how this one works out.