Payment-transfer platform Revolution Money just brought in $42 million from several major investment firms, including Goldman Sachs, Citigroup and Morgan Stanley — not to mention a few high-profile individuals like AOL co-founder Steve Case, former Charles Schwab chief executive David Pottruck and former JP Morgan vice chairman David Golden. With this backing, Revolution is poised to chip away at the big boy credit card companies like Visa and Mastercard, as well as competing online services like PayPal.
With its valuation pegged at $200 million, the St. Petersburg, Fla. company is still hawking its two primary services: RevolutionCard and RevolutionMoneyExchange. The former is an actual credit card that requires no interchange fees, and only charges half a percent for transaction processing (compared to the 1.5 to 4 percent skimmed by the traditional card companies). Accepted at 650,000 merchants and 85 percent of ATMs across the U.S., the card also yields bonus points to engender customer loyalty, including discounts on gas.
RevolutionMoneyExchange, on the other hand, is an online peer-to-peer payment system — notable because it’s free to use. The company’s strategy is usually to sign people up for this service and then pitch them the company’s card.
In addition to the investors listed above, Revolution Money chairman Ted Leonsis also contributed, and is the second biggest shareholder behind Case. The company last raised money in September 2007, bringing in $50 million from those already listed, as well as Deutsche Bank.
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