Tech and Bank Giants Team for New Payments System

WASHINGTON – A new venture headed by America Online founder Steve Case and backed by several banking giants unveiled a payments system yesterday they say will bridge the gap between credit/debit cards and Internet-based transactions. The group, called Revolution LLC, introduced two main products, a free person-to-person money exchange available to anyone over the Internet; and a secure debit card that has no name or account number on it and is self-loadable for up to $15,000. “Traditional, and even online, incumbents have been charging what adds up to billions of dollars of fees every year that ultimately comes out of consumers’ pockets,” said Case, the chairman of the company. “So we have built an innovative Web 2.0 company based on the latest technology to disrupt the decades-old system with the goal of offering the industry’s most accessible, easy-to-use and secure payment system that puts money back where it belongs, in consumers’ pockets.” The fledgling initiative, formerly called GratisCard Inc., recently raised $50 million in new venture capital and is backed by bank giants Citi, Morgan Stanley and Deutsche Bank. Other participants in the venture are; former Treasury Secretary Larry Summers, former MasterCard President Russell Hogg, former Charles Schwab CEO David Pottruck, former Fannie Mae CEO Franklin Raines, and former AOL CEO Ted Leonsis. Revolution’s MoneyExchange P2P offering, unveiled yesterday, is the first online payments platform that can be accessed over social networking or Instant Messaging networks. The RevolutionCard will charge a fraction of the current interchange fees, 0.5%, compared to 1.9%, and provide enhanced security for cardholders by not having an account number or name on the card, which will only be accessible through a PIN. One of the first online partners to offer Revolution MoneyExchange will be AOL’s AIM service, the largest instant messaging network in the country. Starting this fall, AOL users will be able to download MoneyExchange software and make payments free from their AIM Buddy List feature for free.