September 27, 2007: Steve Case, former AOL CEO who now operates investment firm, Revolution LLC, announced a new venture, Revolution Money, this week.

Revolution Money, formerly GratisCardInc, will offer a credit card and a free money exchange service that will compete against eBay's (Nasdaq: EBAY) Paypal. 

"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.

Former AOL executive Ted Leonsis, who was chairman of GratisCard, will continue in that role.  Revolution Money's board includes former Charles Schwab (Nasdaq: SCHW) CEO David Pottruck, former JP Morgan (NYSE: JPM) Vice Chairman David Golden, former U.S. Treasury Secretary Lawrence Summers, former Fannie Mae (NYSE: FNM) CEO Franklin Raines, and former MasterCard International President and CEO Russell Hogg. His son, Jason Hogg, is co-founder and CEO of Revolution Money.

Jason Hogg says the lower fees to merchants through his company's new service is "essentially flipping the industry on its head."   Specifically, the new RevolutionCard will carry merchant fees that are 75 percent less than traditional payment networks. If successful, Revolution Money could provide a significant challenge to Visa USA, MasterCard and American Express.

In addition to Citi, other banks working with Revolution Money on the credit card's debut include First Bank & Trust in Brookings, S.D., to issue the accounts, CompuCredit (Nasdaq: CCRT) in Atlanta to serve as a subprime partner and Union State Bank in Orangeburg, N.Y., to serve as a merchant settlement bank.

The RevolutionCard will feature an unusual security element: no customer name or account number on the card. Instead, the so-called "anonymous" credit card uses PIN-based encrypted technology.

Revolution Money is working with Fifth Third Processing Services, a unit of Fifth Third Bancorp, (Nasdaq: FIT which will allow millions of merchants across the country to immediately begin accepting the RevolutionCard.

Source: San Francisco Business Times