Revolution Money

Revolution Money. It was a financial technology startup founded in 2007 with the goal of disrupting the traditional payment card industry by offering lower-cost alternatives for merchants and consumers. Backed by the venture capital firm Revolution LLC and prominent investors like AOL co-founder Steve Case, the company sought to challenge established networks like Visa and Mastercard. Its suite of products included a PIN-based credit card and an online person-to-person payment service, leveraging proprietary technology to reduce transaction fees.

History

Revolution Money was founded in 2007 by entrepreneur Jason Hogg, with significant early investment and guidance from Revolution LLC, the venture firm led by Steve Case. The company emerged during a period of growing scrutiny over the high interchange fees charged by dominant payment networks, aiming to capitalize on merchant dissatisfaction. Key initial investors included Goldman Sachs, Morgan Stanley, and Citi Ventures, providing substantial capital for its ambitious launch. The company established its headquarters in St. Petersburg, Florida, and later expanded its operations, forming a critical banking partnership with First Bank of Delaware to issue its cards. Its launch was seen as a direct challenge to the duopoly of Visa and Mastercard in the United States payment landscape.

Services and products

The company's flagship product was the RevolutionCard, a credit card that required a PIN at the point of sale instead of a signature, aiming to enhance security and reduce costs. For online transactions, it utilized a unique Revolution Money Exchange system where users created an account with a dedicated username instead of sharing card numbers. A central offering was its person-to-person payment service, allowing free transfers between individuals via email or mobile phone, competing directly with early services like PayPal. The business model was built on charging merchants significantly lower discount rates compared to traditional cards, appealing particularly to small businesses and online retailers. It also offered a gift card program and explored integration with various point of sale systems.

Acquisition by American Express

In November 2009, American Express announced an agreement to acquire the assets of Revolution Money for approximately $300 million, a move widely interpreted as a strategic technology acquisition. The deal was finalized in early 2010, with American Express particularly interested in the company's online payment platform and its secure transaction technology. Key personnel, including founder Jason Hogg, transitioned to roles within American Express to help integrate the technology. This acquisition occurred amidst a broader competitive shift, following the United States Department of Justice antitrust lawsuit against Visa and Mastercard, and allowed American Express to bolster its own digital wallet capabilities. The RevolutionCard brand was eventually discontinued as its features were absorbed into the American Express ecosystem.

Technology and security features

The platform's core innovation was a proprietary, closed-loop network that bypassed traditional card associations, allowing it to control and price transactions directly. Security was a major focus, employing tokenization for online payments where a user-specific token replaced the actual account number during transmission. The mandatory use of a PIN for card-present transactions aimed to reduce credit card fraud associated with signature-based verification. Its architecture was designed for the Internet age, facilitating secure, low-cost micropayments and direct transfers without relying on the legacy infrastructure of Visa or Mastercard. The system also incorporated advanced data encryption standards and real-time fraud detection algorithms.

Impact and legacy

Although short-lived as an independent brand, the company demonstrated the market's appetite for lower-cost payment alternatives and helped accelerate innovation in the financial services sector. Its model directly influenced the development of next-generation payment processors and added pressure on incumbent networks to reconsider fee structures. The acquisition by American Express provided crucial technology that contributed to the development of services like Amex Serve, a prepaid debit card and digital platform. The company's focus on person-to-person payments presaged the later explosion of fintech apps such as Venmo and Cash App. Its challenge to the established payment card industry is viewed as a precursor to later disruptions by companies like Square and Stripe.

Category:Financial technology companies of the United States Category:Companies based in St. Petersburg, Florida Category:American Express Category:Companies established in 2007 Category:Companies disestablished in 2010