We’re all looking to cut costs. Consumers are trying to spend less, even if it is contrary to how the economy receives greatest stimulation. When people shop for payday loans, they’re looking for low cost. When merchants want to cut costs, they look at expenses and see where savings can be had.

Ty McMahan reports for the Wall Street Journal that major financial firms and investors have contributed $42 million in venture capital into Revolution Money, a payment-processing company backed by AOL co-founder Steve Case.

What do they do?

Revolution Money cuts costs by providing an online portal through which merchants can accept credit card payments. The cost is decreased for merchants by up to 75 percent for transactions, and the merchants can then pass part of that savings on to consumers as lower prices for goods. The company expects to steal market share from both traditional credit card companies and payment services like PayPal. According to reports, the post-money valuation (after investment has been made) of Revolution Money is less than $200 million.

Examine their products

Revolution Money’s proprietary Revolution Card Network supports two products: RevolutionCard and Revolution Money Exchange. Revolution Card is a general-use credit card that charges “no interchange fees and only a half-percent processing fee per transaction to accept,” writes McMahan.

Compare this to a 1.5 to 4 percent fee generally charged by traditional credit card companies. Smart, honest merchants can turn this over into customer loyalty benefits. One example of this would be giving a three-cent per gallon discount on fuel as select gas stations.

Revolution Money Exchange is a free online peer-to-peer payments network. Users can access funds at all merchants and ATMs that are members of the RevolutionCard Network.

Spreading like wildfire

According to McMahan, Revolution Money is poised to aggressively expand its network of merchants. Within three years, they project that they will reach 80 percent of the merchant community. Currently, major retailers like Barnes & Noble, Bed Bath & Beyond, Bloomingdale’s, Buy.com, CVS, KOHL’s, Macy’s, Marshalls, Walgreen’s, Nordstrom, Office Depot, Office Max, T.J. Maxx and Whole Foods are part of the network.

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