Thread: serious new player in the industry

Here's something to think about,

Merchants are getting so tired of the fees that there's a new credit card company that has been launched called Revolution Money which avoids the high interchange fees. Many big names are part of the company like Steve Case (former AOL Time Warner Chairman), Frank Raines (former CEO and Chairman of Fannie Mae), Larry Summers (Former Secretary of Treasury, President of Harvard) and more.

Do you think this will end up being a big competitor against credit cards?

There's legislation in the house and senate which would allow merchants to bargain collectively with credit card companies to negotiate their fees. Mastercard has capped the fee on gas purchases of more than $50 but this all might be coming too late. I can see why these mom and pop shops are getting angry over the high fees so this new thing may actually have a chance.

Ok so I looked this thing up and get this... the funding is by Citi, Morgan Stanley, and Deutsche Bank! Why would Citi come out with a product that competes against their own? Here's what I think:

1. This is no different than a designer that sells high fashion clothes but has a cheap line of clothes at Target. They realize there's only so much money to make in one area, and so much in the other, so they do both to make the most possible. Citi probably has realized there's only so much money to make with traditional credit cards so why not capitalize on this new method too? It will be competing against themselves but it doesn't matter because they have a slice of pie on both sides. *This is what I think.
2. Or maybe Citi just got in because they thought "Oh crap this product is going to compete with ours and if you can't beat 'em, join 'em" as a way to hedge their business to play for both teams just to be safe
3. This product looks like it's a direct competitor to Paypal because it allows you to send payments to other account holders too. Maybe Citi got in on it for this reason alone so they could have a stake in a company which they hope will replace Paypal.

Those companies and those names behind it makes me think this thing isn't a joke and it's actually going somewhere. I'd like to see in 5 or 10 years where they are. Maybe they'll end up like Discover, a major credit card but with a minority marketshare.