I have a Revolution card. I got $50 off at Buy.com a year ago, so I signed up. Haven't used it since. The rate was absurd -- about 27% for a guy with a good credit score. So, I think they're just transferring the cost from merchant to consumer, at least for those who keep a balance.
I don't use the card because I have other cards with good "rewards" equal to a percent or two of purchases. If a merchant charges me the same price for a widget no matter what card I use, why wouldn't I use the one with the bribe? The obvious solution for merchants is to offer a percent or two off the normal price, but the Visa/Mastercard cartel requires the same price to be charged to consumers no matter if a Visa/MC is used or not (IIRC). So, Revolution would have to have market penetration close to Visa/MC to convince merchants to opt out of the cartel's grasp. Unlikely to happen without a lot more than $42M spent in marketing.
So, while I hope somebody disrupts the current state of affairs, I don't understand how Revolution thinks its going to pull it off.
Actually, just being able to keep more of the transaction should be incentive enough for merchants. All that's really needed is a high enough consumer buy-in to make it worthwhile to deploy.
Credit card processing fees are ridiculously high given how much of the risk is offloaded onto merchants and other parties.
wow, they charge no interchange fee and only 0.50% for transaction processing and settlement. i have a similar idea (a new payment system/credit card) but was thinking to charge about 1% processing fee... need to recalculate my fee and rev. est.
You had better have a lot of capital. Introducing a a new product into a space where network effects create barriers to entry requires significant cash.
[+] [-] ShabbyDoo|17 years ago|reply
I don't use the card because I have other cards with good "rewards" equal to a percent or two of purchases. If a merchant charges me the same price for a widget no matter what card I use, why wouldn't I use the one with the bribe? The obvious solution for merchants is to offer a percent or two off the normal price, but the Visa/Mastercard cartel requires the same price to be charged to consumers no matter if a Visa/MC is used or not (IIRC). So, Revolution would have to have market penetration close to Visa/MC to convince merchants to opt out of the cartel's grasp. Unlikely to happen without a lot more than $42M spent in marketing.
So, while I hope somebody disrupts the current state of affairs, I don't understand how Revolution thinks its going to pull it off.
[+] [-] dminor|17 years ago|reply
Credit card processing fees are ridiculously high given how much of the risk is offloaded onto merchants and other parties.
[+] [-] dylanmcd|17 years ago|reply
[+] [-] tipjoy|17 years ago|reply
[+] [-] breck|17 years ago|reply
[+] [-] novis|17 years ago|reply
[+] [-] ShabbyDoo|17 years ago|reply