• The Wall Street Journal, Wednesday, September 26, 2007 10:46 AM

AOL co-founder Steve Case's investment company Revolution LLC has launched an Internet-based payment system which would slash merchants' costs for accepting credit cards by some 75%. Revolution Money's first two products will be an online money-transfer service and a credit card with "significantly lower interchange fees" for companies that accept it, Revolution said.

Revolution Money's proprietary operating system uses the Internet to circumvent the traditional interchange system, providing a drastically reduced fee structure that could create billions of dollars of merchant and consumer savings -- essentially flipping the industry on its head. The company will be chaired by Ted Leonsis, who was chairman of GratisCard and, like Case, a former AOL executive.

One of the new products, Revolution MoneyExchange, is billed as "the first online payments platform for social and instant messaging networks, allowing consumers to safely transfer funds via the Internet to anyone, even merchants, for free." The program was launched in invitation-only beta form Tuesday and is intended to be available to everyone by year's end.

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