AOL founder Steve Case may have left Time Warner Inc. (NYSE: TWX) and AOL, but he isn't out of the web space entirely. His latest venture, Revolution Money, promises to lower transaction fees on the Web. And he has an interesting new partner in the venture: his old friend, AOL.Revolution Money, still in its pilot stage, will let users transfer money to individuals and merchants for free through its Revolution MoneyExchange service. AOL will be a launch partner, and will allow users and customers to make payments and fund transfers through its AOL instant messaging service, AIM, for free. It will also offer RevolutionCard, a credit card with an interchange fee of 0.5%, which is below the average of 1.9% for other cards.
The truth is that you and I will win from this venture because this will help drive fees down. The bad news is that as transaction fees move closer and closer to zero, so do the profit margins. Whether the margins are enough to keep these operations viable is an open question.
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