Revolution Money, the new payment and credit card service backed by Steve Case and others, recently received a $42 million C round (reported in WSJ). One of their offierings is called “MoneyExchange.” It’s a PayPal-like service where members can send and receive money between each other through their MoneyExchange accounts.
Their credit card service, the RevolutionCard, seems pretty compelling (much lower processing fees than Visa/MC, etc. MoneyExchange seems to me like a pretty weak competitor to PayPal.
On the marketing front, I looked for and could not find a doc to compare MoneyExhange to PayPal. This is Marketing 101 – if you enter a market with a 100 billion-pound gorilla like PayPal, you better put right on your home page why you’re better than them. Or at least put a link to that on your home page.
I sent a Twitter reply to Steve Case asking for more info on why MoneyExhange is better than PayPal, and got the following reply. The link goes just to the MoneyExchange home page, not to a comparison or “why we’re better” page.
Okay – so according to Steve Case, the main reason is “It’s free.” Here is their fee schedule. But wait, isn’t PayPal free too? I looked it up. For personal use, PayPal is free – send, receive, deposit, withdrawal — all free. For business accounts they charge processing fees to receive money ($0.30 plus 1.9-2.9%), even from other PayPal accounts (not just from credit cards). It seems that MoneyExchange business users get payments from other MoneyExchange members for no charge.
So, it would appear that the primary difference between MoneyExchange and PayPal is that businesses can take in-network payments from other MoneyExhange accountholders without charges. Is that compelling?
The point of merchants/businesses taking PayPal payments is that there are so many PayPal users. There are so many PayPal users because it’s free for personal use. Unless MoneyExchange starts paying consumers to join, there’s not a great reason to believe the adoption will be there. Revolution thinks that merchants will pass on the savings. Maybe so – if I could get 2% off a purchase by using MoneyExchange, perhaps I would enroll. Or perhaps not.
Why not? I’d have to wait 3-4 days to make my first purchase (funding takes that long) so the merchant would lose the shopper in the cart and hope that they return. Sorry – NFW. I would never tell customers that they could save money by taking 10 steps through someone else’s site and come back later. Cart abandonment would be horrendous!
My vertict? MoneyExchange is DOA unless they go out and pre-enroll a HUGE user base and get members to request a discount from their merchants with an “I want my MTV” type of campaign. Perhaps that’s where the $42 million can be used, but I doubt the return would be worth it.