eBiz News: Online Payment Service Cuts Merchant Fees

This week in e-commerce news, Steve Case, founder of AOL, introduced a new online payment company that offers free fund transfers and a credit card with significantly lower fees for merchants. Plus, research shows that behavorially targeted ads perform better than contextual ones, and a new site for "green" e-tailers.

The new payment company backed by Case, Revolution Money, is planning to let shoppers transfer money to individuals and online merchants for free through its Revolution MoneyExchange service. The company also said it will offer RevolutionCard, a credit card with an interchange fee of 0.5 percent, compared with an average of 1.9 percent for other cards.

Show Me the Money
Longtime AOL executive Ted Leonsis, who is chairman of the new venture formed by Case, describes it as "PayPal meets MasterCard without the high fees." According to the company, Revolution MoneyExchange's money transfer service is the first online payment platform for social and instant messaging networks, allowing consumers to transfer funds over the Internet to anyone for free. Consumers will be able to use Revolution MoneyExchange across a variety of online platforms, including social networks and instant messaging portals.

Revolution MoneyExchange launched in invitation-only beta form this week and will be gradually expanded before being made available to all consumers later this year, according to the company. In the future, Revolution MoneyExchange plans to provide its users the option of linking their accounts to a RevolutionCard, which the company says will save merchants and shoppers money.

"When a consumer uses a credit card at any store today the merchant is required by traditional credit card companies to pay them an average of 1.9 percent of the total sale. For example, when a consumer buys a $500 television using their credit card the store has to pay the credit card company an average of $9.50. With billions of credit card transactions annually these fees, called 'interchange fees,' totaled an estimated $56 billion paid in the United States to credit card companies in 2006 alone," according to a statement issued by the new venture.

The company goes on to say that by cutting these fees to .5 percent, it is "creating significant savings for merchants and enabling them, in turn, to offer their customers new and immediate rewards, such as cost savings and loyalty programs."

In addition, the company says it is the first to offer an anonymous credit card with PIN-based encrypted technology. "With no name or account number on their card, consumers' identities remain anonymous, drastically reducing the risk of identity theft, fraudulent charges and other consequences of cards being lost or stolen," reads the company statement.

The AOL off-shoot also says it will make accepting the RevolutionCard easy for merchants. It can be accepted through existing payment processors or directly through Revolution Money. The company also says it can seamlessly integrate into existing Point-of-Sale (POS) software and implementation can be completed remotely.

Actions Speak Louder than Words
In other news, a study shows that behaviorally targeted ads yield more receptive prospects. (This comes on the heels of the announcement that Yahoo recently purchased the behavioral ad company Blue Lithium.)

Revenue Science, Inc. announced the results of a study on consumer receptivity to online advertising, conducted by JupiterResearch, that found that more online consumers are consistently more receptive to behaviorally targeted ads than to contextual advertising, outperforming contextual by as much as 22 percent in some categories.

The responses of more than 2,000 people surveyed revealed that, across all advertising, 14 percent more online consumers are more receptive to behaviorally targeted ads than to contextual ads, representing 63 percent of the total audience.

For advertisers, the study shows that behavioral targeting outperforms contextual advertising in terms of consumer attention by at least 10 percent across 14 major product categories, from financial services to consumer electronics to pharmaceuticals to fashion and style.

Specifically, the study found that 17 percent more online buyers of computing products are more receptive to behaviorally targeted ads, 18 percent more online auto purchasers are more receptive to behaviorally targeted ads and 20 percent more online telecom purchasers are more receptive to behaviorally targeted ads, compared to contextual ads.

The necessity of using attention-getting behavioral targeting was reinforced by responses regarding online behavior. The study found that more than 75 percent of online shoppers shop once per month or less and that the majority research a product only once or twice before buying.

According to the study, behaviorally targeted ads fare better with both those who spend a lot, and those who don't. Among people who spend more than $500 online annually, 10 percent more were defined as behaviorally receptive, and, among those who spend less than $500 online annually, 17 percent more were defined as such.

It's Easy Being Green
Finally, there's good news for e-tailers who sell "green" products. TheFind, Inc., a shopping search engine for lifestyle goods, just launched a dedicated shopping search site for finding products from eco-friendly retailers and brands.

The Web site, which is located at www.TheFindGreen.com, includes products that are organic, developed using ecologically conscious processes, or those offered by retailers who are actively committed to preserving the environment. Items will include clothing, food and beverage items, household goods and beauty products. Visit the "Add A Merchant" page to get listed.

Michelle Megna is managing editor of ECommerce-Guide.com.

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