Revolution Money raises multimillion investment

A PayPal competitor Revolution Money announced this week that it raised a funding of $45 million from a group that includes a Goldman Sachs affiliate and earlier investors Citigroup and Morgan Stanley, reports Reuters. An online payment service backed by AOL co-founder Steve Case, Revolution Money is a part of Washington-based Revolution LLC.

The company is going to use the funds for upgrading its technologies and helping merchants promote the credit card with a target of 3 million retailers to be covered by 2011, said Revolution Money chairman Ted Leonsis. According to the company estimates its RevolutionCard credit card is accepted at about 650,000 locations in the United States.

"We see more rapid adoption of our service as merchants fight in this economy for more margin from sales," said Leonsis, who owns the National Hockey League's Washington Capitals.

Revolution Money competes with eBay Inc's PayPal service in peer to peer money transfers by letting users transfer funds to one another for free. Besides the company also competes with major credit card issuers like Visa, MasterCard and American Express by offering competitive interchange fees for merchants.

While the current and the previous investment that was attracted in 2007 comes in a tough economy environment Revolution Money has no intentions to go public in the near future said Leonsis.

"Right now, we are focused on the build-out of the platform, but at some point to really scale the business, we would have to go public," Leonsis said.

Meantime, he thinks that within the two year the business will grow to become large enough so as to attract public investors or a possible acquirer.