NEW YORK -- According to a report in Business Week on March 13 another card brand, one that is aimed at helping subprime consumers and tapping into retailers' anger over interchange, is in the offing.
According to the report, Steve Case, founder of America Online, is behind the attempt to launch another card brand called the GratisCard.
The magazine reported that GratisCard will aim to undercut Visa and MasterCard on interchange--chopping the rate from an average 1.75% of purchase price to as little as 0.5%--and broadening the card base to include more consumers than are usually offered credit cards--including those considered subprime.
Revolution, the private investment bank that Case founded with $500 million from his AOL holdings, is the brand's largest shareholder, the magazine reported.
According to its Web site, www.gratiscard.com, the new brand's leadership team includes a fair number of executives from the former MBNA, which merged with Bank of America and became FIA Card Services.
The St. Petersburg Times also reported that the new company has an office on the 19th floor of the Bank of America building in St. Petersburg.
"The current infrastructure is inefficient and costly," Jason Hogg, president and chief executive of the new brand told the Wall Street Journal. "It is that structure that is being attacked by Gratis, a payment system that eliminates the bulk of those fees and gets merchants to use the savings to create instant rewards for their customers."
Hogg is a former executive with MBNA Canada and the son of a former CEO of MasterCard, the paper reported.
The card brand is currently being test marketed in Philadelphia with offers to the fans of Philadelphia Flyers and 76ers, where an official for the joint venture which runs both teams said in a "quiet test" several hundred fans signed up for the card on a recent night.
The new card will also offer a degree of anonymity unmatched by Visa or MasterCard. The new cards will not carry the consumer's name, just a card number, and personal identification numbers that can be changed regularly, Business Week reported.
An additional security feature of the new card will allow consumers to easily create temporary PINs for one-time purchases, according to the company's Web site.
The cards will also encrypt transactions and route them over the Internet, a factor which the brand said will speed up the approval process.
Merchants will be able to distribute the cards as well and will not have to make major modifications to their point of sale terminals to take them, according to the brand's Web site.
Calls to Gratiscard and Bank of America were not returned as of press time. --firstname.lastname@example.org