American Express acquires Revolution Money for $300 million

American Express, a global credit card major has agreed to buy Revolution Money, an innovative internet-based payments company for approximately $300 million, aiming to scale up the company's presence in the growing online payments business.

St Petersburg, Florida-based Revolution Money is part of AOL co-founder Steve Case's Revolution LLC. The company founded in 2005, launched payment services two years later, and has around 400,000 customers.

Revolution Money provides an innovative online payment platform with an integrated low-cost payment card network offering significant value to both merchants and customers alike. Its two products, RevolutionCard and Revolution MoneyExchange present consumers the most accessible, easy to use and secure online payment system.

The RevolutionCard is pin-protected and do not carry the name, number or signature of the holder on it. The card has a participation of around one million merchants and offers numerous discounts and incentives.

MoneyExchange is a free person-to-person online payment service to instantly send and receive money to and from family, friends and associates. Its customer's accounts are insured by the Federal Deposit Insurance Corporation.

American Express chairman and chief executive officer Kenneth I. Chenault said, ''New payments products and platforms are evolving rapidly and it's important for us to keep identifying cutting edge technologies that can extend our leadership beyond the traditional payments arena.''

Chenault further said that joining with American Express will unlock the potential of the young and relatively small Revolution money, which has developed some innovative e-payment offerings while allowing American Express to deliver competitive online payment products more rapidly and efficiently.

Ted Leonsis, chairman of Revolution money and a major investor said, ''We have built a next-generation payments platform that will enable American Express to compete even more effectively, especially against online competitors."

The company's founder and chief executive officer Jason Hogg stated that becoming part of American Express would enable Revolution Money to transform the industry by scaling its technology and business and providing even greater consumer benefits.

Through the acquisition, American Express intends to focus on developing re-loadable prepaid products, introducing new products for card members, creating payment alternatives designed for social media sites, and developing mobile payment options in the US, apart from expanding Revolution Money payment solutions globally.

The transaction is expected to close in the first quarter of 2010, subject to regulatory approval.

On completion of the deal, Revolution Money will become a subsidiary of American Express and part of its recently formed Enterprise Growth organisation.

Jason Hogg, will continue as president and chief executive officer and Leonsis will become a special advisor to American express.

New York-based American Express is a leading global payments and travel company that was hit hard by the global economic crisis. Analysts believe that the credit card major would recover faster than other financial firms, as it depends more on its affluent and corporate customers than its competitors.