American Express Acquires Revolution Money

As a follow-on to my blog about alternative payments, it looks like one big player is either afraid of the competition – or maybe it is simply making smart business decisions. Announced yesterday was American Express’ deal to purchase Revolution Money, launched by AOL Co-founder Steve Case’s Revolution LLC in 2007. The acquisition, estimated at $300 million, will give American Express a foray into new payment channels and, hopefully, will provide Revolution’s customers (merchants and cardholders alike) access to American Express’ existing network.

The Revolution Card contains no imprinted cardholder data and require a PIN to authorize transactions.  Revolution Money also provides an innovative payment platform and low-cost merchant services, which is highly attractive to business owners – and has provided some strong competition against the larger payment networks (i.e. Visa, MC).

Network availability and matching (cardholders would only be able to use cards at merchants who also processed Revolution Money payments) was one challenge that was facing Revolution Money.  Hopefully, Revolution’s new parent will continue the low-cost business model as well.  With credit card issuers adding new cardholder finance charges before the credit card act goes into effect and merchants up against unavoidable service fees, a company sticking to a plan to help the economy recover rather than hinder its growth would be, well, revolutionary.

American Express plans to add Revolution Money as the first subsidiary to its new Enterprise Growth organization.

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