American Express to Acquire Revolution Money
Will develop next-generation payment products
ST. PETERSBURG, Fla. -- American Express Co. said that it has agreed to acquire Revolution Money, a Revolution LLC company. Revolution Money, launched by AOL Co-founder Steve Case's Revolution LLC in 2007, provides secure payments through an Internet-based platform. No names or account numbers appear on Revolution cards and transactions are authorized by using a PIN number.
The transaction, which is subject to regulatory review, is expected to close in the first quarter of 2010. The purchase price is expected to be approximately $300 million. Upon closing, Revolution Money [image-nocss] would operate as a subsidiary of American Express and be the first component of its recently formed Enterprise Growth organization. Enterprise Growth was formed to leverage American Express' existing assets and capabilities to generate incremental fee revenue and to drive the company's entry into new payment areas and related businesses.
Revolution Money's online person-to-person payment accounts are FDIC insured and suited for social and instant messaging networks. It also offers a prepaid card linked to those accounts that can be used for offline payments or to withdraw cash from ATMs throughout the United States.
"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," said Kenneth I. Chenault, chairman and CEO of American Express. "Joining with American Express will help [Revolution Money] unlock their potential, while allowing us to deliver competitive online payment products more rapidly and efficiently."
He added, "Revolution Money has a lot of room to grow as it competes head-to-head with other online and person-to-person payment providers. We are committed to using our global brand recognition, marketing reach and network expertise to help reach a critical mass of customers."
Jason Hogg, founder and CEO of Revolution Money, will continue as president and CEO. Ted Leonsis, a Revolution Money angel investor, major shareholder and chairman, will become a special advisor to American Express working with Chenault on overall digital and online payments strategy.
"We have built a next-generation payments platform that will enable American Express to compete even more effectively, especially against online competitors," said Leonsis. "Revolution Money's technology brings together the online and offline worlds in a way that can transform the way consumers securely transact. And with the low cost structure enabled by internet technology, American Express is now even better positioned to scale their online presence over time."
Hogg said, "Since our inception, our sole goal has been to build a payments platform that can help transform the industry. Becoming part of American Express will enable us to reach that goal by scaling our technology and business and providing even greater consumer benefits."
Chenault said that the initial areas of focus will include:
Developing re-loadable, prepaid products for new segments of the market. Introducing new products for cardmembers who currently use other alternative payment systems. Creating payment alternatives designed for social media sites and allowing open APIs that can help developers distribute new product innovations. Developing mobile payments solutions in the United States. Other opportunities will include expanding Revolution Money payment solutions internationally, extending product offerings to banks that issue cards on the American Express network and creating new forms of PIN-based debit products.
Revolution Money, a secure technology platform, was created to deliver value to consumers and merchants through two products, RevolutionCard and RevolutionMoneyExchange. The RevolutionCard provides consumers with enhanced PIN-based security, identity protection and numerous merchant discounts and incentives. MoneyExchange is an online payment service that offers consumers secure and free way to instantly send and receive money online to and from their friends, family and associates. St. Petersburg, Fla.-based Revolution Money is part of the family of companies within Revolution LLC, which was founded by AOL co-founder Steve Case with the intention to drive transformative change by shifting power to consumers.