Industry giant american express company revealed in a recent conference call that it will be acquiring Revolution Money for $300 million, a move that will enable the company to expand its presence in the highly lucrative Internet market.
American Express is expecting to seal this highly anticipated deal in early 2010. After the acquisition, Revolution Money would function as an affiliate company of AmEx. No sweeping changes will happen in Revolution Money's boardroom following the deal, with the current CEO and president, Jason Hogg, expected to retain his position.
The Florida-based Revolution Money is the brainchild of AOL co-founder Steve Case, which founded the company in 2007. Among others, the company promotes a low-cost Internet-based alternative payment system, which targets merchants who currently have to contend with paying credit issuers hefty fees annually. credit card companies charge stores and merchants "interchange" fees for transactions involving credit cards. These fees have been extremely lucrative for credit issuers, earning them billions of dollars annually. Merchants have been lobbying lawmakers to regulate interchange fees, which they feel disproportionally eats a huge chunk of their total expenditures.
American Express have lately been exploring opportunities in the online payment industry, which has seen major developments in recent years. Analysts say that the projected acquisition of Revolution Money would fit well into AmEx's ambitious goal of exploiting the Internet market. What's more, AmEx officials said that Revolution Money does not at all threaten their business and would actually be a perfect complement to the credit issuer's operations.
One market that AmEx is seeking to tap with Revolution Money is the young market sector. Young consumers are known to be technologically savvy and in tune with developments in the technology industry. Pitching Revolution Money to young customers would be an easy task since they are found to be more receptive and appreciative of innovations. They are also targeting merchants who, because of their size and scale, may find interchange fees to be prohibitive and costly.
American Express is intending to focus first on the U.S. market and eventually branch out overseas if conditions permit. The company is also finding ways to integrate Revolution Money into its current system, thereby enhancing customer experience.
One groundbreaking product that Revolution Money has introduced in the market is its prepaid card that is embedded with just a PIN number. It does not contain a user's name, account number, signature and other classified information. All these revolutionary features are designed protect users from identity theft and fraud.
Users can also load the card with funds from existing bank accounts. The company also promotes MoneyExchange, an online service that allows people to remit money through social networking sites and instant messaging systems.