American Express Acquires Revolution Money: Challenges PayPal
American Express just announced that it plans to acquire Revolution Money for $300 million. The deal is still subject to regulatory approval. Revolution Money, which was founded by AOL's co-founder Steve Case, launched in 2007. The company offers a number of services, including a payment and ATM card that offers discounts at participating retailers and the Revolution Money Exchange, which enables online person-to-person money transactions. It seems reasonable to assume that American Express made this acquisition to get a foothold in the online e-payment market and to challenge eBay's PayPal.
According to today's press release, Amex hopes that this acquisition will give Revolution Money - and Amex - room to grow as it goes "head-to-head with other online and person-to-person payment providers." Amex will put its own brand and marketing reach behind Revolution Money's services.
Chances are that Amex is mostly interested in the P2P payment system that Revolution Money has developed. It will be interesting to see what the company will do with the Revolution Money card, which, even though widely accepted, hasn't exactly become a household name yet. Amex also plans to expand Revolution Money's reach beyond the US.
Lots of Participating Merchants - But How Many Customers?
The Revolution Money card is currently accepted at about 650,000 stores in the US, including Barnes & Noble and Whole Foods. Merchants have been drawn to Revolution Money because the company charges lower fees than credit card companies. The company didn't announce how many actual users it currently has, though just like GigaOm's Om Malik, we still haven't met anybody who owns a Revolution Money card.
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It will take years until these dinosaurs catch up. They still charge for everything and checks takes days to clear not to mention international transfers. Paypal came up with lightning fast transfers for very little. Wise enough they did not get involved in gambling so it was not frozen like netteller who had a great start, but eventually got nailed under the pretext of illegal gambling.
The 650,000 number is a bit deceptive. Revolution uses the debit card network, it can be used pretty much anywhere that a debit card can. It's an interesting model, and while it's got a lot to appeal to merchants, the case for customers has always been on the thin side.
Rumor puts Case's stake in this at $500 million, and if that's true, that casts a bit of a pall on this.
-Rob D.
Doesn't seem that it as a lot of visitors at all. It going to be a pretty hard sell to consumers, unless American Express creates reward program for customer to user the product.
http://siteanalytics.compete.com/revolutionmoney.com/
Why don't the card issuers/banks just do a licensing deal with Paypal and be done with it? Why do they assume that because they are banks they know how this works and others don't?
Posted by: islandinthenet.com
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November 20, 2009 7:11 AM