American Express this month completed a $300 million acquisition of online payment service provider Revolution Money, giving the network a new platform from which to explore the growing prepaid product segment of the payments industry.
At the onset, acquiring Revolution Money—started by AOL co-founder Steve Case—gives American Express a chance to compete in the peer-to-peer payment sphere against the dominant PayPal. However, Amex said it also would concentrate on developing reloadable, prepaid products for new market segments.
"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," American Express chairman and CEO Kenneth Chenault said in a statement. "We are committed to using our global brand recognition, marketing reach and network expertise to help Revolution Money reach a critical mass of customers."
Prepaid cards are of growing interest among corporate travel buyers, who can use the products in such situations as replacing cash advances or to gain reporting controls among travelers who do not travel frequently enough to need their own corporate card. Foreign exchange and international payment supplier Travelex last year launched a prepaid card product with MasterCard: the Corporate Cash Passport tool, a MasterCard-branded card loadable with U.S. dollars accepted at ATMs and by vendors that accept debit MasterCard products
(BTNonline, June 22, 2009).While American Express already offers prepaid products, the person-to-person payment capability is a new avenue for the company, vice chairman Ed Gilligan told BTN.
"We were not into person-to-person payments, and that's a major trend right now as electronic means of payments are cannibalizing cash and checks," Gilligan said. "We were riding that wave around the world with consumer and corporate cards, but now we can complement that with person-to-person payments."
American Express also plans to expand Revolution Money to become an international presence and provide offerings to banks that issue cards on Amex's network. Revolution Money will operate as a subsidiary of American Express. Its founder and CEO, Jason Hogg, is continuing to serve in that capacity.