AmEx: Say We Want a Revolution
by John Paczkowski
Posted on November 18, 2009 at 8:04 AM PT
AOL moguls Steve Case and Ted Leonsis are smiling into their cornflakes this morning. Moments ago, American Express (AXP) announced plans to acquire Revolution Money, the online payments outfit they’ve been working on since 2007, for about $300 million. A nice exit for Revolution, which was valued at less than $200 million during its last funding round earlier this year.
A savvy move for Amex, too. Though Revolution competes against entrenched credit-card companies and PayPal, among others, its alternative payment system, which reduces costs for accepting credit cards by up to 75 percent, is quite attractive to merchants who’ve shouldered those costs for so long.
Says JP Morgan analyst Imran Khan: “While it is hard to know precisely what direction AmEx plans to take the Revolution assets, we think the acquisition suggests the company is trying to be more aggressive in the online payments arena. We think PayPal’s existing account base and international footprint have given it a network advantage in the C2C space that is hard to dislodge. On the other hand, we believe significant room exists for market share gains in Online Payments by companies that offer innovative solutions, and this acquisition gives Revolution Money a stronger backer.”
