American Express Co. announced plans to jump into the growing online-payment business by acquiring Internet-transaction company Revolution Money for about $300 million.
The credit-card company said the acquisition will help it develop reloadable, prepaid products; introduce new products for cardmembers who currently use other alternative-payment systems; work on payment alternatives designed for social media sites; and develop mobile-payment solutions in the U.S.
Revolution Money, whose backers include AOL co-founder Steve Case, provides secure payments through an Internet-based platform. The company also offers a prepaid card linked to online accounts that can be used for offline payments or to withdraw cash from ATMs.
"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 Amex Chairman and Chief Executive Kenneth I. Chenault.
Jason Hogg, founder and CEO of Revolution Money, will continue in his role. The transaction is subject to regulatory review and is expected to close during the first quarter.
Revolution Money slashes costs for accepting credit cards by as much as 75% for merchants, who have long complained about credit-car fees. With $42 million of new money raised earlier this year, the company said at the time it would continue developing its technology as it looks to steal market share from traditional credit card companies like Visa Inc. and MasterCard Inc., as well as popular payment service PayPal, a unit of eBay Inc.
Besides Case, investors in Revolution Money include Citigroup Inc. and Goldman Sachs Group Inc. At the time of the $42 million funding, Revolution Money was valued at less than $200 million.
Shares of American Express slid 0.2% to $41.26 in premarket action.