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American Express Co., one of the oldest and most traditional credit card companies, is betting $300 million that a small but high-profile alternative payments network will help it leap ahead in emerging technologies (CardLine Special Bulletin, 11/18). AmEx's deal to buy Revolution Money Inc., an upstart payments company backed by AOL founders, is a long-term bet and one that mystified some of the New York credit card company's observers. But the deal announced Wednesday also demonstrated AmEx's renewed ability to invest in growing its business, and its commitment to what executives called "identifying cutting-edge technologies" through its new Enterprise Growth group. "We see Revolution Money as a small acquisition, but one with big potential," Kenneth Chenault, AmEx chairman and chief executive, told reporters during a conference call this morning to discuss the deal. "If you were designing a payments platform today from scratch, you would do a lot of the things that have been built into Revolution Money." The news baffled one industry observer who wondered how AmEx would benefit. "I don't see it," says Philip J. Philliou, a former AmEx executive and a partner in the Philliou Selwanes Partners LLC consulting firm. "Revolution Money isn't the company that comes to mind when I think of innovative products that have succeeded in the marketplace to date. I guess I commend them for bringing in new talent. But as far as purchasing a new platform that's going to fundamentally change the way they do business, to my mind that's suspect." The companies expect to close the deal during the first quarter of next year.
