Revolution Money Got It

by Paul D'Alessandro on November 19, 2009

revolution_logoRecently I had the opportunity to chat with Jason Hogg, CEO of Revolution Money and some of his investment team.  These guys were absolutely adamant that they have a customer experience that is truly different.  While most of the buzz in the last 24 hours since American Express announced their $300M acquisition of Revolution Money has been about the acquisition of a new payments product and platform, I would contend that there is something different going on here with one of Steve Case’s latest coups.

Revolution Money provides secure payments through an internet based platform. No names or account numbers appear on Revolution cards and transactions are authorized by using a PIN number. The company’s online person-to-person payment accounts are FDIC insured and they also offer a prepaid card linked to those accounts that can be used for offline payments or to withdraw cash from ATMs throughout the United States.

So at $300M with around 400K card holders, American Express paid around $750 per customer to Revolution Money.  Given that American Express already has almost 100M cards-in-force and a market cap near $50B, what explains the 50% price premium paid for each card holder?

What the press missed today is that Revolution Money is a payments product that is ideally suited for social and instant messaging networks.  This is where the Revolution team truly displayed their passion for their “experience” during our chat.  What they have created is a payments mechanism that fluidly interfaces with where Gen Y and an increasing amount of the general population is going today, the social media space.  Fluid is the operative word here as it is a primary tenet of great customer experience.  What Revolution has (and now American Express) is a payments platform where tomorrow’s customers shop, when they need it, and in a form factor that overcomes the “kludgey” way in which today’s bricks and mortar optimized payment products try to fit into the virtual world.  Revolution got how it has to work and now they got a whole lot more than that.

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