American Express (NYSE: AXP) today announced that they are acquiring Revolution Money, the financial services company founded by Steve Case in 2007. The acquisition is a move by American Express to expand its line of prepaid products. The deal is expected to close in the First Quarter of 2010.
Revolution Money was formed as an alternative payment system with an objective to reduce merchant interchange fees and other expenses associated with the big payment networks. It is unclear how many accounts have been issued by Revolution Money, however, it is clear that they have an advanced technology platform and top level expertise in prepaid products.

According to American Express, the the initial areas of focus for the acquired entity will include:

• Developing re-loadable, prepaid products for new segments of the market.
• Introducing new products for cardmembers who currently use other alternative payment systems.
• Creating payment alternatives designed for social media sites and allowing open APIs that can help developers distribute new product innovations.
• Developing mobile payments solutions in the United States.

Other opportunities will include expanding Revolution Money payment solutions internationally, extending product offerings to banks that issue cards on the American Express network and creating new forms of PIN-based debit products.