Rev's whole business model was this: do what the major legacy credit card companies do, but cheaper. This is achievable because a business that used to require massive proprietary machinery can now run on cheap commodity PCs and networks. They'd lure retailers with transaction cost savings, and crush the legacy credit card companies by undercutting their profit margins.
For a big retailer like Whole Foods, these transaction costs are a direct cut of their profit. AmEx takes around 5%, Visa/MC take 2%, Revolution takes 0.5%. If you can run the business cheaply enough, you can get a lot of retailer market share by offering to cut these costs, and maybe even divert some of those savings into features that make your card better for consumers.
So there are three reasons I can see for this deal:
1. Hastening the failure of the Revolution card means AmEx can sustain its absurd transaction costs a little longer.
2. AmEx is thinking ahead many many years, and thinks that the Revolution approach will get them some new markets, and are willing to accept the risk that they'll be cannibalizing some of their existing retailer/consumer market.
3. AmEx thinks it could save a ton of money by adopting more current technology, and wants the folks who built Revolution to help them do it.
These are listed in order of decreasing likelihood. I would bet that the Revolution Card's growth slows significantly, very soon. I wonder also if there were other problems impeding the company's growth, and pushing the investors to sell now rather than hold out until the market really was more disrupted.
On the bright side for startup folks and consumers, this deal suggests that now is a great time to start another credit card company based on low transaction costs. Revolution already figured out a lot of the hitches, and retailers ought to be suspicious now that they're owned by the industry's biggest usurer. The industry is even riper for disruption now than when Revolution started, and hardly disrupted at all.