Sydney-based E Com was founded in 1998 by its existing chief technology officer Michelle Deaker who will be joining ReD as product development director of its Australian business.

The unit currently employs 19 staff and has been acquired from a number of private investors. ReD says it will fund the acquisition through a mixture of existing cash resources and new debt facilities.

In its most recent full year, to 30 June 2005, E Com reported a 160% increase inn revenue to A$5.9m (£2.5m), and a pre-exceptional operating profit of A$97,000.

Over the last three years the company has launched more than 30 gift card schemes for blue chip retailers including Australia's two largest retailers Coles Myer and Woolworths.

The company also operates its own multi-retailer electronic gift voucher programme aimed at both consumers and the corporate incentive market which it sells through a proprietary Web site.

ReD says the acquisition is an important extension to its existing card issuing business and provides a number of commercial and operational synergies. These synergies include migrating E Com's stored value gift card offering across other ReD regions, particularly the UK and the US, and also cross selling opportunities in Australia.

E Com will be integrated immediately into ReD's Australian fuel card business. The combined operation will be managed by Rob Hillan, who has been the MD of ReD's Australian operations since 2000.

Carl Clump, CEO, ReD, says the acquisition "extends our card issuing capability into a new segment with excellent growth potential".

"We are already working on launching E Com's services for our existing retail customer base in the UK and subsequently the US," he adds.