PayPal acquires shopping reward platform Honey for $4bn
Deal gives PayPal a way to fight back against the competition from tech giants entering the payments marketEuropost
PayPal announced Wednesday it has agreed to acquire Honey Science Corporation, the makers of a deal-finding browser add-on and mobile application, for $4bn, mostly cash. The acquisition, which is PayPal’s largest to date, will give the payments giant a foothold earlier in the customer’s shopping journey. Instead of only competing on the checkout page against credit cards or Apple Pay, for example, PayPal will leap ahead to become a part of the deal discovery process, as well.
Currently, Honey’s 17 million monthly active users take advantage of its suite of money-saving tools to track prices, get alerts, make lists, browse offers and participate in an Ebates-like rewards program called Honey Gold. Its users tend to be younger, millennial shoppers, both male and female. PayPal aims to add Honey’s technology to its own product line, expanding its reach to PayPal’s 300 million users.
“What’s exciting is that we can take the functionality Honey now offers - which is product discovery, price tracking, offers and loyalty- and build that into the PayPal and Venmo experiences,” explained PayPal SVP of Global Consumer Products and Technology, and former Xoom CEO, John Kunze.
“When Honey says they’re putting money in the pockets of their customers - that’s perfectly in line with what we want to do. We want to make digital commerce and financial services more affordable, easier to use, more fun and more accessible to people around the world,” he said.
In addition, PayPal’s network of 24 million merchant partners will gain the ability to offer targeted and more personalised promotions to consumers as a means of acquiring new business and driving increased sales. PayPal Credit may also be integrated into Honey to help finance larger purchases.
Honey has flown under the radar to some extent since its founding in 2012. Originally only a web browser extension, Honey tracks sales and retailers’ promo codes, as a rival to RetailMeNot and others. What makes the extension so useful is that it automatically tries all the eligible promo codes for you during checkout then selects the one that provided the most savings and applies it on your behalf. This helps shoppers feel more comfortable with their purchases and reduces shopping cart abandonment.
The company also rolled out features to inform shoppers of an item’s price history, including the historical pricing of any product on Amazon’s marketplace. In 2017, Honey launched DropList, which would track and alert users to lower prices, as well as tools for finding travel deals.
As more consumers shifted their shopping to e-commerce merchants, Honey’s user base also rapidly grew. Its browser extension now works across approximately 30,000 merchant websites, including fashion, technology, travel and even pizza delivery. Last year, Honey publicly shared that its 10 million members had saved over $800m using its tools. As of today, Honey’s 17 million members have saved more than $2bn to date.
This way the acquisition gives PayPal a way to fight back against the increased competition from Apple, Google, Facebook and other tech companies that have entered the payments market in recent years. With Honey, PayPal immediately shifts the battle away from the checkout page itself to instead compete against all the places people go to discover, browse, get inspired and deal-hunt - whether that’s directly on retailers’ sites or through newer platforms, like Pinterest or Instagram Shopping.