Need to Know
- PayPal has announced it is acquiring Honey, a browser extension that helps e-commerce shoppers find online coupons and discounts and apply them to their shopping cart before checking out.
- The acquisition, valued at $4 billion, is the largest in PayPal’s history behind its $2.2 billion purchase of POS company iZettle in 2018.
- Honey currently has over 17 million monthly active users and works with more than 30,000 retailers across several industries such as travel, food delivery, and fashion.
- Paypal also owns Venmo, and through their combined 275 million users and 24 million merchants, Honey will look to source exclusive offers and bring new shopping experiences to its users. PayPal’s number one goal is to become part of the consumer’s daily financial life.
Mobile payments is a crowded space, and PayPal’s acquisition of Honey is one more benefit to choosing their platform over other competitors such as Apple Pay or Google and Samsung’s mobile wallets. By acquiring Honey, PayPal is looking to own the online shopping experience from start to finish. Customers can use Honey to find coupons, then navigate to a site to purchase with that coupon via PayPal, extending PayPal’s reach beyond the finished checkout process.
PayPal president and CEO Dan Schulman said the move is “amongst the most transformative acquisitions in PayPal’s history,” going on to say that “the combination of Honey’s complimentary consumer products with our platform will significantly enhance our ability to drive engagement and play a more meaningful role in the daily lives of our consumers.”
One of the main value propositions for Honey is its Honey Gold program, a loyalty program that rewards users with free gift cards for using the platform a number of times. PayPal has experimented with and launched cashback and loyalty programs as recently as September 2019 when they partnered with PepsiCo to provide cashback on certain food and beverage purchases. Loyalty programs have become a major focal point for the largest retailers in the world over the last few years as companies struggle to maintain brand awareness and dedication.
In 2019 alone Honey has saved its users more than $1 billion while itself earning $100 million in revenue and staying profitable by growing over 100 percent year-over-year. The LA-based company had raised $40 million in funding prior to acquisition.
“Honey’s vision has always been to give consumers the tools they need to make the best decisions with their money,” said Honey co-founder George Ruan in a statement. “PayPal shares that vision and together we can build powerful commerce capabilities that create real value for both consumers and retailers around the world.”