PayPal announced today that it plans to buy Honey, the app that helps users find coupons across the internet, for $4 billion this year. This is PayPal’s largest acquisition so far.
While PayPal is one of the longest-running eWallet companies in the U.S., Apple Pay, Samsung Pay, and others are becoming really competitive. With the purchase of Honey, which has 17 million active monthly users, PayPal is putting itself ahead and inserting themselves in the deal and discovery process.
Big Benefits for PayPal
PayPal will take Honey’s technology and add it to their own product line.
“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,” explains 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 says.
Upgrading Merchant Reach with Targeted Ads
PayPal currently has more than 300 million users around the world and 24 million merchant partners.
The network of merchants will gain some benefits from this acquisition. Honey uses targetted ads and personalized promotions to help its users find deals on stores they repeatedly shop at or items they search for. Now, PayPal merchants will be able to take direct advantage of this feature to drive sales.
It’s also been mentioned that PayPal credit may be integrated into Honey’s process, helping users finance bigger purchases.
Smarter Innovations
Honey was created in 2012 to compete with the rise of sites like RetailMeNot and other promotion code-listing services. Originally Honey was just a browser add-on that showed the day’s deals and best coupon codes.
What skyrocketed them to the top is the feature that tests all the known promo codes at checkout and finds the best deal possible.
Businesses love this app feature because it’s actually been shown to reduce shopping cart abandonment. Finding a deal also helps users feel more comfortable and confident about the end price.
They’ve also debuted a feature in recent years that tracks price changes for popular items, so users can see if they’re getting the best deal. The Honey DropList tracks items and travel deals and alerts users when they hit a new low.
It’ll be interesting to see how PayPal and Honey combine their services to benefit its users.
