UNITED STATES – Payment processor PayPal Holdings Inc has announced that it would buy privately held shopping and rewards platform Honey Science Corp for about $4 billion.
The acquisition, which is PayPal’s largest to date, will give the payments giant a foothold earlier in the customer’s shopping journey.
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.
“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 Senior Vice President of Global Consumer Products and Technology.
PayPal aims to add Honey’s technology whose users tend to be younger, millennial shoppers, both male and female to its own product line, expanding its reach to PayPal’s 300 million users.
In addition, PayPal’s network of 24 million merchant partners will gain the ability to offer targeted and more personalized promotions to consumers as a means of acquiring new business and driving increased sales.
TechCrunch speculated that PayPal Credit may also be integrated into Honey to help finance larger purchases.
“As a partner of choice for our merchants, this is another way that we can help them build and strengthen their customer relationships, provide personalized offers, and drive incremental sales,” said Dan Schulman, president and CEO of PayPal, in a statement.
“The combination of Honey and PayPal adds another significant and meaningful dimension to our two-sided platform.”
The acquisition also gives PayPal a way to fight back against 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.
Honey was already profitable on a net income basis in 2018, PayPal notes.
The acquisition is expected to close in the first quarter of 2020, subject to regulatory approval and is anticipated to be accretive to PayPal’s non-GAAP earnings per share in 2021.