PayPal this week announced the acquisition of Honey Science Corporation, a popular browser extension that helps purchasers save money while shopping. However, the lucrative $4 billion deal for an add-on application did not go down well for the industry insiders, as ominous predictions are making the rounds. As the acquisition will be the largest deal in PayPal’s history, it is already raising some questions in the market.
Honey Science Corporation
Honey, since its inception in 2012, is assisting buyers in automatically apply coupons to increase savings while they shop online. On installing the Honey browser extension, it tracks price changes on 30,000 retailer websites to get the best deals for purchasers. It also offers reward programs and price-tracking tools and alerts users on a price drop. Such services have helped millions of people find more than $1 billion in savings in a year. The firm is in association with a wide range of retailers ranging from fashion and technology to travel and pizza delivery.
Dan Schulman, president and CEO of Paypal, stressed on the importance of simplifying the customer shopping experience by collaboration with Honey. He also mentioned that Honey is amongst the most transformative acquisitions in PayPal’s history. The idea behind the deals is to play a more meaningful role in the daily lives of their customers.
Although PayPal has announced the association with Honey, the transaction is expected to close in the first quarter of 2020. However, there are no immediate plans to rebrand Honey. As a result, it will retain its headquarters and brand in Los Angeles, California. Besides. Honey’s co-founders will continue to lead the team as part of PayPal’s global consumer product and technology organisation.
Today, many blue-chip organisations like Amazon and Google are trying to make their mark into the payment landscape. More notably, Facebook, with Libra, is aiming to disrupt the marketplace. However, there are numerous roadblocks that Facebook is witnessing, thereby, slackening its progress.
With such fierce competition among payment firms, PayPal was feeling the heat. Although these companies were not directly into the PayPal model, it was highly likely that, in future, they might get into PayPal’s digital money space.
Consequently, PayPal needed to innovate and bring something new to the table for retaining its customers. And the acquisition of Honey might just be the answer.
How Will It Help PayPal
Since every other payment company is providing similar services, the differentiating factor among them was mostly limited to trust in the brand and the advantage of current customers. For instance, in India, there are numerous payment service providers, which more or less offer a similar payment experience. This led payment firms to offer cashback for retaining and gaining customers.
Such referral bonus strategy was adopted by PayPal early in their history, and would not make much of a difference today. As a result, PayPal had to devise a different strategy to hold its position in the cut-throat competition.
The deal will enable PayPal to move ahead from just facilitating a superior customer experience while payments to helping its customers discover products at lower cost by leveraging Honey. PayPal and Honey collectively might transform the way buyers purchase products as they will now streamline the whole shopping experience. It is not about only offering payment services anymore. This will place PayPal ahead of the pack in the payment landscape.
It seems like an exceptional collaboration but will it be a value for money? Irrespective of the price tag, PayPal has made a necessary move in order to remain a leader in the payment marketplace. The success cannot be guaranteed, and we will have to wait and watch how PayPal takes this association ahead and disrupt the landscape.