- PayPal announced in a press release Wednesday its largest acquisition with an agreement to buy shopping and rewards platform Honey for $4 billion. Honey helps people find online coupons and discounts while they shop online and has about 17 million monthly users, per the company.
- Honey, which PayPal CEO Dan Schulman said on a conference call is profitable, generated more than $100 million in revenue last year. It works with major companies such as Macy's, Sephora and Walmart to help them target consumers with personalized offers.
- PayPal will embed Honey into its apps such as Venmo, which has more than 275 million users. The deal is expected to close in the first quarter of 2020, per the announcement.
The deal is another sign that PayPal plans to expand its e-commerce services for merchants amid fierce competition in the mobile payments space. Apple Pay comes pre-installed on every iPhone, while Google and Samsung offer mobile payment platforms for Android devices. Meanwhile, Facebook this month rolled out a payment service in the U.S., giving millions of users another way to make purchases on apps such as Instagram and Messenger, or to send money to friends and family.
PayPal has expanded its range of value-added programs for brands and merchants, including loyalty programs for PepsiCo, Target and Sephora. The addition of Honey to its platform could help to expand those services and drive deeper engagement with its 300 million customers. PayPal could also help merchants better target new customer segments with cross-promotions for customers based on their purchase history and other data it gathers.
Loyalty and cash-back programs like Honey's have become more popular among a wider variety of brands working to cut through ad clutter and boost customer lifetime value. Target last month introduced a loyalty program that offers 1% cash back, personalized deals and early access to sales. Chipotle Mexican Grill boosted downloads of its app nearly fivefold with the nationwide rollout of a loyalty program that used Venmo to give cash back to customers. Starbucks has made its mobile app a central part of its successful loyalty program, along with ordering and payments, but just last month was surpassed by Apple Pay as the most popular mobile payment app.