On November 20, 2019, American online payments company PayPal announced that it would be acquiring Coupon code site, Honey, for approximately $4 billion. The acquisition will enable PayPal to add Honey's technology to its product line, thereby stirring higher competition with other payment services like Apple Pay, Visa, etc. Honey, on the other hand, will benefit immensely by gaining exposure to PayPal's 300 million users.
Honey Science Corporation is a coupon site that was founded in 2012. The platform is available as a mobile application and extension for Chrome, Safari, Opera, Microsoft Explorer, and Firefox web browsers. Upon installation by a user and during checkout, Honey begins to scan the internet for a promo code that can beat down the price of the product or service. It then chooses the best coupon that offers the cheapest cost. Read the full Honey Review here.
PayPal Makes Move to Acquire Honey
PayPal, on the other hand, is on the verge of buying Honey for roughly $4 billion, a payment that will mostly be made in cash. Much more, it will be the largest acquisition ever made by the American payments company to date. The acquisition is also set to take place in the first quarter of 2020, and it will be subject to regulatory approval.
On the other hand, George Ruan and Ryan Hudson, Honey's co-founders, will join PayPal after the acquisition, and they will continue to lead the Honey team. The duo will work in integrating Honey into PayPal's processes and scaling its technology to reach a more extensive user base. Similarly, 350 employees of Honey will move to PayPal, even though the company will still be based in L.A, California.
Acquisition to Stir More Competition
PayPal's acquisition of Honey will put it at the edge of the competition with other popular payment services, including Apple Pay, Visa, MasterCard, etc. This is because Honey is a popular coupon site that helps to find the best deals on products and services for its 17 million active monthly users.
As such, PayPal will be setting its foot into the deals market and competing with existing sites in this niche. Instead of only competing in the checkout page, PayPal will also be part of the process that helps customers to discover the best deals to be integrated into their product.
Explaining how Honey's features will be used, John Kunze, PayPal SVP of Global Consumer Products and Technology, said:
"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."
PayPal's Merchants to Benefit from Acquisition
What's more, PayPal's 24 million merchants will also benefit immensely from Honey's acquisition. The latter can be attributed to their increased ability to learn about a customer's preference. As such, they can offer targeted and more personalized products or services, which could translate into increased sales.
While making comments in that regard, Kunze also stated that:
"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."
Honey to Gain More Exposure to a Wider Audience
Honey has 17 million active users who are taking advantage of its web extension to shop online with the best coupon codes. However, its acquisition will give it more exposure to a broader user base. This is because PayPal has 300 million users around the world.
Ryan Hudson, while making comments, remarked that a combination of PayPal's assets and reach with Honey's technology could allow the Honey team to build a more enhanced new online shopping experience for consumers and merchants. Hudson also said it would enable them to help millions of retailers to reach customers efficiently with offers that give more value to Honey members.
It is, however, worth noting that Honey had raised $49 million from investors in a Series A and Series B round of funding. Some investors are SXE Ventures, BAM Ventures, Zuma Partners, Ludlow Ventures, Cendana Capital, Anthos Capital, Plug and Play, Wonder Ventures, and Mucker Capital. PayPal also revealed that Honey was profitable on a net income basis in 2018.