Wednesday marked a historic day for PayPal, which announced its acquisition of online price comparison tool Honey for $4 billion, making the buy its biggest ever.
In the announcement, the company said it hopes the merger will “transform the shopping experience for PayPal (PYPL)’s consumers while increasing sales and customer engagement for its merchants.” The move signals a further push toward offering a holistic e-commerce experience, which PayPal has begun attempting in recent years with the integration of its PayPal and Venmo checkout tools.
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“This acquisition is a testament to the fact that disruptors can come in all sizes and come from anywhere,” said Vidya Peters, chief marketing officer at Marqeta, a B2B card issuing platform that powers companies’ online payments. She went on to explain that digital payments are still “ripe for disruption,” with the barriers to entry lower than ever before.
“Honey’s valuation and the acquisition value is a testament to that,” Peters told Observer. “The lines between payments, discounts, rewards and promotions are blurring, and payments platforms need to modernize to meet customer expectations.”
While the acquisition is undoubtedly smart for diversifying PayPal, which already operates several money-focused subsidiaries, some finance experts are cautiously optimistic about the investment.
“Acquiring a coupon comparison tool means they can be involved at the beginning of the search as well as the last step (the payment),” said Ted Rossman, an industry analyst at CreditCards.com, who explained that the sense of caution is due to payments and e-commerce both being crowded spaces. He pointed to coupon code and shopping portal options, such as RetailMeNot, Rakuten and TopCashback.com, as existing Honey competitors.
But with PayPal due to launch a Venmo credit card in the coming year, the brand’s synergy could benefit from closing the online shopping loop for users.
“I think a lot of people still believe PayPal is ‘the eBay payments company,’ and don’t realize they can use PayPal all over the web for online shopping, which is integrated with their existing credit and debit cards and bank accounts,” Rossman said. And so, by integrating Honey, PayPal can incentivize shoppers to purchase with its one-click method rather than their bank card, for example.
