Home Investing & Trading Paypal and Honey : A Positive Merger?

Paypal and Honey : A Positive Merger?

by Alan Daniel
Paypal and Honey : A Positive Merger?

Paypal, the quickly growing fintech giant, recently bought Honey into the Paypal family. The fintech firm paid quite a substantial sum for Honey. Many observers didn’t understand why Paypal would pay such a princely sum for what is essentially a Chrome App Store (compatible with Firefox too) based coupon application.

The acquisition, to me, is fascinating and provides a few clues to the long-view that Paypal is taking on the future of commerce.

Let’s take a look at what the Honey App is and why it matters from an entrepreneurial standpoint and a Paypal stockholder standpoint.

What You Need To Know About the Honey App

What is Honey?

Honey is a Chrome extension that you, as a consumer, can quickly add to your Chrome Browser and shop around as you usually would. The Honey Chrome Extension for your browser is free and may be very valuable to you.

How does Honey Work?

The Honey App reminds me of Lolli or maybe even cashback by Rakuten. Simply browse and shop online as usual, and then when you are ready to checkout, click on the Honey app extension within your browser to find the “Internet’s best deals, promo codes, and savings.”

Why Would You Want To Use Honey?

You, the consumer, will not have to do the heavy lifting of endlessly scouring the web for discounts, coupon codes, and other offers, Honey would do it for you.

Remember that the application works with several retailers ranging from Pizza Hut to Macy’s.

Honey makes your life easier and saves you time and money; two valuable aspects that companies such as Alibaba, Amazon, and Walmart have focused on to grow their empires.

Honey doesn’t focus on an aspect of your life that is a “nice to have,” it does something that you will need to be financially well off in the long-term, save money.

A smart shopping assistant like Honey, will let you, the user improve your shopping and get the most bang for your buck.


Why Does Paypal Want Honey?

The reason why the payment processing firm, Paypal wants Honey is simple; it is because youwant Honey, and would benefit from using Honey.

The chrome extension also provides significant value in a critical growth sector, online commerce.

The bet is that more people will shop on e-commerce platforms through their mobile devices. Entrepreneurs and leaders who help individuals save money in this new and growing medium should see significant growth over time.

Paypal is willing to bet that their 4 billion dollar acquisition of Honey will pay off in the long run because of all the relevant parties involved in the shopping process.

Remember that an application such as Honey provides Paypal with what many characterize as the new oil, data. Paypal may learn more about people, their shopping patterns, and buying affinities.

The more that firms such as Paypal understand your online shopping behavior, the higher the potential for them to see how to improve your experience.

At the current moment, services such as Paypal are merely infrastructure companies that do quite well, taking a small percentage of each transaction that goes through their systems. But these firms have to stay competitive. After all, Paypal isn’t the only company in the payments processing sector, and they need to conduct value-added purchases that make sense. How do they do that?

By making purchases such as Honey.

See, if PayPal is like bitcoin, and serves as the base layer/ protocol later, it can buy or create products and services that can overlay on top of their service. The base layer, Paypal, is the core, but value-added applications such as Honey provide for growth opportunities within the domain they serve, e-commerce.

The fintech giant can become more of a marketing partner for other brands and become more involved in the consumer decision purchase life-cycle. An application like Honey also allows for further stickiness when using Paypal as the firm can now provide more value than just processing the payment.

Related Posts