PayPal Is Acquiring Honey To Increase Its Stickiness With Consumers
(Get it? Sticky!)
It’s PayPal’s largest acquisition to date. PayPal’s core value proposition is in alleviating shoppers’ concerns about providing personal financial information during the online checkout process — and that remains as valuable as ever. But here’s what the Honey acquisition means for PayPal moving forward:
- The Honey acquisition extends PayPal’s role in the customer journey. Honey will enable PayPal to leap forward from the online checkout process and add value to consumers earlier in their shopping journeys via promotions and discounts. It will also deepen its usefulness to consumers with Honey’s other tools such as price tracking, alerting, and rewards.
- PayPal’s merchant partners can use Honey’s data to better target communications and promotions. The company promises to use Honey’s data on consumer browsing and shopping habits to help merchants (e.g., retailers, brands, etc.) “increas[e] sales and customer engagement,” likely via more targeted communications and promotions.
- PayPal is now walking a narrower tightrope along its “two-sided network.” Its core value position is anchored in security and giving consumers control of their data, and the main driver of value for merchants with Honey is predicated on sharing consumer data. PayPal will have to nurture both sides of its balancing pole equally to succeed.
- PayPal will still face stiff competition. PayPal needs this stickiness. In the last week alone, both Facebook and Google have made significant moves. Of course Amazon Pay, Android Pay, Apple Pay, and Samsung Pay (to name a few) are all coming after PayPal’s core business. And PayPal’s traditional competitors, the credit card issuers, are also trying to enhance their role in merchant rewards and promotions (for example, Capital One’s acquisition of Wikibuy and its upcoming initiative of allowing Capital One credit card users to use their rewards toward purchases on Amazon, announced today in a “coming soon” email to cardholders).
It’s been a big week of payments news! What do you think of all these announcements? What other benefits or challenges await merchants and consumers — or PayPal and Honey?