1) PayPal bought Honey for $4 billion, an expensive purchase that doesn’t guarantee long-term gains for the payment platform.

WHAT HAPPENED: PayPal purchased Honey Science, a technology startup launched in 2012, which connects shoppers with digital coupons. Honey currently has 17 million users and offers discounts from 30,000 online retailers. This is PayPal’s biggest acquisition to date. WHY IT MATTERS
  • As more checkout options continue to surface, Honey’s technology and consumer data enable PayPal to stay relevant and ahead of its competitors. While many shoppers view PayPal as a trusted payment partner, they don’t interact with PayPal until they select a payment option during checkout. But if Honey’s technology integrates with PayPal, the payment platform is now relevant during browsing and buying, transforming itself into a shopping companion rather than simply a payment tool. Although Honey’s user base is only a fraction of PayPal’s, the former has grown with minimal investment in advertising and with PayPal’s support, Honey could become a household name.
  • However, the digital coupon industry is crowded and lacks a clear future. Honey has a built-in following and unique technology that is widely known for being user-friendly. Still, the low barrier of entry is fueling more competition. Honey’s competitors include coupon platforms that offer cashback and customer rewards themselves like the mobile coupon app Ibotta, and Rakuten (formerly known as Ebates), which gives users cashback rewards and even a $10 credit for signing up. Google also offers a similar technology through its Chrome browser. While the digital coupon industry is nearing saturation, Honey’s partnership with PayPal could enable the technology platform to stay ahead of the pack.
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