PayPal has agree to buy the online shopping tool Honey for $4bn (£3.1bn), the largest acquisition in the payments company’s history.
The deal expands PayPal’s focus from processing payments to influencing what shoppers put in their digital baskets amid hot competition in the online shopping world.
Honey was founded in 2012 as an add-on that shoppers could install on their web browser to alert them if a retailer was offering a better deal for the same item.
It has since launched a mobile shopping assistant, loyalty scheme and cross-retailer price tracking, which PayPal said it will merge with its digital payment service.
PayPal’s focus on processing payments has barely faltered in its 20 years, but the Honey deal indicates the need to come up with something to keep users engaged as the financial technology sector becomes increasingly crowded amid a new wave of fintech apps and the impending launch of Facebook’s Libra cryptocurrency.
Honey has roughly 17m monthly users and works with 30,000 online retailers to find deals. It will be granted access to PayPal’s 24m merchant accounts to find exclusive offers for PayPal’s 275m active consumer accounts, the company said on Wednesday.
Dan Schulman, chief executive of PayPal, described the merger as among “the most transformative acquisitions in PayPal’s history”.
He said: “It provides a broad portfolio of services to simplify the consumer shopping experience, while at the same time making it more affordable and rewarding. “The combination of Honey’s complementary consumer products with our platform will significantly enhance our ability to drive engagement and play a more meaningful role in the daily lives of our consumers.
“As a partner of choice for our merchants, this is another way that we can help them build and strengthen their customer relationships, provide personalized offers, and drive incremental sales. The combination of Honey and PayPal adds another significant and meaningful dimension to our two-sided platform.”
In 2018 Paypal paid $2.2bn for card payment reader iZettle to expand its in-store presence following concerns about its staying power following a split from eBay, the digital marketplace that made it a household name.