Online search service Honey became the property of PayPal: details of the deal
Company PayPal buys online discount search service Honey. The amount of the deal is $4 billion, which makes it the largest acquisition in this segment of the market.
The Honey service allows users to save money by making purchases online. The program compares the cost of selected goods and services in various online stores. Last year the startup entered the Forbes rating as a future unicorn, which will soon cost $1 billion.
The Honey service greatly simplifies the procedure of purchasing products, saving time of a user in search of the best option in terms of cost.
Buying a startup is an important step for PayPal, it will strengthen its position in several segments at once and give a new vector of development. According to statistics for 2018, the online service provided discounts of over $1 billion. Each month the startup serves about 17 million people, and collaborates with more than 30 thousand Internet retailers.
Despite the large transaction amount and optimistic expectations of PayPal representatives, experienced investors and Wall Street players do not share their joy. In a short time, the value of the company’s shares fell by 2%.
The impetus for the deal with Honey was the fierce competition from other IT companies. Such major market players as Google and Facebook already have their own services for payment and processing of payments, so PayPal needs not only to develop, but also to hold the existing positions, which becomes extremely difficult due to increasing competition.
The amount of online service purchase was almost twice higher than the deal on another major purchase of PayPal – Swedish startup iZettle. Last year it was paid $2.2 billion, which is twice the amount of the estimated capitalization, which was planned by the management of iZettle. The purpose of this step for PayPal is to compete with the U.S. startup Square Inc, which provides payment services for small businesses. iZettle is called the European equivalent of this service.
PayPal company is the largest system for electronic payment transactions. It operates in more than 202 countries, and the service is used by 200 million people. PayPal works with different national currencies, providing high security of data transmission and speed of transactions.
The company was founded in 1998, and in 2002 it became the property of eBay Corporation, which made it possible to pay with PayPal more than 50% of the auctions held on the website.
The company is expanding its scope of activities, improving technology, acquiring various startups around the world. For example, in 2017, Thyngs, a project specializing in mobile payments, became part of PayPal.
