PayPal's $4B Honey acquisition is a bet on the affiliate model and loyalty programs, as it aims to control the starting point of a transaction alongside payment
Mike Jaconi / Business Insider : Tweets: @evanwray1 , @chrismaddern , and @mdudas Tweets: Evan Wray / @evanwray1 : Couldn't agree more with @michaeljaconi in that loyalty and stored value are the beginning of the battle for the starting place of commerce. I'd add peer to peer sharing as it will also be massive. https://www.businessinsider.com/ ... Chris Maddern / @chrismaddern : Welcome to the era of commerce. by @michaeljaconi @button https://www.businessinsider.com/ ... Mike Dudas / @mdudas : “Companies that control the start of the buyer journey can influence what people buy, where they buy from, and how they pay.” ~ @button CEO @michaeljaconi https://www.businessinsider.com/ ...
Context & Ripple Effects
PayPal has spent years buying its way up the purchase funnel: the $280M Paydiant deal put it behind Walmart's Apple Pay rival, and the Acorns integrations followed an investment round, extending PayPal into personal finance. The ~$4B Honey acquisition is the largest step yet — a comparison-shopping and rewards platform with 17M monthly users whose entire value is sitting at the start of the buyer journey.
The strategic logic, echoed by Mike Jaconi, Evan Wray, and Mike Dudas in the surrounding commentary, is that whoever controls where commerce begins can influence what people buy and where they pay. That thesis aged into concrete products: by 2024 PayPal was building an ad sales business on user and purchase data, culminating in PayPal Ads drawing on transaction data across Venmo and Honey.
First-order effects
- PayPal gains Honey's 17M monthly users and its affiliate-commission revenue stream, placing a shopping-intent layer directly in front of its checkout flow.
- Merchants in Honey's affiliate program now pay commissions routed through PayPal, which sees both the product choice and the payment it enables.
Second-order effects
- The purchase-intent data Honey generates becomes raw material for PayPal's planned ad sales business, later launched as PayPal Ads spanning Venmo and Honey — converting the acquisition from a loyalty play into an advertising asset.
- Rival wallets and card networks face pressure to acquire or build their own rewards and discovery layers rather than cede the pre-purchase moment to PayPal.
Third-order effects
- If the pattern holds, payment processors compete less on take rates and more on ownership of the discovery-and-rewards layer above checkout — the wallet becoming the storefront, a case of workflow-native monetization.
- Concentrating purchase-intent data inside a payments company raises the likelihood that regulators eventually examine how that data feeds advertising and small-business lending, especially as PayPal pushes further into banking services.
The trend: Payments companies are moving upstream from processing transactions to owning the discovery and rewards layer where purchases begin, converting shopping intent into advertising and financial-services inventory.