An couple of interesting salvos were recently sent in the online payments and shopping space. First, Paypal bought Honey for $4b to move up the consideration funnel to see user shopping interests not just at payment time. Honey has moved from a rebates browser plug-in to become a kind of pan-site shopping cart facilitating not only coupons but comparison shopping, identity and an interest graph. Paypal sees this as a way to immediately move up the ecommerce funnel not only to leverage their identity but also to engage the customer earlier in the consideration cycle. A potentially lucrative and deeper lock-in that has not often been the purview of payments providers.

Queue Amazon for the reactive move. In the most Amazon predatory way, they warned their customers that Honey was a security risk and should be uninstalled:

“Honey tracks your private shopping behavior, collects data like your order history and items saved, and can read or change any of your data on any website you visit,” Amazon said. “To keep your data private and secure, uninstall this extension immediately.”

https://www.pymnts.com/amazon/2020/amazon-warns-paypal-honey-security-issue/

I can’t say what is under the hood with Honey but it hardly seems a security threat nor, given people opted in via downloading a browser plug-in, have serious privacy issues. Amazon had to know of Honey before and seemed content to co-exist with them. However, the Paypal acquisition changes the equation here.

Theoretically, Paypal has the potential to create a “meta shopping and payment layer” driven by their broad identity capabilities and (non-Amazon) merchant relationships. You can think of it as a shopping cart across all e-commerce sites (Amazon included…unless they can get Google to ban the plug-in…doubtful) where Paypal then guides the customer on where to buy and how to pay. Many non-Amazon merchants already integrate with Paypal and, post acquisition, many will integrate with Honey. This is one of the few real threats to Amazon’s e-commerce power. Imagine browsing Amazon for a new Fitbit. Honey pops up and says you can get it with a 10% coupon at BestBuy and, with one click, checks you out there.

Dan Schulman (Paypal CEO) certainly knows the value of a closed loop, vertically integrated network from his days at Amex. Paypal is now positioned to go much deeper. This will be interesting to watch play out over the coming 18 months.