Dive Brief:
- Expanding its rewards offering following the 2019 acquisition of Honey, payments giant PayPal has created a rewards program that lets users earn, redeem and manage their shopping incentives within the PayPal app, the company announced on Monday.
- PayPal will reward customers who use the Honey browser extension to find deals, the San Jose-based company said. Customers can redeem their rewards points for cash back and other incentives, according to the press release.
- Customers can also transfer their cash back into their PayPal accounts or their connected bank accounts, donate it to charity, or send it to other PayPal users in peer-to-peer transactions, the company said. With the change, Honey Gold points become PayPal Rewards points.
Dive Insight:
In the competitive payments arena, PayPal appears to have launched this program to attract customers seeking loyalty perks. Still, PayPal users don’t earn points in the program every time they tap the company for a digital payment, said a spokesperson for the company.
In launching the loyalty program, the payments giant cited a 2022 IDC Consumer Sentiment Survey indicating that 25% of respondents considered loyalty programs in determining where to shop.
“With the financial challenges people face these days, brought on by rising prices and the need to tighten budgets, it can be frustrating to shop for everyday essentials or plan for the holidays,” Greg Lisiewski, PayPal’s vice president of shopping and global pay later, said in a statement. “PayPal Rewards makes it easy to find sales, discounts, and great deals when making a purchase with PayPal – through cash back, discount codes, or other rewards.”
The company said in the release its rewards program “will build upon the nearly $200 million PayPal consumers have already saved this year so far through PayPal Honey-enabled cash back and discounts.” PayPal purchased Honey Science Corp., the Los Angeles-based digital shopping and rewards company, for roughly $4 billion in cash in 2019. At the time of the acquisition, the company’s co-founders, George Ruan and Ryan Hudson, stayed to lead Honey within PayPal’s global consumer product and technology division.
Research suggests rewards are an essential perk to credit cardholders. A Bank of America survey released in September revealed 65% of respondents applied for a new credit card to access its rewards. Nearly seven in 10 respondents said cash back was one of their most valued reward categories, followed by one-third who said the same for credit card points.
Consumers’ appetite for cash-back rewards comes as they brace for the impact of inflation. A Mastercard report released in September said that grocery spending in August was 29% higher than 2019 levels. International food prices have spiked 48% since 2019, an increase that is driving more spending on groceries and restaurant dining. Another Mastercard report released in September predicted that consumers will spend 7.1% more during the 2022 holiday season, excluding automotive sales, than the year prior.
In light of rising inflation, consumers have changed their shopping habits and are looking for ways to save, a survey from Morning Consult discovered. The global intelligence firm’s survey of 15,000 U.S. adults found that 79% sought discounts recently to save money, and 85% cited rising inflation as the reason why they altered their shopping habits.
