Question

How is Paypal likely to generate revenue through the acquisition of honey science? What is the basis of its profitability? Please explain its business model.

Answer 1

As honey science corporation offers users vast range of products so consumers can save money by getting deals online. Because of honey's 17million active users and when honey's acquisition of PayPal to simplify the payment method and personalising payment method giving revenue to company. As their basis of profitability mainly depends upon consumer sales and merchants which comes under their network as honey has 17 million active users. As honey science saves average $126 per user per year and also has 30,000 active merchants giving their business to honey science and now their payment channel is PayPal they integrate it with them to handle their payment and getting commission from it. As also their demographic matched with Venmo states that 70% of their customers are millennials and 79% are females which also overlaps with PayPal. As honey will monetize the acquaintance of PayPal by charging commissions from the merchants when their customers use their platform for payment as long as honey is providing customers to merchants they won't mind paying the fee.