NEW YORK (AP) - Groupon launched a payment service Wednesday that
allows businesses to accept credit cards using an iPhone or iPod Touch,
becoming the latest company to enter the growing mobile payments market.
The announcement sent the online deals company's
stock up nearly 14 percent. Groupon shares climbed 65 cents to close at
$5.34 Wednesday. The Chicago-based company went public in November at a
stock price of $20.
Groupon Payments is aimed mainly at businesses that
offer deals through the company, though they can use the system to
process any credit card transaction. A test program allows other
merchants to use the service, but at higher rates.
Groupon's technology has been tested in the San
Francisco Bay Area and will go up against eBay Inc.'s PayPal unit and
Twitter co-founder Jack Dorsey's Square. Those services also allow
merchants swipe credit cards on their phones using a small card-reader
attachment.
The services are aimed mainly at small businesses
that, until now, haven't accepted credit card payments because of high
transaction fees. In some cases those businesses lacked the technology
required to process credit cards. The service takes advantage of the
proliferation of smartphones in recent years.
Each time a merchant swipes a credit card issued by
MasterCard, Visa or Discover, Groupon will charge a 1.8 percent fee
plus 15 cents for each transaction. American Express cards will be
assessed a 3 percent fee plus 15 cents.
In comparison, Square charges 2.75 percent per
swipe, or $275 per month. PayPal charges 2.7 percent. These fledgling
services are also up against traditional credit card processors such as
Visa or American Express.
Groupon has seen a sharp decline in its stock price
since going public late last year. With Groupon Payments, the company
is trying to broaden the array of services it offers merchants amid
growing worries about "daily deal fatigue" among customers. With
competitors such as LivingSocial and Amazon.com Inc. flooding people's
inboxes with discounts for spas, manicures, trips and restaurants, it's
becoming difficult to stand out.
Groupon says merchants can use its payments service
to add tips, taxes and email receipts to their customers. And it plans
to process payments overnight, faster than many traditional credit card
companies, which can take as long as three days.
"Our goal is to provide powerful and affordable
tools to help Groupon merchants run their business," said Mihir Shah,
vice president of mobile and merchant products for Groupon.
Groupon.com
