The world’s largest and most successful daily deals provider, Groupon, has launched an additional service for businesses. Groupon payments launched on Wednesday in the United States, where it will compete in a market currently dominated by eBay Inc’s PayPal, as well as the start-up Square Inc. In order to be competitive, Groupon Payments will offer their services at a lower price. For many restaurants, spas, salons, retailers and other businesses, Groupon Payments can be used in conjunction with daily deals services, and be used to accept credit card payments at lower deals than competing providers, offering convenience and economy.Groupon Payment Rates
MasterCard, Visa and Discovery Cards will be charged 1.8% per transaction, over and above a 15 cent fee per swipe, with Groupon Payments. American Express has a higher charge of 3%, as well as the 14 cent swipe fee. Although Groupon is currently the largest deal provider in the United States, it does face competition from LivingSocial, Google and Amazon.com. However, Groupon has high ambitions to expand to a size where is becomes the default platform or ‘operating system’ for local commerce, according to the Chief Executive Andrew Mason. Groupon Payments is a way of expanding its services and growing its already large market share.What the Experts are Saying
Wall Street has been sceptical about the roll out of new Groupon services, such as a scheduling system and a customer loyalty programme. However, payments industry expert, Rick Oglesby, stated that Groupon Payments is the right move for the company, although the payments market is highly competitive. Reflecting this, Groupon shares increased by 13.9% to reach $5.34 on the closing bell of the day the announcement was made. This jump was much needed by Groupon, as the value of the company has been reduced by almost 75% since it went public last year.The Payments Market
In the last few years, the payment market has become increasingly competitive, even though the market itself has grown rapidly, thanks to growth in online commerce. Innovation in the market has also grown, thanks to new competition by Square and Groupon Payments. For example the start-up Square, backed by Twitter co-founder Jack Dorsey, earned the business of small merchants with an easy credit card acceptance service that used a small swipe device that plugs into smartphones. A similar service to rival Square was releases by PayPal earlier this year, titled PayPal Here. PayPal currently has higher service charges than Groupon Payments; 2.7% of the purchase price for all credit and debit cards.
