Potentially expanding its commerce offerings, Groupon is reportedly testing a payments service. Seeking an edge over existing services offered by eBay’s PayPal, Square and Google, Groupon is apparently offering an iPod Touch and card reader to merchants free of charge.
“The other [services] provide only the readers for free,” reports VentureBeat. Meanwhile, “The [service’s] pricing is extremely aggressive, with a 1.8% transaction fee and a 15 cent per transaction charge for transactions processed through the terminal,” VB reporting, citing an email from a business that was solicited for the service. Square currently charges 2.75% with no per transaction fee, while PayPal Here and Verifone Sail charge 2.7%, also with no transaction fee.
Groupon, meanwhile, plans to charge 2.7% for AmEx transactions. “Groupon’s offering has the potential to put a lot of pressure on Square and could leave it with the least profitable customers,” VB writes. “For customers whose typical transaction exceeds $15, it makes sense to use Groupon’s offering. On a $100 Visa transaction, Groupon would charge $1.95 vs. Square’s $2.75. That’s a 41% premium for Square.”