Groupon on Wednesday launched its own payments service, entering the fray with competing offerings from providers like PayPal, Square and Google. The daily deals giant said its payments service would be the simplest and least expensive option for Groupon merchants to accept credit cards.
The company will charge 1.8% for MasterCard, Visa and Discover cards, along with a fee of 15 cents per swipe. For American Express cards, it will charge 3% plus the 15-cent fee. Any merchant that runs a daily deal through Groupon in the U.S. is eligible for the service.
Businesses that don’t run Groupon deals will be charged a higher rate of 2.2% to accept MasterCard, Visa and Discover, and the 15-cent fee. For comparison, PayPal’s rival service -- PayPal Here -- charges a fee of 2.7% on purchases for all credit and debit cards, including those from American Express. Square charges 2.75% per swipe or a flat fee of $275 per month.
A competing payments service from Vodafone also charges 2.7%, but lowers that to 1.95% for higher-volume accounts that also pay a $9.95 monthly subscription fee.
“In addition to slashing transaction fees, Groupon Payments offers services that most of the traditional processors don’t. Rather than waiting the typical two or three days for credit card payments to hit an account, Groupon Payments users get paid overnight,” wrote Mihir Shah, Groupon’s vice president, mobile and merchant products, in a blog post today.
The debut of Groupon’s payments service comes after a pilot this spring in the San Francisco Bay area. Sameet Sinha, an analyst at B. Riley & Company, told Reuters the company isn’t so much looking to make money from the payments business but to provide merchants with more data and help attract businesses to start with.
Through an online dashboard, Groupon said business owners can view a live transaction history, check daily sales reports, track deposits to an account and analyze revenue trends. The service rolls out with a card reader for the iPhone and iPod touch that is compatible with the latest version of the Groupon Merchants mobile application.
Groupon’s shares have taken a beating since its November 2011 IPO, the result of disappointing earnings and concerns about rising marketing expenses and “daily-deal fatigue.” But after sinking to as low as $4 a share recently, the stock was trading up about 11% on Wednesday afternoon to about $5.25 on news of the new payments service.