Groupon takes aim at PayPal and Square with payment service – Rumour

"A number of trials designed to help merchants and small businesses”

Groupon is reportedly trialling a payments service that will offer a physical card plug-in, similar to PayPal Here and Square, as the daily deals firm continues attempts to broaden its offerings. A Bloomberg report, citing a person with knowledge of the matter, claims that the card reader is manufactured by Infinite Peripherals and plugs into a smartphone or tablet in a similar way to its aforementioned rivals. The point-of-sale software is partly based on technology acquired from FeeFighters in March. Groupon is refusing to comment on the report, with a spokesperson only saying that the firm “has a number of trials in markets that are designed to help merchants and small businesses”.

A separate report from VentureBeat, citing a business that was solicited for the service, says that the firm is planning to provide businesses with an iPod Touch and a card reader in an attempt to steal a march on its more established competitors. The report claims that Groupon is also pricing its service aggressively, charging just 1.5% per transaction, compared to Square’s fee of 2.75% and PayPal’s 2.7%. However, this is contradicted by Bloomberg, which claims that Groupon’s fee is actually 3%, but adds that the company is yet to decide on a final rate.

If confirmed, the move would place Groupon in direct competition with the likes of Square, European counter iZettle and payments giant PayPal. Plug-in solutions are considered a convenient way for small- and medium-sized merchants to complete transactions without the need for traditional cash registers and card readers. All three firms have targeted the potentially lucrative market in recent months, with Square making the biggest dent, recently announcing that it now processes more than USD5 billion in payments every year. However, PayPal’s already-established user base ensures that it poses a threat to Square.

Groupon has endured a torrid few months since its much-hyped IPO in November, as it continues in its attempts to convince investors as to its long-term viability as a company. The daily deals and group buying market has received a backlash of late as initial hype faded. The market leader is subsequently making significant strides to broaden its services, with CEO Andrew Mason aiming to position the firm as “the OS of local commerce”. Groupon went some way to appeasing investors by narrowing its losses to USD11.7 million during its latest quarter, but concerns remain regarding the firm’s ability to tap into the 10 million subscribers that are still yet to use the service, despite signing up to its daily newsletters.

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