Groupon buys Breadcrumb payment firm in mobile push

Expanding into payments

Groupon is buying Breadcrumb, a firm that creates point-of-sale (POS) systems for iOS devices, in an undisclosed deal, as it expands into the payments space. Similar to Square, Breadcrumb lets merchants accept mobile payments using an iPhone or iPad, without investing in costly POS terminals. The firm’s network of merchant partners and smaller retailers and restaurants is also valuable to Groupon as it attempts to mature its relationship with local merchants at the core of its business. This is just the latest rumour surrounding Groupon’s foray into mobile payments amid speculation that the firm is planning its own plug-in service to let retailers accept payments using mobile devices.

Although Breadcrumb will continue to serve its existing client base and exist as a separate division, its entire team, including founder and CEO Seth Harris, will join Groupon as part of the deal. Like many of its recent acquisitions, it looks as though Groupon is planning to weave Breadcrumb’s technology into its own deals platform. This is just the latest deal Groupon has made to bolster its presence on mobile as it attempts to target the growing number of smartphone users in key markets such as the UK and the US. Groupon bought price comparison site FeeFighters earlier this year, and is reportedly using its technology to underpin the POS product it is trialling. The firm also bought mobile app developer Kima Labs and Hyperpublic, which aggregates deal and location data, in February, indicating that the firm is attempting to beef up its presence on mobile.

The Breadcrumb acquisition fits snugly with Groupon’s aim to become the “operating system of local commerce” as the firm attempts to evolve from just selling offers to processing transactions. A move into POS makes sense, with plug-in card readers considered a convenient way for small- and medium-sized merchants to complete transactions without the need for traditional cash registers and card readers. This could be a good opportunity for Groupon to strengthen its value relationship with local business after many said they planned to walk away from offers altogether after seeing mixed results and poor consumer loyalty.

Launching a plug-in service will pitch Groupon into direct competition with the likes of Square in the US and iZettle in Europe, as well as payments giant PayPal, all three of which are attempting to roll out their payment services to local businesses. Although Groupon’s huge network of merchants means the firm has a potentially massive client base to roll out a POS service to, the number of payment firms vying for merchant tie-ins means the firm will face steep competition. PayPal is targeting small-to medium-sized businesses with its own plug-in card reader, PayPal Here. The firm claims the service signed up 1,000 customers per hour in the first 24 hours of availability and now has more than 300,000 users. Meanwhile, Square claims it is processing USD5 billion annually through its mobile card reader.

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