In an attempt to match up to Square, Groupon seems to have opened their Groupon Payments service to merchants nationwide, as opposed to their earlier policy of restricting it to those in the San Francisco Bay Area alone.
Square currently leads the market. In order to change these dynamics, Groupon plans on opening up their payment service open to merchants outside of US, allowing them to sign up for the service. This was announced on the company’s official blog recently. This will enable the merchants to accept major credit cards by means of using the swipe option offered by Groupon on the iPod Touch or the iPhone and successfully install the required application that runs on iOS. This swiping can be done using a small attachment that can be plugged into the audio jack of the iOS devices. The payments thus made will be deposited into the accounts of the merchants overnight, as confirmed by Groupon. What’s more, while Square charges its customers a transaction fee of 2.75 percent, there is a possibility of customers finding cheaper rates with Groupon. Groupon charges its customers a transaction fee 1.8 percent upon the use of MasterCard, Discover and Visa. However, the use of an American Express card will cost the customer a transaction fee of 3 percent. Overall, the platforms through which mobile payments can be processed through Groupon seem to boast of lower merchant costs as compared to those introduced by PayPal and Square.
Square, leading with transactions worth $8 billion and valuation of $2.5 billion, reportedly was able to raise $200 million during a Series D round of funding, sometime this week. Groupon, on the other hand, is facing trouble as investors are not too optimistic about the company’s likelihood to succeed. Ever since the start of this year, Groupon saw their shares drop to $5.38, by nearly 75 percent. With respect to market capitalization, the value of the company is nothing over $3.5 billion. Caught amidst a crisis, it is unclear as to why a company like Groupon would want to get themselves involved into area of mobile-payments. One would rationalize that after having experimented with the San Francisco Bay area for the success of their payment services, Groupon seems to be now ready to step outside and try their luck!
