Are you tired of big companies lining up to take on Square? Well, the list officially got longer today with Groupon’s launch of Groupon Payments.
This shouldn’t be a surprise — we previously reported that Groupon was testing out the service. But it adds yet another competitor to a very crowded market. Groupon is launching with an iPhone and iPod touch reader that works with the Groupon Merchants mobile application, allowing businesses to take credit card payments.
Here’s how the payment structure will work with Groupon Payments according to AllThingsD:
- Swiped transactions — MasterCard, Visa and Discover (1.8 percent plus 15 cents) and American Express (3 percent plus 15 cents)
- Keyed-in transactions — MasterCard, Visa and Discover (2.3 percent plus 15 cents) and American Express (3.5 percent plus 15 cents)
- Non-Groupon merchants will be charged 2.2 percent plus 15 cents for MasterCard, Visa and Discover.
This will give merchants new payment options that could lower their expenses. Square, for example, charges 2.75 percent for swiped card transactions but recently introduced a new $275 monthly plan with no swipe fees. VeriFone has also tried to compete on price by offering a 1.95 percent fee for higher volume accounts that subscribe to a $9.95 monthly subscription. LevelUp has done away with fees for merchants who pay to run its marketing campaigns.
Payments is an obvious step for Groupon, which is desperately trying to build up businesses outside of its core daily deals. By combining payments and loyalty, it’s hoping to be a local operating system for merchants. And with its army of salespeople and its existing relationships with merchants, it’s got a decent chance of at least pitching businesses on a new payment product.
For Square and its rivals, Groupon represents yet another challenger to contend with. But as I’ve said before, taking payments is relatively easy. But the winners will be the companies that offer a complete set of value-add services like loyalty, offers, marketing, customer relationship management inventory and other features. Groupon has some of those tools but will need more to compete.