Groupon Reportedly Testing Payments Product

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Groupon is reportedly testing a new payments offering, and is giving merchants complimentary iPod Touches and card readers.

Rocky Agarwal at VentureBeat says he was forwarded an email from a business who was solicited for it. Agarwal reports:

The pricing is extremely aggressive, with a 1.8% transaction fee and a 15 cent per transaction charge for transactions processed through the terminal. Square charges 2.75% with no per transaction fee. PayPal Here and Verifone Sail charge 2.7%, also with no transaction fee. Groupon is charging 2.3% for AmEx transactions [update: a groupon insider tells me the AmEx pricing is 2.7, not 2.3]. Square and PayPal don’t charge extra, and Sail charges 3.7% for AmEx.

While he doesn't share the actual email, he says it hints at a PoS system for iPod and iPad, and says it's already in use in "several places in the Bay Area".

I wonder if any businesses in Groupon's hometown of Chicago are using it.

So far, Groupon is not talking about the product.

Bloomberg BusinessWeek has some additional information, however. According to the publication's Douglas MacMillan, the reader is manufactured by Infinite Peripherals, and that it plugs into the headphone jack of a smartphone. According to that report, it's being tested by "dozens" of businesses in the Bay Area. McMillan's source also says that Groupon collects a fee of "less than 3%" on each transaction.

Groupon appears to be entering an increasingly competitive market, facing off against some more experienced (in the payments realm) foes, namely Square and PayPal. Groupon could have the deals brand leverage to make something like this work though. It will be interesting to see how it plays out.

Here's what people are saying on Twitter:

Smart. They have massive distribution into local merchants. If they execute will be interesting!
54 minutes ago via Safari on iOS · powered by @socialditto
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If Groupon wants to get into SMB payments, it should make some acquisitions and partner w existing POS giants or it will fail.
56 minutes ago via Twitter for iPhone · powered by @socialditto
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There is no way that $GRPN can take on $SQUARE in payments, they just don't have the tech team to do it
1 hour ago via Seesmic · powered by @socialditto
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And here is what @groupon is doing with the @feefighters acquisition.
12 hours ago via TweetDeck · powered by @socialditto
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Chris Crum
Chris Crum has been a part of the WebProNews team and the iEntry Network of B2B Publications since 2003. Follow Chris on Twitter, on StumbleUpon, on Pinterest and/or on Google: +Chris Crum.

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