Groupon Testing Merchant Payment System

An anonymous reader writes with news that Groupon is testing out a service for letting merchants accept credit cards that could put it into competition with PayPal and Square. "Groupon's nascent payment service comes with an Apple iPod Touch, and a case that wraps around the back of the device, which allows merchants to swipe credit cards." The fee structure isn't finalized, but their aim is to be competitive with PayPal and Square. "Groupon may have flexibility to charge lower fees because it could subsidize the payments service from money it makes providing other services to merchants, they said. PayPal's service, known as PayPal Here, charges a fee of 2.7 percent of the purchase price for all types of credit and debit cards - including those issued by American Express Co.. Transaction fees for processing AmEx cards are often higher. Square charges 2.75 percent per swipe. Groupon's test service is charging a 1.8 percent transaction fee and 15 cents per transaction, Rocky Agrawal, an industry analyst, reported in a VentureBeat blog late Thursday."

Comments

Paypal? More like Lame, pal!

[negRo_slim]

I would love for Paypal to have some competition. There asinine policies and terrible customer service have forever turned me of to the service.

Re:Paypal? More like Lame, pal!

[Anonymous Coward]

In some places the 2% is not that much compared to the cost of dealing with cash. Staff and 3rd parties are more likely to steal cash. Storing and transporting large amounts of cash costs you money.

On the flip side with credit cards there are charge-backs. But if you're not an online merchant I think the charge-back and fraud rates aren't that high.

Re:Paypal? More like Lame, pal!

[innocent_white_lamb]

When I first started my small business twenty years ago, I opened a commercial bank account at the bank that's located just a half-block away from my building. No particular reason to go to that bank other than it was the closest one to me.

About five years later they were charging me about $50 per month in various service charges, and they sent me a notice of service charge increases that would have raised that to nearly $75!

I then opened an account at the local Credit Union and moved all of my business there. I paid $12 per month to them for their services at that time. It's $15 per month today.

I can't recommend this more strongly: If you're not doing your banking at your local Credit Union, you're getting ripped off.

Brilliant

[Floyd-ATC]

Now all you have to do is install a Trojan and skimming will be completely automatic.

OMIGOD

[WOOFYGOOFY]

PayPal's service, known as PayPal Here, charges a fee of 2.7 percent of the purchase price for all types of credit and debit cards - including those issued by American Express Co.. Transaction fees for processing AmEx cards are often higher. Square charges 2.75 percent per swipe. Groupon's test service is charging a 1.8 percent transaction fee and 15 cents per transaction, Rocky Agrawal, an industry analyst, reported in a VentureBeat blog late Thursday."

OMIGOD Could it be that when barriers to entry into otherwise mono-duo-trio- opolisitc markets fall then competition drives down prices and consumers benefit?

I think the mere PRESENCE of such mono-duo-trio- opolisitic markets should AUTOMATICALLY invoke very tight regulatory structuring of those markets until such time as meaningful competition arrives.

Capitailsm can't survive it's own success if success always means the consolidation of markets. Something external has to step in and reset the game

It seems to me that people who love capitalism should all agree with me and the people who don't are just profiteers fundamentally unconcerned with the society they in or other people, at best paying some lip service to some "invisible hand" that justifies their selfish greed.

Re:OMIGOD

[hardtofindanick]

Abuse of a monopoly is bad

If history teaches one thing that is abuse of monopoly is inevitable.

credit card with iDevices

[JimboFBX]

Sticking with the subject of attaching a credit card reader to an Apple device, there's a business in my city that uses an iPad with a credit card reader on it to do their transactions. Pretty slick considering point of sale (POS) systems used to run for $1.5k-$2k each.

But then on one busy day I saw the cashier constantly swapping the charger and credit card reader in and out because there's only one slot on an iPad. So clearly there's a drawback with that system.

Seems like the natural upgrade is to just have a tablet that can be on a charger AND support a credit/debit card reader at the same time. Bingo, cheap touch screen POS system. Is there one out there that already does this?

Re:credit card with iDevices

[jpapon]

You wouldn't need to change tablets. There are many iphone charging usb pass-through cables available.

In practice, it doesn't work that way

[SteveFoerster]

Capitailsm can't survive it's own success if success always means the consolidation of markets. Something external has to step in and reset the game It seems to me that people who love capitalism should all agree with me and the people who don't are just profiteers fundamentally unconcerned with the society they in or other people, at best paying some lip service to some "invisible hand" that justifies their selfish greed.

The problem is that if you really have capitalism, then anyone can enter an industry if they see that the dominant one, two, or however many companies in it are pricing their goods or services too high. But we don't have that, we have corporatism, where those who are already in a market use relationships with the policy makers who oversee them for mutual advantage.

In other words, we already have something external that's supposed to do what you describe. The problem is that it usually stifles real competition rather than promoting it, because human nature is to act more from individual incentive rather than from altruism.

Re:In practice, it doesn't work that way

[WOOFYGOOFY]

The problem is that if you really have capitalism, then anyone can enter an industry if they see that the dominant one, two, or however many companies in it are pricing their goods or services too high. But we don't have that, we have corporatism, where those who are already in a market use relationships with the policy makers who oversee them for mutual advantage. In other words, we already have something external that's supposed to do what you describe. The problem is that it usually stifles real competition rather than promoting it, because human nature is to act more from individual incentive rather than from altruism.

I could not agree with you more. Corporatism.. that's the world I was looking for in my above reply to Anonymous. Crony capitalism, where your personal connections to other business owners and to people in government determine your business success.

http://en.wikipedia.org/wiki/Crony_capitalism

There is no system of laws that can't be abused. I completely agree that a large number of people are inherently motivated by their own greed and virtually nothing else . There are also people who are inherently motivated to be altruistic after their own needs are satisfied. They exist too and are just as natural as the greedheads.

All I can say with respect to the failures of the system we've created so far is - they are not nearly bad as what went down in the Dark and Middle Ages (yet) and , well, it's our turn to take a crack at making things better. Here's the map of history. You are here -->

Re:Merchant fee

[Kalriath]

In NZ we took it one step further - banks aren't allowed to only offer blended rates like they do overseas, so they actually have to offer interchange-plus rates, where you pay the card network fee plus a transparent markup - even Visa and MasterCard have to compete with each other here.