Groupon Introduces Credit Card Business With Low Merchant Fees

Groupon Introduces Credit Card Business With Low Merchant Fees
By GrouponRUS (Own work) [CC BY-SA 4.0], via Wikimedia Commons

In efforts to make its merchants happy, on Wednesday, Groupon Inc (NASDAQ:GRPN) launched a payments service that will offer them low fees for credit-card transactions.

Groupon Introduces Credit Card Business With Low Merchant Fees

The company announced the service, called Groupon Payments, in a statement, and said beginning today, it is available in the U.S., after successful pilot testing in the San Francisco area.

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The services have been built into the current version of the company’s iPhone and iPod Touch application.

With Groupon Payments, restaurants, salons and spas, retail establishments, and other local businesses will now be able to accept all credit card payments at a lower rate than other providers. It will also have the functionality to add tips, taxes, and email receipts.

This includes swiped transactions for MasterCard, Visa, Discover (1.8% plus $0.15 per transaction), and American Express (3% plus $0.15 per transaction). There are also neither hidden costs nor monthly fees, said Groupon.

The new payment service also comes as Groupon’s local businesses face constant annoyance, over seeing their discounts failing to obtain repeat customers.

Mihir Shah, vice president of mobile and merchant products at Groupon Inc (NASDAQ:GRPN), said of the service via the statement, “Our goal is to provide merchants with the most affordable and powerful tools to run and grow their businesses.”

Reaching out to merchants isn’t anything new for Groupon. According to the release, this latest enhancement joins other apps in the company’s products and services, utilized by merchants to “save money, streamline operations, and grow their businesses.”

These include GrouponDailyDealsGrouponNow! (real-time location-based offers); GrouponRewards (loyalty program); and GrouponScheduler (online scheduling for appointment-based businesses).

But will this latest service make a difference for the struggling company?

They will face tough competition from American Express Company (NYSE:AXP), Visa-backed (NYSE:V) Square, PayPal, and Google Inc (NASDAQ:GOOG), all moving toward the mobile payments arena.

Not helping matters, is merchants’ perception of Groupon Inc (NASDAQ:GRPN).

On Tuesday, here at ValueWalk, we also pointed out the company’s struggles with its merchants. In a recent survey of more than 100 of them, a disturbing statistic said that regarding Groupon’s ability to retain customers, only about 2% indicated that at least 50% of their customers were repeat ones.

During this current challenging business environment, merchants want their customers to be loyal, enabling them to build a base. It appears Groupon isn’t always the answer, but where should fingers be pointed: the daily-deals site or the individual businesses?

It appears that Groupon Inc (NASDAQ:GRPN) will do what it can to not make it their fault, but it doesn’t mean that analysts aren’t still concerned.

Upon announcing the news, Groupon’s shares jumped 7.5 percent to $5.04. Since its initial public offering last November, the company’s stock has seen an almost 75 percent drop.


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