Daily Insight | Nick Holland | September 20, 2012
Groupon, better known for its online coupons and daily deals, launched itself headfirst into the mobile payments space with the introduction of Groupon Payments on Wednesday.
According to CNBC, Groupon’s new service means the company has joined the likes of Square, PayPal and the major payment card companies in accepting transactions submitted through mobile devices. Groupon is hoping to draw in potential users with the promise of lower processing fees. Groupon Payments will cost merchants 15 cents per swipe, plus fees issued by payment card companies—1.8 percent for MasterCard, Visa and Discover and 3 percent for American Express.
Merchants can use Groupon Payments to accept payment for items beyond just online coupons. The service can be used to process any kind of payment made with either a credit or debit card. Groupon has long looked for ways to diversify its business, and company officials are banking on the new service to provide a needed boost.
Yankee Group Principal Analyst Nick Holland comments
“With Groupon throwing its hat into an increasingly crowded ring, we have yet more pressure on the market for card payment capture over mobile where product differentiation is becoming less about innovation and more about a race to commoditization. Savvy companies in this space need to find ways to meaningfully differentiate beyond just lower fees while looking beyond this short-term opportunity that may diminish as chip cards come to market in 2015.”
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