September 19, 2012, 10:06 AM

Groupon launches a mobile payments service

Groupon enables businesses to accept cards via iPhone or iPod Touch.

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Groupon Inc. today launched Groupon Payments, a mobile payments service that enables businesses to accept credit and debit cards using an iPhone or iPod Touch.

Groupon provides merchants using the service a case-based credit card reader that attaches to the mobile device to swipe the magnetic stripe of the payment card.

The daily deal operator says it is guaranteeing merchants using its service lower costs than competing mobile payment options. If a merchant finds a lower rate, Groupon will beat that rate, a spokesman says.

The service is largely aimed at businesses that offer deals on Groupon, such as restaurants, spas and retailers. Merchants can use the service, which runs on an app, to scan and redeem Groupons and monitor additional spend over the value of the Groupon.

The daily deal operator says it also is running a test to gauge whether other merchants will use the service at higher rates.

For businesses that offer deals on Groupon, the fees for swiped transactions of MasterCard, Visa and Discover cards are 1.8% of the purchase price plus 15 cents per transaction. For American Express cards, the fees are 3% of the purchase price plus 15 cents per transaction.

For businesses that don’t offer deals on Groupon, the rate is 2.2% of the purchase price for MasterCard, Visa and Discover cards, and 3% for American Express cards, plus 15 cents per transaction for all cards.

"Our goal is to provide merchants with the most affordable and powerful tools to run and grow their businesses," says Mihir Shah, vice president, mobile and merchant products at Groupon.

The payment program pits Groupon against a slew of other companies offering similar services, such as Square—which charges a rate of 2.75%—eBay Inc.’s PayPal Here, PayWare Mobile from VeriFone Systems Inc. and PayAnywhere from payment processor North American Bancard.

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