In the past several months, a number of companies have launched their own mobile credit card reading services as a means of allowing merchants to avoid higher interchange fees, and now another company has joined the fray.
The social couponing service Groupon is now offering merchants the ability to join its new Groupon Payments mobile processing service, which allows companies to accept credit and debit card payments via a device that plugs directly into a smartphone, the company recently announced. It says it is doing so because, in partnering with many businesses all across the country to offer consumers discounts on goods and services, it has also heard repeated complaints about the high cost of traditional credit and debit card payment processing services.
How the rollout begins
When companies want to enroll in Groupon Payments, all they will have to do is download the company’s free Groupon Merchants app, available for both iPhone and iPod Touch, the report said. Many may already have the app, and in that case, all they will have to do is update the version on their mobile device to the current one, as it has Groupon Payments built in.
Once a merchant signs up for the service, they will be able to obtain one of two specialized card readers, one which either connects to the mobile device through its headphone jack, or the other, which fits over the entire handset like a traditional protective case, the company’s site said. The latter is for merchants that process a higher volume of purchases. Armed with this technology, merchants can then accept a transaction either by swiping the card being used or by manually entering the payment information.
Will it save merchants money?
Because Groupon has repeatedly heard from its partner merchants that they believe they are paying too much to accept debit and credit card transaction processing fees, the company says it guarantees its program will save them money, the report said. For instance, the swipe fees on all Visa, MasterCard and Discover-branded cards is just 1.8 percent, plus 15 cents per transaction.
That rate is likely to be below what is typically offered by those processors themselves, as well as a discounts from many other independent payment services, such as Square or PayPal. However, for any transaction using those branded cards that has to be entered manually, the rate rises to 2.3 percent with the flat 15-cent transaction fee. Meanwhile, for American Express purchases, Groupon will charge 3 percent per swipe, and 3.25 percent per keyed purchase. Both will likewise carry the 15 cent flat rate as well.
It should be noted, however, that according to the company’s terms and conditions, it will only offer these rates if a merchant has or soon will offer a daily deal through Groupon, the report said. Further, merchants must provide evidence of what they are paying for accepting transactions through their current payment processor to be guaranteed the lower rates.
As an added bonus, the company says it will provide merchants with support seven days a week in case they run into any trouble with the service, the report said. Groupon Payments representatives can be contacted by phone or email. Further, instead of waiting a few days to receive the money from a transactions, as they would from many other payment processors, Groupon’s are processed overnight. Further, the company will also provide a website member merchants can visit to view transaction history, see daily reports, analyze trends, and more.
A crowded marketplace
There is likely to be a significant amount of competition for Groupon, but the company likely knew that going in. Already, there are several well-known and better established mobile payment processors on the market, in addition to the larger, more traditional ones like Visa or MasterCard that have been in business for years. As such, even with the more competitive pricing structure, the daily deals company might not be able to make a huge dent in the payment processing marketplace right out of the gate.
However, if it can demonstrate appreciable value to those merchants that do sign up in the first few months, it has a chance of catching on with smaller businesses.
Consumers who may be worried about whether these systems are secure likely have little to fear. Many experts have noted that the way in which they encrypt and transmit data is likely just as safe as, if not safer than, traditional credit card use. However, if you’re concerned about the state of your finances in general, it might be a good idea to check your credit report regularly for unfair markings that may be having an adverse effect on your standing.
