What Does Groupon Entering the Credit Card Payment Business Mean for Business Owners

Last week Groupon made the announcement that they were entering the credit card and debit card processing business to compete with more established companies Square, Intuit and Paypal. According to Gartner, the mobile processing transaction value is expected to surpass $170 billion.

The service will be called Groupon Payments and it will allow U.S. restaurants, salons and spas, retailers and other industries that use Groupon's daily deal service to accept credit card payments at a lower rate than competing businesses. Groupon will charge 1.8% for Mastercard, Visa and Discovery cards in addition to a 15 cent per-swipe fee, and for American Express, the daily deals company will charge 3% plus the 15 cent per swipe fee.

Related Post: Deal a Day – Should You Do It?

What will this mean to for small business owners?

1) Lower Processing Fees, Means More Revenue

For business owners that have already used Groupon and used an “alternative” credit processing option such as Paypal or Square, they can now use Groupon Payments for their deal and take advantage of the lower processing fees.

2) Entice More Customers to Use Groupon for Daily Deals

More business owners that choose to run a daily deal campaign, have one additional reason to use Groupon instead of other daily deal options. Margins can sometimes be razor thin for merchants that run these campaigns and any possible “savings” will be looked at favorably by merchants. This is an additional way for Groupon to try and entice small businesses to use Groupon.

3) Business Is Becoming Mobile

This might be overlooked in this announcement and miss the , but the future of mobile payments and mobile in general is something that entrepreneurs and business owners should pay attention to and start preparing their business for.

About Groupon

Groupon's biggest competitors in the daily deals realm is LivingSocial, Google and Inc which owns part of Living Social. Typically, consumers pay for goods and services at a 50% discount and Groupon and the business that participates split the income 50/50. For example, a product that typically costs $50, customers would typically pay $25 and that would be split with $12.50 for the business and $12.50 for Groupon Inc.

Photo Credit: Groupon


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