Groupon Extends Payments Service as Rivalry Grows

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Groupon says its credit card processing service, Groupon Payments, is now available for Android phones as part of version 2.2 of the Groupon Merchants app. The payments service was released for iPhone in the fall of 2012.

The payment service promises fast setup, simpler statements, online analysis of transactions and, for merchants in the United States, a lowest-cost guarantee. Users are typically small businesses, often with mobile workers, such as housecleaning services, quick-serve restaurants, contractors, health and beauty service providers, and small retailers.

While Groupon originated as a coupons and deals service, Sean Harper, director of products for Groupon Payments, says that credit card processing is in line with the company's overall mission and its other products, Groupon Scheduler and Breadcrumb, an iPad-based tool for sit-down restaurants.

"Since we're there and sending the merchant a lot of new customers, we make the business a lot more efficient in actually serving that customer," Harper says.

The mobile payment sector is hot and competitive, with Bank of America announcing Mobile Pay on Demand in November of 2012. Indeed, payments may be the killer app for providers of check-ins and deals. In March of 2012, a year after Scvngr launched LevelUp, another payments and rewards system, CEO Seth Priebatsch told ClickZ that the app was handling more than $1 million a month. Harper would not give information about the volume or dollar value of transactions handled by Groupon Payments, because the company will release its next earnings statement in February.

Groupon Payments can help merchants understand the ROI of their promotions by tracking when it sends someone into the store and that person buys something, according to Harper, who came to the company when it acquired his startup, FeeFighters, an online service to help merchants find the cheapest credit card processors. He says: "Having that data about when customers are in stores purchasing is hugely valuable, and Groupon Payments give us that."

In a hypothetical example, Groupon could only send a merchant's promotions to people who had not shopped there before. The service also could track the lifetime value of each new customer it gets into the location. "The real value to the merchant is repeat purchasers, but merchants systematically undervalue that," he says.