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Will Groupon's New Launch Help it Get Back on Track? By Mini Swamy TMCnet Contributor Groupon, launched in November 2008 in Chicago, has been using its collective power to offer people a great way to get the best deals every day, regardless of whether they intend to shop, eat at a restaurant, seek entertainment or just want to indulge in an activity.
Going a step further, Groupon entered the rapidly growing mobile payment market by launching a payment service that allows businesses to accept credit cards using an iPhone (News - Alert) or iPod touch. It hopes to exploit the rapidly growing smartphone market to its full potential. With the new launch, the company is hoping to broaden its array of services and combat to some extent the sharp decline in its stock price, since going public in 2011. While the payment service announcement did increase the share by 14 percent, allowing Groupon to close at $5.34, can it recover lost ground and cross its initial stock price of $20?
The move targets small businesses who held back either because of the high transaction fees involved while processing credit card payments or because they lacked the technology to process credit cards.
Groupon's payment services are not restricted to businesses that offer deals through the company. Other merchants can also use the service by paying a higher rate.
Each time a merchant swipes a credit card issued by MasterCard, Visa or Discover, Groupon will charge a 1.8 percent fee plus 15 cents for each transaction. American Express (News - Alert) cards will be assessed at a three percent fee plus 15 cents.
Groupon's new payment service has been tested in the San Francisco Bay Area and seems to be holding its own against e-Bay Inc.'s PayPal unit and Twitter (News - Alert) co-founder Jack Dorsey's Square, whose rates are professed to be higher.
However, Groupon faces competition from the traditional and popular credit card processors and is having a tough time carving a niche for itself as it has to contend with the might of the likes of LivingSocial (News - Alert) and Amazon.
The company is trying to differentiate by using its payment services to allow merchants to add tips, taxes and even e-mail receipts to their customers. It also plans to process payments much more quickly than traditional credit card companies.
'Our goal is to provide powerful and affordable tools to help Groupon merchants run their business,' said Mihir Shah, vice president of mobile and merchant products at Groupon.
Edited by Rachel Ramsey |