Daily-deals website Groupon yesterday announced a new mobile payments service that will compete directly with other providers like Square and PayPal.
Groupon is guaranteeing lower fees per transaction than other services.
The Chicago-based company has been trialing the service in the San Francisco Bay Area. Groupon will allow any merchant that runs a deal with it in the United States to accept payments using the service.
Swiped transactions can be processed via a case-based credit card reader or through an updated iOS app, which allows merchants process payments straight from iPhones, iPads and iPods, using an audio-jack accessory. The Groupon Merchants app can be downloaded for free from the App Store.
Groupon is guaranteeing the industry's cheapest payments. MasterCard, Visa and Discover transactions will be charged a 1.8 percent fee plus 15 cents per transaction, while American Express transactions will incur a 3 percent charge plus 15 cents per transaction.
Square currently charges its customers 2.75 percent per transaction, while PayPal has a 2.7 percent fee.
Groupon's move into the payments space may have been forced by pressure from investors. The company’s Nov. 2011 IPO was priced at $20 but has since performed erratically, settling in at the $5 rage.
Shares of Groupon rose 65 cents on Wednesday’s announcement to close at $5.34 but had dipped over 4 percent in early trading Thursday to $5.09.