Groupon Launches U.S. Mobile Payments Service

NEW YORK -- Groupon entered the mobile wallet payment arena this week, launching a payment service to allow businesses to accept credit card payments using an iPhone or iPod touch, according to an Associated Press report.

Following the announcement, the company's stock spiked nearly 14 percent.

"Our goal is to provide powerful and affordable tools to help Groupon merchants run their businesses," said Mihir Shah, vice president of mobile and merchant products for Groupon.

Groupon Payments is aimed mainly at businesses offering deals via Groupon, but a test program allows other merchants to use the service at higher rates. The technology was tested in the San Francisco Bay Area and will go up against eBay Inc.'s PayPal unit and Twitter co-founder Jack Dorsey's Square, among others, which also allow merchants to swipe credit cards on their phones via card-reader attachment, the report stated.

The company is charging a 1.8 percent fee plus 15 cents for each merchant transaction using a MasterCard, Visa or Discover card, while American Express will take a 3 percent fee plus 15 cents. Square, in comparison, charges 2.75 percent per swipe or $275 per month, and Paypal takes 2.7 percent.

Groupon said merchants can use the payments service to add tips, taxes and e-mail receipts to their customers, and the company plans to process payments overnight, which is faster than many traditional credit card companies, according to the news outlet.

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