As part of its bid to diversify its revenues and become the “local commerce operating system” for SMBs, Groupon launched a payments trial in the SF Bay Area in May. Today that business, Groupon Payments, is formally launching across the US.
In addition to Square, Groupon Payments will face off against LevelUp, PayPal, GoPayment, First Data, Amex and others focused on the mobile and SMB payments market. Square just closed a $200 million round at more than $3 billion valuation. The company is on track to do more than $8 billion in transactions (gross) this year.
While Groupon Payments works very much like Square and its various imitators, Groupon seeks an edge with lower costs in most instances. Here’s the fee structure:
Aside from Amex-related charges it appears Groupon Payments is the least expensive of the various competitors aiming at this market. Most charge 2.7% per transaction. Some have additional fees as well. For e-commerce (as opposed to POS card swipes) Google Wallet may be the least expensive (over certain transaction thresholds) at $1.9 percent.
Groupon is building an integrated suite of tools that work together: Deals, Mobile, Loyalty, Scheduling and now Payments. According to the Groupon blog post:
With the online Groupon Payments Center, business owners can view a live transaction history, check daily sales reports, track deposits to an account and analyze revenue trends. Groupon provides a sturdy audio jack card-swiping device free of charge – merchants can opt for a high-volume case-based reader if they need it. Plus, if there is ever a need to reach us, we’ve put together a dedicated Groupon Payments support team available by phone and email 7-days a week to answer any and all questions.
As I wrote previously this is a very smart move for Groupon and could generate significant revenue over time, as well as be a way to expand its merchant base beyond deal purveyors. Indeed, Groupon stock is up slightly on the news this morning. This diversification story is one that the market should continue to like, especially if it produces results, as “daily deal fatigue” continues and the growth slows.
This is also part of the larger story of SMB-focused vendors and marketing firms seeking to insinuate themselves into the daily operations of SMBs. DemandForce, acquired by Intuit, is another example of this trend. Hibu in the UK is trying to move toward something along these lines.
If you’re planning on coming to the Local Social Summit in November we’ll have a very interesting discussion in this very topic: “The Convergence of Mobile Payments, Analytics and Loyalty Marketing.”