Transaction fees for processing AmEx cards are often higher. PayPal’s service charges a fee of 2.7 percent of the purchase price for all types of credit and debit cards - including those issued by American Express. PayPal launched a rival service earlier this year called PayPal Here.

Square, a start-up backed by Twitter co-founder Jack Dorsey, has won small merchants as customers by offering easy credit card acceptance through a small swipe device that plugs into smartphones. The payments business has become highly competitive in recent years. Rocky Agrawal, a local commerce consultant who has criticized Groupon and bet against the stock, said Groupon Payments “fills some of the holes in Square’s model. The stock has lost about three-quarters of its value since the company went public last year. Groupon shares jumped 13.9 percent to close at $5.34 after the announcement. “They are making the right moves, but it’s a highly competitive market,” said Rick Oglesby, a payments industry expert at consulting firm Aite Group.

Groupon aims to reach a size where it will become the “operating system” for local commerce, as Chief Executive Andrew Mason put it earlier this year.ĭespite skepticism on Wall Street, Groupon has rolled out a slew of new services for local merchants, including a scheduling system, a customer-loyalty program and now payments. Groupon’s daily deals competitors include LivingSocial, Google and Inc, which owns part of LivingSocial. For American Express cards, it charges 3 percent plus the 15 cent fee.

Groupon will charge 1.8 percent for MasterCard, Visa and Discover cards, on top of a 15 cent per-swipe fee. In a typical local deal, a customer could pay $20 for a voucher worth $40 of goods and services. restaurants, salons and spas, retailers and other businesses that run Groupon daily deals accept credit card payments at a lower rate than other providers. The service, called Groupon Payments, lets U.S. People enter and leave Groupon Inc corporate office and headquarters in Chicago, Illinois, November 4, 2011.

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