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Groupon Testing Merchant Payment System

Soulskill posted more than 2 years ago | from the exploiting-their-reach dept.

The Almighty Buck 57

An anonymous reader writes with news that Groupon is testing out a service for letting merchants accept credit cards that could put it into competition with PayPal and Square. "Groupon's nascent payment service comes with an Apple iPod Touch, and a case that wraps around the back of the device, which allows merchants to swipe credit cards." The fee structure isn't finalized, but their aim is to be competitive with PayPal and Square. "Groupon may have flexibility to charge lower fees because it could subsidize the payments service from money it makes providing other services to merchants, they said. PayPal's service, known as PayPal Here, 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 Co.. Transaction fees for processing AmEx cards are often higher. Square charges 2.75 percent per swipe. Groupon's test service is charging a 1.8 percent transaction fee and 15 cents per transaction, Rocky Agrawal, an industry analyst, reported in a VentureBeat blog late Thursday."

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I liked the summary (0)

Anonymous Coward | more than 2 years ago | (#40126573)

Wow, it's been minutes and no one has posted. I just wanted to say thanks for including some details in the summary, such as the percentages the different companies charge.

Paypal? More like Lame, pal! (4, Insightful)

negRo_slim (636783) | more than 2 years ago | (#40126575)

I would love for Paypal to have some competition. There asinine policies and terrible customer service have forever turned me of to the service.

Re:Paypal? More like Lame, pal! (1)

Anonymous Coward | more than 2 years ago | (#40126667)

this part of paypal *has* competition (most significant, perhaps, is gopayment from intuit)...

but like the vast majority of credit card/merchant services, they all pretty much suck -- nature of the beast.. you want to take credit cards, you got to bend over for the card companies and banks... ya know, THEY should be paying US (merchants) for accepting their cards instead of charging both the customer AND the merchant.

Re:Paypal? More like Lame, pal! (0)

Anonymous Coward | more than 2 years ago | (#40126709)

THEY should be paying US (merchants) for accepting their cards instead of charging both the customer AND the merchant.

Why? The merchant can either pay or lose sales. Not charging would be illogical.

Re:Paypal? More like Lame, pal! (1)

jpapon (1877296) | more than 2 years ago | (#40127007)

I don't know about you, but I don't pay much, if anything, for my credit cards. If I do pay anything, it's well worth it to get an interest free up to 30 day loan. Heck, on one of my cards I don't pay any fees at all.

Re:Paypal? More like Lame, pal! (1)

mirix (1649853) | more than 2 years ago | (#40127331)

The merchant usually gets a ~2% haircut for the privilege of using visa/mastercard.

So while it doesn't show up as a line item, you do pay it via higher prices at stores. (and at stores without a 'cash discount', you end up paying it even if you dont use credit).


If you show me you need it, I'll let you have credit,
I'm a jolly banker, jolly banker am I.
Just bring me back two for the one I lend you,
Singin' I'm jolly banker, jolly banker am I. ...

When the bugs get your cotton, the times they are rotten,
I'm jolly banker, jolly banker am I.
I'll come down and help you, I'll rake you and scalp you,
Singin' I'm jolly banker, jolly banker am I.

Re:Paypal? More like Lame, pal! (1)

SydShamino (547793) | more than 2 years ago | (#40127999)

Unless you propose to do away with non-cash payment methods, then every merchant that accepts credit will always price their products to cover those fees.

That means that all the people out there who continue to pay for things with cash subsidize those of us that use cards with cash-back programs. I get about half that "haircut" in checks in the mail and free hotels and airfare, and I run anything I can through credit cards that I pay off with no interest.

Re:Paypal? More like Lame, pal! (2, Interesting)

Anonymous Coward | more than 2 years ago | (#40128025)

In some places the 2% is not that much compared to the cost of dealing with cash. Staff and 3rd parties are more likely to steal cash. Storing and transporting large amounts of cash costs you money.

On the flip side with credit cards there are charge-backs. But if you're not an online merchant I think the charge-back and fraud rates aren't that high.

Re:Paypal? More like Lame, pal! (1)

nobaloney (1012719) | more than 2 years ago | (#40136303)

On the flip side with credit cards there are charge-backs. But if you're not an online merchant I think the charge-back and fraud rates aren't that high.

I know my experience is only anecdotal, but nevertheless I still remember the one time my PayPal debit card was compromised and used five times at four different stores, all card present transactions, all within ten miles of my home, all within an hour. Fortunately, as bad as they may or may not be in other respects, PayPal is very good at detecting fraud patterns; they noticed, canceled the card account, and called me to let me know what happened, even before I noticed.

Re:Paypal? More like Lame, pal! (1)

Anonymous Coward | more than 2 years ago | (#40127347)

"ya know, THEY should be paying US (merchants) for accepting their cards ..."

Yeah, cash that has to be sorted, counted, protected, insured, put in an expensive safe, guarded then transported by armored trucks with armed guards to a bank.
For small mom and pop businesses it's risking your life when you transport the cash yourself.

2-3% to avoid all that is a bargain.

Re:Paypal? More like Lame, pal! (1)

WrongSizeGlass (838941) | more than 2 years ago | (#40127973)

Yeah, cash that has to be sorted, counted, protected, insured, put in an expensive safe, guarded then transported by armored trucks with armed guards to a bank. For small mom and pop businesses it's risking your life when you transport the cash yourself.

2-3% to avoid all that is a bargain.

Don't forget the fees to deposit cash and checks. Some banks charge retailers up to 0.4% to deposit cash, and $0.25 (or more) for each check.

Re:Paypal? More like Lame, pal! (2)

innocent_white_lamb (151825) | more than 2 years ago | (#40130943)

When I first started my small business twenty years ago, I opened a commercial bank account at the bank that's located just a half-block away from my building. No particular reason to go to that bank other than it was the closest one to me.

About five years later they were charging me about $50 per month in various service charges, and they sent me a notice of service charge increases that would have raised that to nearly $75!

I then opened an account at the local Credit Union and moved all of my business there. I paid $12 per month to them for their services at that time. It's $15 per month today.

I can't recommend this more strongly: If you're not doing your banking at your local Credit Union, you're getting ripped off.

Re:Paypal? More like Lame, pal! (1)

nobaloney (1012719) | more than 2 years ago | (#40136313)

I then opened an account at the local Credit Union and moved all of my business there. I paid $12 per month to them for their services at that time. It's $15 per month today.

I can't recommend this more strongly: If you're not doing your banking at your local Credit Union, you're getting ripped off.

Are they still offering new accounts with those terms? I ask because I checked the local Credit Union when Chase started charging my business $10/month. While they still don't charge for personal account, they were over twice the price for business accounts.

Re:Paypal? More like Lame, pal! (1)

tlhIngan (30335) | more than 2 years ago | (#40135699)

I would love for Paypal to have some competition. There asinine policies and terrible customer service have forever turned me of to the service.

That part of paypal already has competition.

Paypal's bread-and-butter are random two-people-get-together-and-send-money transactions. Try paying your friend with a credit card - unless your friend runs a business and has a merchant account set up, you can't. And if it's a somewhat significant amount of cash (e.g., $200+), it can be troubling for everyone involved. Paypal is the only service that makes it possible (well, you can use eGold or Western Union, but their cuts are even worse). Or try a random Craigslist transaction of significant value.

Especially in the age of eBay and internet shopping - sending money to random individuals is actually quite hard (other than credit card, you'd have to get off your ass, get a money order, stick it in an envelope, and send it out via the mail. Wait a week for it to arrive... then seller ships item...).

"ya know, THEY should be paying US (merchants) for accepting their cards ..."

Yeah, cash that has to be sorted, counted, protected, insured, put in an expensive safe, guarded then transported by armored trucks with armed guards to a bank.
For small mom and pop businesses it's risking your life when you transport the cash yourself.

2-3% to avoid all that is a bargain.

And that's what all the people forget. Operating a cash register is actually a lot harder than it appears - that tray the cashiers carry out contains a very *specific* amount of money in it, and the register gets told how much. As transactions are done, the register keeps track of how much should be in the tray. At the end of the shift, the cashier "cashes out" and the register closes out and prints out how much should be in the tray. Of course there will be discrepancies (people make mistakes) but they'll be low (a few dollars, tops).

It's this tracking that leads to stores shutting down cash transactions if the server goes out - electronic payments can go through fine, but having to go and manually record down cash tranasctions is a royal pain, especially since it has to be reconciled later.

And heck, I always wondered what the losses were to robberies at convenience stores and gas stations - those businesses may save money going cashless purely to from direct losses from the robbery (the cash lost) and indirect (counseling for employees, insurance, etc).

Re:Paypal? More like Lame, pal! (0)

Anonymous Coward | more than 2 years ago | (#40126921)

At least they're just a shitty payment processor and not, say, the same people who have just been made responsible for boldly going where no man has gone before.

(The first hit's always free. And by free I mean several hundred $100 million of your money to support their profit.)

Brilliant (4, Funny)

Floyd-ATC (2619991) | more than 2 years ago | (#40126615)

Now all you have to do is install a Trojan and skimming will be completely automatic.

Re:Brilliant (-1)

Anonymous Coward | more than 2 years ago | (#40126769)

"Now all you have to do is install a Trojan and skimming will be completely automatic."

What do you mean automatic? When I install a Trojan it's always stick shift.

Paypal takes 2.7%?? (0, Insightful)

Anonymous Coward | more than 2 years ago | (#40126635)

Vultures! I bought an ex-display Qosmio laptop for £1100. This means their cut would have been £29.70?! That's massssiiiiive, I hope they die.

Re:Paypal takes 2.7%?? (0)

Anonymous Coward | more than 2 years ago | (#40127119)

I bought an ex-display Qosmio laptop for £1100. This means their cut would have been £29.70?! That's massssiiiiive, I hope they die.

Here's hoping that you didn't pay that from your bank account!
'Cause once you exceed their $5,000 limit, they make you link a bank account and ALWAYS default to paying from that account (no way to default to a credit card anymore, you have to manually change every payment)
The beauty of the system is that they don't pay any transaction fees on bank transfers (or when using your paypal balance). At least when they charge a credit card for you, they pay some amount to the credit card...

OMIGOD (3, Insightful)

WOOFYGOOFY (1334993) | more than 2 years ago | (#40126645)

PayPal's service, known as PayPal Here, 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 Co.. Transaction fees for processing AmEx cards are often higher. Square charges 2.75 percent per swipe. Groupon's test service is charging a 1.8 percent transaction fee and 15 cents per transaction, Rocky Agrawal, an industry analyst, reported in a VentureBeat blog late Thursday."

OMIGOD Could it be that when barriers to entry into otherwise mono-duo-trio- opolisitc markets fall then competition drives down prices and consumers benefit?

I think the mere PRESENCE of such mono-duo-trio- opolisitic markets should AUTOMATICALLY invoke very tight regulatory structuring of those markets until such time as meaningful competition arrives.

Capitailsm can't survive it's own success if success always means the consolidation of markets. Something external has to step in and reset the game

It seems to me that people who love capitalism should all agree with me and the people who don't are just profiteers fundamentally unconcerned with the society they in or other people, at best paying some lip service to some "invisible hand" that justifies their selfish greed.

Re:OMIGOD (0)

Anonymous Coward | more than 2 years ago | (#40126871)

Abuse of a monopoly is bad, and incidentally regulation against that already exists, but there is nothing intrinsically wrong with having a monopoly. If one business provides much better value at the same price than its competitors (assuming fair business practices), it actually should become a monopoly, and crippling that business or subsidizing competition isn't doing anyone any favors.

Re:OMIGOD (4, Interesting)

hardtofindanick (1105361) | more than 2 years ago | (#40126999)

Abuse of a monopoly is bad

If history teaches one thing that is abuse of monopoly is inevitable.

Re:OMIGOD (1)

WOOFYGOOFY (1334993) | more than 2 years ago | (#40128137)

Perhaps this is the difference between people who believe in a free market and those who believe the purpose of government is to foster an environment in which people and businesses have no limits on the amount of market power they can acquire irrespective of what effect it has on society at large. .

A free market is not a natural state of man, just as a healthy functioning city sanitation system is not a state which arises naturally from people living together in cities. It has to be engineered, attended to , trouble shot and actively kept in good working order.

Some people misconstrue the free market with some sort of natural law or fundamental law of nature that is only contravened when Big Government steps in and ruins it, usually by trying to assure "equality" in some form. Nothing could be further from the truth.

The free market like every system of laws that seeks to regulate human interactions, is the result of heavy handed (as in, do THAT and we'll fine you , end your company and or throw you in jail) legislation the sum total of which represents the accumulated wisdom and hard won knowledge of previous generations. There is no concept of "less legislation is always better" because the whole edifice is an act of lawmaking first place.

In fact, even having the power to look over the behaviour of a monopoly to see if further action is needed to correct their behaviour is itself a form of regulatory authority. That is, the fact that Congress CAN do this at all is already regulatory and further, and the existence of that Congressional power has a definite effect on monopolies whether they are target for legislation or not..

As far as unintended consequences of legislation on business goes, in a nation of laws choosing to create a law is an affirmative act and choosing to refrain from creating a law is equally an affirmative act and both bear consequences, some of which will be unintended and some of which will sometimes be contrary to the actor's intentions. So "unintended consequences" is not the sole purview of legislation .

There is no magic path to knowing in advance what to do in any given circumstance. All we have in any field -and all we ever have - is the iterative and application of judgement and the accumulated knowledge of results in pursuit of pro-social outcomes.

There are other ways to encourage deep investment and provide low cost services - two alleged benefits of monopolies- other than permitting monopolies to reign with unchecked, unregulated power.

In practice, it doesn't work that way (4, Insightful)

SteveFoerster (136027) | more than 2 years ago | (#40127083)

Capitailsm can't survive it's own success if success always means the consolidation of markets. Something external has to step in and reset the game It seems to me that people who love capitalism should all agree with me and the people who don't are just profiteers fundamentally unconcerned with the society they in or other people, at best paying some lip service to some "invisible hand" that justifies their selfish greed.

The problem is that if you really have capitalism, then anyone can enter an industry if they see that the dominant one, two, or however many companies in it are pricing their goods or services too high. But we don't have that, we have corporatism, where those who are already in a market use relationships with the policy makers who oversee them for mutual advantage.

In other words, we already have something external that's supposed to do what you describe. The problem is that it usually stifles real competition rather than promoting it, because human nature is to act more from individual incentive rather than from altruism.

Re:In practice, it doesn't work that way (2)

WOOFYGOOFY (1334993) | more than 2 years ago | (#40128179)

The problem is that if you really have capitalism, then anyone can enter an industry if they see that the dominant one, two, or however many companies in it are pricing their goods or services too high. But we don't have that, we have corporatism, where those who are already in a market use relationships with the policy makers who oversee them for mutual advantage. In other words, we already have something external that's supposed to do what you describe. The problem is that it usually stifles real competition rather than promoting it, because human nature is to act more from individual incentive rather than from altruism.

I could not agree with you more. Corporatism.. that's the world I was looking for in my above reply to Anonymous. Crony capitalism, where your personal connections to other business owners and to people in government determine your business success.

http://en.wikipedia.org/wiki/Crony_capitalism [wikipedia.org]

There is no system of laws that can't be abused. I completely agree that a large number of people are inherently motivated by their own greed and virtually nothing else . There are also people who are inherently motivated to be altruistic after their own needs are satisfied. They exist too and are just as natural as the greedheads.

All I can say with respect to the failures of the system we've created so far is - they are not nearly bad as what went down in the Dark and Middle Ages (yet) and , well, it's our turn to take a crack at making things better. Here's the map of history. You are here -->

Re:OMIGOD (1)

DogDude (805747) | more than 2 years ago | (#40128467)

WTF does your post have to do with this article? I've read it a few times, but it doesn't seem to make sense, although other people have seen fit to moderate it up.

Re:OMIGOD (1)

WOOFYGOOFY (1334993) | more than 2 years ago | (#40128549)

Uh, that would be that the ability of new players to enter into online commercial payment processing thanks to handheld devices and the internet, is having the effect of driving down prices from what MasterCharge and Visa (duopoly) have traditionally been able to inflict on merchants:

http://www.finextra.com/news/fullstory.aspx?newsitemid=22662 [finextra.com]

Getting the point of my post requires some awareness of what the world is like outside of the post and what current context the original story is implicitly embedded in.

Clear that up for ya?

Re:OMIGOD (1)

DogDude (805747) | more than 2 years ago | (#40128587)

That'd be nice if it were true. Visa/MC prices (fees) are at an all time high.

And, the barrier to entry isn't Visa/MC, but the credit card processing network, which is largely a monopoly, controlled by FirstData.

Re:OMIGOD (1)

WOOFYGOOFY (1334993) | more than 2 years ago | (#40128699)

MC and Visa are a duopoly and they have quite a bit of power over their merchants including their fee structure which Congress has looked into : http://www.investorplace.com/2011/06/visa-stock-credit-cards-congress/ [investorplace.com]

FirstData is a monopoly (75% of the market at least) but that fact doesn't imply that MC and VISA are not also at the same time a duopoly with the power to distort the market in their own right.

Re:OMIGOD (1)

DogDude (805747) | more than 2 years ago | (#40128747)

There are already other credit cards out there: namely Discover and American Express. Both operate somewhat separately from Visa/MC, but are forced to share the same network (First Data). Introducing a new credit card won't make a difference, because it'll have to use the same network.

Groupon and PayPal, and just about every other consumer oriented brand that "accepts" credit cards is just re-branding some other service and tacking on some more fees. Groupon certainly is not building a credit card network. More than likely, they're not even creating a credit card gateway. It won't have any impact, whatsoever, on the industry, as per the original post's suggestion.

Re:OMIGOD (1)

WOOFYGOOFY (1334993) | more than 2 years ago | (#40131385)

I would say most people including most merchants the US Congress and the EU consider Master/Visa to be a duopoly as my links indicated, whatever else market distorting entities there may be at work also.

Wow, me too! (-1, Troll)

Anonymous Coward | more than 2 years ago | (#40126651)

I want to do this too. My payment system is... innovative. It's skimmerific. Yeah man, you'll feel the smooth silkiness of my skimming innovation. Sheesh. No wonder they say America is going down the tubes. Yep, it'll skim your money down the InterTubes.

i peck at my prostate! (-1)

Anonymous Coward | more than 2 years ago | (#40126891)

ever had an uncooked butterball turkey in your rectum?

credit card with iDevices (4, Interesting)

JimboFBX (1097277) | more than 2 years ago | (#40126979)

Sticking with the subject of attaching a credit card reader to an Apple device, there's a business in my city that uses an iPad with a credit card reader on it to do their transactions. Pretty slick considering point of sale (POS) systems used to run for $1.5k-$2k each.

But then on one busy day I saw the cashier constantly swapping the charger and credit card reader in and out because there's only one slot on an iPad. So clearly there's a drawback with that system.

Seems like the natural upgrade is to just have a tablet that can be on a charger AND support a credit/debit card reader at the same time. Bingo, cheap touch screen POS system. Is there one out there that already does this?

Re:credit card with iDevices (1)

ThatsMyNick (2004126) | more than 2 years ago | (#40127013)

Square does. It interfaces with the Tablet/Mobile through the headphones port. You are free to use the minusb/equivalent-port to charge it. And yeah I agree it is pretty sleek, my local restaurant uses it for the billing, along with a bluetooth printer. Works really well for them.

Re:credit card with iDevices (0)

Anonymous Coward | more than 2 years ago | (#40127329)

Works well but the square swiper have 2 major problems:
1) It doesn't last long, most people end up swiping cards in many weird ways to get it to read the card in just some months.
2) The data is not hardware encrypted, this means the credit card data arrives through the headphones port unencrypted to the phone system. PCI rules are still not clear for mobile devices but this could result in a big security problem.

Re:credit card with iDevices (1)

Kalriath (849904) | more than 2 years ago | (#40127407)

Dangerous as hell though. It converts the track 2 data into audio, which any app on the iDevice can record. And there was recently a /. story where a researcher got a hold of a recording from a Square swiper, and was able to reconstruct the card data.

Re:credit card with iDevices (1)

Lumpy (12016) | more than 2 years ago | (#40127939)

He got ahold of it by using a square reader. It's not hard, but it's also not "DANGEROUS"

I am guessing you dont know how most card readers work. It's the exact same thing. the audio level signal from the reader head is sent to the chip to decode. All card readers have worked like this for decades.

Re:credit card with iDevices (0)

Anonymous Coward | more than 2 years ago | (#40128583)

We use the ProPay iDevice reader, which encrypts the audio signal and their app decrypts it.

No chance I would pay someone using square's device.

Re:credit card with iDevices (1)

Kalriath (849904) | more than 2 years ago | (#40132185)

In practice, what happens with all card readers is that the data is encrypted, and sent to the bank over an encrypted tunnel. There is no point in the way where anything can intercept the unencrypted data and do anything with it. That Square's device does not encrypt the data with an encryption key known only to the device and Square's servers is inexcusable, and I don't know how it passed PCI. It certainly wouldn't meet EMV specifications which is what's required to connect to any of our financial networks here.

Re:credit card with iDevices (2)

jpapon (1877296) | more than 2 years ago | (#40127017)

You wouldn't need to change tablets. There are many iphone charging usb pass-through cables available.

Re:credit card with iDevices (1)

Neil_Brown (1568845) | more than 2 years ago | (#40127255)

a tablet that can be on a charger AND support a credit/debit card reader at the same time

Square [squareup.com] , which uses the microphone / headphone socket. (Although, I note sadly, it's US-only at the moment.)

Re:credit card with iDevices (1)

CastrTroy (595695) | more than 2 years ago | (#40127341)

I'm not si sure I'm comfortable someone scanning my credit or especially debit Ward with a personal device like an ipad or iPhone. If its possible for a program to be written do do the transaction securely, then its possible for shadyy retailers to have an app on there that looks like the official app but that retains your card data. It easy enough to get your card duplicated with scanning it through consumer devices.

Re:credit card with iDevices (1)

meta-monkey (321000) | more than 2 years ago | (#40129577)

Any time you're handing your card to someone you're trusting them not to steal your number. Go to a restaurant and hand your card to the waiter? How do you know they don't have a sophisticated app called a "notepad and pen" they can use to write down your number for use later? Even if they're swiping the card in front of you, a $10 reader can duplicate the numbers. Or they can just take an imprint.

An iDevice card reader is no more or less secure than any other form of card reader in the hands of merchants. However, they're probably not going to steal your card number because 1) they're probably not crooks and 2) the CC companies will notice "gee, everybody who goes to this restaurant winds up having fraudulent charges made!" and bust them.

Re:credit card with iDevices (1)

tlhIngan (30335) | more than 2 years ago | (#40135589)

I'm not si sure I'm comfortable someone scanning my credit or especially debit Ward with a personal device like an ipad or iPhone. If its possible for a program to be written do do the transaction securely, then its possible for shadyy retailers to have an app on there that looks like the official app but that retains your card data. It easy enough to get your card duplicated with scanning it through consumer devices.

Well, a debit card is riskier, but that's easily mitigated by choosing a bank that offers the same protections for debit as credit.

For credit, it's easy - if your card is used to purchase something you didn't buy, you call your card company, say it's a fraudulent charge, and they'll go investigate it and send you a new card just in case. And it's legally enforced, as well.

And it's a swipe transaction, not a chip transaction so the protections of chip don't apply. The oddball thing is that only now when we're moving away from swipe that everyone comes out with swipe readers.

Risk is higher with debit cards (it always seems pinpads are compromized), but that's a bank issue. With credit, it's less of an issue on the consumer side.

Re:credit card with iDevices (1)

adolf (21054) | more than 2 years ago | (#40127879)

Seems like the natural upgrade is to just have a tablet that can be on a charger AND support a credit/debit card reader at the same time. Bingo, cheap touch screen POS system. Is there one out there that already does this?

Card readers from Square and PayPal already work like you suggest, at least sort of: They connect to the headset jack in a very device-agnostic way. Any other ports are left unused.

Re:credit card with iDevices (1)

Lumpy (12016) | more than 2 years ago | (#40127929)

they bought a junk one. Square can charge and swipe at the same time.

Re:credit card with iDevices (1)

DogDude (805747) | more than 2 years ago | (#40128417)

Credit card reader + Apple devices = business fail. I've seen this a few times, and all of the places I've seen this are now closed, or will be closing soon. A retail business dumb enough to waste money on Apple devices for POS and is paying such an exorbitant amount to accept credit cards is not run by people making financially sound decisions.

So $16.67 or less is MORE expensive? (0)

Anonymous Coward | more than 2 years ago | (#40127045)

So any bill under $16.67 is MORE expensive via Groupon?
I make $16.67 works out at 45 cents for Groupon and Paypal and less than that Group costs more because of the extra 15 cents fixed charge per transaction.

e.g. $10, Paypal = 10*0.027 = 27 cents, Groupon = 17 cents + 15 cents = 33 cents

I reckon, a coffee here, a snack there, I think a lot more transactions are small than big, especially with Groupon, and so Groupon works out more expensive for these items, and so presumably they've worked out they can make MORE money from merchants that way.

Meanwhile this seems to be marketing it as 'cheaper' which it isn't.

Merchant fee (1)

aristedes (732532) | more than 2 years ago | (#40127121)

Since banks regularly charge even small customers less than this, I don't see the attraction. I have customers who turnover as little as $2m per year and with merchant rates down to 0.8% for Visa/MC. I don't understand why any merchant would be paying such high rates. Amex of course is much higher, but in Australia that's easily solved: very few retail merchants accept Amex.

The biggest improvement that happened in Australia was when retailers were allowed by law to charge a surcharge to the customer for processing credit cards. That has been very successful in keeping the merchant rate low since banks are not only competing with each other on credit card fees, but also with other forms of payment such as debit cards, EFT or cash.

Re:Merchant fee (2)

Kalriath (849904) | more than 2 years ago | (#40127419)

In NZ we took it one step further - banks aren't allowed to only offer blended rates like they do overseas, so they actually have to offer interchange-plus rates, where you pay the card network fee plus a transparent markup - even Visa and MasterCard have to compete with each other here.

Getting between you and merchants! (0)

Anonymous Coward | more than 2 years ago | (#40127417)

Why would any consumer want a third party to get between themselves and the merchants they buy from? All the third party does is aggregate and sell purchase information.

Aggregating purchase data is the last frontier of data to gather and sell. No one has your complete purchase picture. Yet. The real fight is going on to be between you and merchants, and to get that data.

The public isn't noticing this "data grab" but it's starting.

Re:Getting between you and merchants! (1)

Lumpy (12016) | more than 2 years ago | (#40127961)

:"Why would any consumer want a third party to get between themselves and the merchants they buy from? All the third party does is aggregate and sell purchase information."

You may live in a fantasy world utopia, but those of us that live in the USA,Canada, and Europe have that third party shoved right in there all the time.

If you use anything but Cash, you are paying someone to use your plastic card. and most people use the plastic card and do not carry cash. It's exactly how the banks planned it.

Re:Getting between you and merchants! (1)

meta-monkey (321000) | more than 2 years ago | (#40129627)

I assume you're trollin'. Aggregating purchase data is not the last frontierit was the first target. That battle's lost a looooong time ago.

And second, there are tons of good reasons to want a 3rd party between you and the merchant. If the merchant rips me off I can contest the charges and get my money back. There's the convenience and security of not having to carry wads of cash around to make purchases. If somebody takes your cash, you're boned. If they take your credit cardyou call the CC company and cancel the card. You can also make remote purchases via phone or internet. I can't very well shove a wad of cash into the dvd drive on my computer and have the merchant whose products I want pop back out. Then there's additional services the card companies provide, like automatic insurance on rental cars, default warranties on purchases, airline miles, etc.

Chip and Pin (1)

markxz (669696) | more than 2 years ago | (#40128955)

Since this just uses the magnetic swipe available on the card what will happen after Chip and Pin is introduced in the US?

The readers for this are a lot bigger (since they need to have a keyboard) and have higher security requirements making them more expensive.

Re:Chip and Pin (1)

gl4ss (559668) | more than 2 years ago | (#40137321)

it will die and usa merchants will be using the cheap sagem-or-whatever-chinese-manufacturer-all-in-one-device-comes-with-wireless-internet devices for pos cc charges like the rest of the world. fuck, I can order a pizza and the pizza guy will have one when he comes up with the pizza. you can build the entire device with a chip reader cheaper than what iphone costs so what's the point in tying one iphone to a half assed sales solution really?

groupon is just doing this because some exec over there read on techcrunch about how hip square is. seriously, it's stone age! and groupon, go die in a moat or learn to sell reasonable amounts of offers to small business owners(not so that if the deal goes through he'll be swamped for the rest of the year working on poor return with a dick on his forehead).

Least of evils (1)

hendridm (302246) | more than 2 years ago | (#40130895)

PayPal vs Groupon, who is more evil? I'd say it's a tossup.

I'll stick with Square.

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