When I first heard Groupon was entering the mobile payment business, I was curious. As an occasional user of the online coupon service myself, I’ve occasionally come across a merchant who was unable to process credit card payments easily. The hair stylist you need to tip or the local tour company that gathers in front of the state capitol at a designated time. Some of these small businesses participate in PayPal Here, but for some small businesses, participating in Groupon is the first step toward a larger customer base.
By providing payment acceptance, Groupon is offering one-stop shopping for these kind of businesses. The module will be built into the merchants app for iPhone and iPod Touch, available to any merchant who runs a deal through Groupon. The company promises the lowest rates, at 1.8% and a $.15 fee per transaction for MasterCard, Visa, and Discover.
Sage Payment Solutions, a leading provider of online payment solutions, has been watching as the market has become saturated with online payment options. While it’s impossible to deny the technology is an important part of today’s global marketplace, Sage’s president, Greg Hammermaster, notes that the customer must come first.
“My first thought is the customer, which is a business,” Hammermaster says. “There is a significant difference between a business’s payments environment and a consumer payments environment.”
While providing payments through mobile devices is exciting, Hammermaster cautions that supporting the day-to-day operations of businesses should be the primary goal. This, he emphasizes, is the part that is too often overlooked. A mobile payment processor should offer telephone support. Hammermaster also expresses concern about the complication of combining mobile payment with an existing coupon service.
One plus is Groupon’s low rates. “It would appear that Groupon is bundling two business models in hopes of making one that works,” Hammermaster says. “And, if businesses see it as an adjunct to their current commercial payments environment, it may find a niche over a period of time.”
Still, small businesses are looking for financial service providers with a proven track record in the business. Providers who exist to provide financial services, like Sage and PayPal, will have an edge over bundled services. Additionally, social media sites tend to be seen as transient, especially since the meteoric rise and fall of MySpace. Even if Groupon is here to stay, customers are tentative about its long-term viability, and this could hurt the chances of a company interested in developing relationships with businesses.
Whether Groupon’s mobile payment service catches on or not, the availability of multiple online payment options creates competition, which can only be good for small businesses looking for reasonable rates. Small businesses interested in offering deals through Groupon have many options for mobile payment solutions–or traditional payment solutions. Be sure to investigate your options before making a choice.
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