Groupon Testing Merchant Payment System 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."
Paypal? More like Lame, pal! (Score:5, Insightful)
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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.
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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 jol
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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.
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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.
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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.
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"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.
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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.
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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 th
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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.
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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. P
Brilliant (Score:4, Funny)
OMIGOD (Score:4, Insightful)
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 (Score:5, Interesting)
Abuse of a monopoly is bad
If history teaches one thing that is abuse of monopoly is inevitable.
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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, at
In practice, it doesn't work that way (Score:5, Insightful)
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.
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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
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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
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And, the barrier to entry isn't Visa/MC, but the credit card processing network, which is largely a monopoly, controlled by FirstData.
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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.
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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 ne
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credit card with iDevices (Score:5, Interesting)
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?
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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.
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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.
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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.
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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 netwo
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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.)
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An iDevice card reader is no more or less secure than any other form of card reader in the hands of merch
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Well, a debit card is riskier, but that's easily mitigated by choosing a bank that offers t
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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.
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they bought a junk one. Square can charge and swipe at the same time.
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Merchant fee (Score:1)
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 pro
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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.
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:"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.
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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 compan
Chip and Pin (Score:1)
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.
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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 te
Least of evils (Score:2)
PayPal vs Groupon, who is more evil? I'd say it's a tossup.
I'll stick with Square.