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Groupon Furthers Payments Strategy with Android Update

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Groupon's push into the payments business continues with an update that brings its mobile card reader to Android phone users.

Groupon's product allows its merchant clients to accept swiped card payments with an add-on reader for smartphones. The daily-deals company began offering an iPhone version in September, and an update announced Jan. 11 brings the same technology to Android handset owners.

Groupon aims to offer lower rates for card acceptance by relying on its own sales force instead of paying an independent sales organization to offer the mobile card reader.

"By and large, because of our distribution model, we're able to take the rates that we negotiate with the bank directly and pass those on to the merchants without markup," Gene Alston, Groupon's vice president and general manager of payments, said in a September interview.

Other companies similarly look to unconventional sales methods to distribute mobile card readers. Fiserv, for example, chose to distribute its SpotPay card reader through banks instead of ISOs. Square offers its reader directly or through retail stores.

However, the terminal maker VeriFone Systems recently went against this trend, choosing to abandon its direct-to-merchant sales strategy for its Sail mobile card reader.

Groupon charges 1.8% for swiped Visa, MasterCard and Discover credit and signature-debit transactions or 2.3% for keyed-in transactions, plus a 15-cent per-transaction fee. For Amex, pricing varies by industry category.

"We're thrilled to bring the powerful features of the Groupon Merchants app and the cost savings and convenience of Groupon Payments to more merchants with smart phones," Alston said in a Jan. 11 press release.

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