Groupon has modified its Breadcrumb POS mobile payments app to allow it to handle payments even when the wireless signal cuts out. It was no easy feat.

The new offline redundancy mode stores payment data for up to an hour and sends the transactions to a server when the wireless connection is restored.

"It's hard because if you say you're allowed to store credit card data then that platform needs to be more secure," says Varun Krishna, director of product at Breadcrumb POS. "With each successive layer of holding that information, it becomes a question of how secure is that platform."

"A big part was having the resources to understand the PCI compliance," a set of rules that describe how companies must protect and payment card data they handle, he says.

Breadcrumb POS regularly checks its connectivity and alerts the merchant if there are issues with the connection.

"When the Internet went out during our grand opening, Breadcrumb's offline mode saved the day," says Shae Whitney, owner of Dram Apothecary, a bar in Denver, in an email. "We were able to store transactions and run them later when it came back online."

"Wi-Fi can be kind of tricky," says Jeff Green, director of emerging technologies advisory space at Mercator Advisory Group. "It all depends where [merchants] are positioning their tablets and how close they are to the routers."

Sometimes, if there is a lot of traffic on a network, it can slow down or cause a blip in the connection.

"These situations may be rare…but at least it enables [merchants] to continue to conduct transactions," Green says.

But Groupon's new approach could be risky for its merchants.

 "While this feature puts customers first, as should be the case, merchants are at risk if payments are later declined long-after the customers are gone," says Arkady Fridman, a senior analyst at the Aite Group.

To address risk, Breadcrumb limited offline storage to an hour. This allows merchants to deal with the common scenario of a temporary loss of connectivity. Breadcrumb's method of taking these payments offline spares merchants the task of taking down credit card information by hand to run the payments in bulk later.

Shopkick, which offers a mobile app that rewards consumers for visiting certain retailers, also faced the difficult task of dealing with inconsistent connectivity. In April 2012, shopkick updated its app to function without immediate internet connection. The company described this as a huge effort that moved much of the processing burden to the user's handset instead of relying on a remote server.

Groupon's system also received several updates to make navigation quicker and more relevant, including expanded menus, a canvas-style layout, item modifiers and a search capability. Merchants can use starter menus to test customized layouts based on the type of business.

The Breadcrumb app can now scan a Groupon offer with the front or back camera of an iPad to validate, redeem and apply the discount to the bill. The system also tracks deals so merchants can view how much money they've earned from Groupon users, how many deals they released and who took advantage of those deals.

As part of the update, Breadcrumb also allows merchants to take care of more than one customer at a time with its tabs feature. One example, says Krishna, is when a customer at a grocery store forgets something they needed while checking out. While the customer leaves to get the forgotten item, a cashier could open a new tab and take payments from other customers in line, he says.

In this situation, the cashier would swipe the original customer's card and the system would hold the credentials on file until the customer was ready to pay. The card doesn't stay saved for future purchases, but Groupon may add such a feature in a later update as a way to make consumer purchasing more seamless, Krishna says.

"We're only just starting to scratch the surface; we're laying the groundwork to build more capabilities," Krishna says. Breadcrumb is "helping Groupon grow a new muscle, one that makes the company very strong."

Groupon acquired Breadcrumb last year. A day after an accidental release of Groupon POS on iTunes in May, the company released the updated Breadcrumb POS to enable merchants to use iPads as point of sale terminals. The latest updates to the system parallel the company's broader payments strategy.

Groupon charges 1.8% plus 15 cents for swiped card Visa, MasterCard and Discover transactions, which is lower than most processing fees in the industry today. American Express rates vary by the type of business. Groupon is offering $5,000 free processing to merchants to drive adoption. 

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