Groupon's strategy in mobile payments relies heavily on the feedback it gets from its merchants. The company's latest update to the Breadcrumb POS mobile payment app allows those merchants to get similar knowledge about their own customers' needs.

Called Breadcrumb POS v 1.3, the iPad app lets merchants analyze purchase behaviors and record notes on individual preferences. For example, restaurants can use these features remember which customers have food allergies or which always order the same flavor.

"It's a compelling way for merchants to understand and get more insights into their customers," says Varun Krishna, Groupon's director of product management for Breadcrumb POS. 

"There is a desire among merchants to increase the engagement between the consumer's wallet and the point of sale," Krishna says. "We think that with 50 million consumers that use Groupon, we can create value for the merchants."

Groupon also added an employee management function to Breadcrumb, allowing merchants to categorize job functions, filter sales product reports and track the actions of specific staff members.

"You can … see who is delivering the best performance on your staff, or who deserves the best tips, etc.," Krishna says.

Groupon's receptiveness to customer feedback has won it some business from competitors. Dram Apothecary in Colorado switched to Groupon from Square to make use of some of Groupon's newer features, such as keeping a bar tab, a function Groupon added in July. Groupon also began allowing end-of-day reports to be sent each night over email after Dram owner Shae Whitney requested it, she says. Whitney has also requested an ability to more efficiently split tabs.

Breadcrumb charges 1.8% plus 15 cents per swipe for Visa, MasterCard and Discover payments, with variable rate schedules for American Express. The iPad app has an offline protection if that allows it to function for a limited time if it loses its wireless Internet connection.

Groupon acquired Breadcrumb in 2012. The iPad app complements Groupon Payments, a mobile card reader Groupon introduced the same year.

Though the latest Breadcrumb updates should appeal to merchants, consumers may not be willing to volunteer their personal information for merchants' benefit, says Gareth Lodge, a senior analyst at Celent.

"Customer intimacy is what every retailer seeks. It's cheaper to keep a good customer than to find a new one," Lodge says. "But with more and more advertising, spam email, telemarketers and coupon services, there is an argument to say that I'm more and more reticent to give them my details. Would I give the barber my details for 5% off the next time? Nope. 95%? Absolutely. But the yes/no line is unclear."

Other companies, such as PayPal, Monitise and U.S. Bank are adding ways for merchants to recognize the preferences of repeat customers.

Customer relationship management "is perhaps the most critical need that is evolving in POS systems today," says Rick Oglesby, a senior analyst at Aite Group.

Most retailers have no idea who their customers are, he says. "We don't generally provide our names and addresses when walking in and out of a retail store."

However, Groupon can offer merchants access to a vast number of consumers who have already provided their contact information and preferences when registering to receive its daily deals through email and mobile apps, Oglesby says.

"Mobile represents a big opportunity here as consumers who download apps will frequently register and thereby provide identity information as well as contact preferences, like when you buy a Groupon," Oglesby says.

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry