![]() ![]() We did the math quite some time ago, but it’s still relevant: However, while that would be perfectly fine for GroupOn, it would be very bad for Square, which, due to its pricing structure, loses money on small ticket transactions. So a smart merchant could sign up for both services and put all low-dollar transactions on Square and run the higher-dollar ones on GroupOn. So Square provides a better value to merchants processing very small-ticket transactions, whereas GroupOn offers a better deal to retailers selling average- and big-ticket items. The daily deal site’s rates for GroupOn merchants are substantially lower than Square’s, as seen in the table below:īy comparison, Square’s swipe rate is 2.75 percent, without the per-transaction charge. Well, GroupOn has made different calculations. Evidently, the payments giant had calculated that it could take Square on even without competing on cost. When PayPal Here was launched in March, eBay’s subsidiary copied Square’s pricing structure, with the only difference being that it lowered the headline swipe rate by a grand total of five basis points, from 2.75 percent to 2.70 percent. GroupOn Biggest Advantage: Much Lower Rates Why would GroupOn fare any differently? Well, while the latest newcomer certainly has a mountain to climb, I think that it does have a fighting chance. Even mighty PayPal wasn’t able to slow Jack Dorsey’s juggernaut down. After all, Square copycats have been popping up all over the place for more than a year now, yet none of them has managed to gain much traction, as evidenced by the fact that Square’s growth rate, high as it is, seems to keep accelerating. I have to admit that when I first heard about GroupOn’s mobile payments ambitions I was quite skeptical about the project’s potential, even though the details leaked in May sounded very interesting. Rumors about GroupOn Payments, as the service is called, have been swirling around the blogosphere ever since the company bought FeeFighters, a comparison website for merchant accounts, back in March. As anticipated, GroupOn is the latest company to launch a Square-like mobile payments service, the Chicago-based daily deal provider told us today. ![]()
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