News Column

Groupon Launches Payment System for Businesses

May 17, 2013
Payment for Business

Groupon Inc. said Tuesday that it has started offering its point-of-sale system to all brick-and-mortar businesses, building on an important part of its strategy to tackle every aspect of local commerce.

The Chicago-based company has been getting deeper into payments and point-of-sale services for local businesses, seeing merchant technology tools as a logical and lucrative extension of its core daily deals business. In an interview, Mihir Shah, vice president of Groupon's "merchant operating system" division, described this strategy as part of the company's long-term vision.

"We're really helping provide mission-critical software that enables these businesses to run ... efficiently and serve their customers better," Shah said.

A year ago, Groupon acquired Breadcrumb, a startup that had created a point-of-sale system based around Apple's iPad. Groupon introduced this system to restaurants, bars and cafes in October. Tuesday's launch expands Breadcrumb POS, as the product is called, to all brick and mortar establishments such as salons and retailers. Groupon is retaining the Breadcrumb name because it has good brand recognition in the restaurant industry, Shah said.

Though many of Groupon's Web-based merchant tools are free, the Breadcrumb POS system comes with a payments service that charges a credit card processing rate of 1.8 percent plus 15 cents per transaction. Groupon said its transaction fees are highly competitive and the company is running a promotion for free processing on the first $5,000 in credit card transactions.

Merchants do not have to run daily deals with Groupon in order to sign up for Breadcrumb, although the company would like to see those businesses adopt the new technology. On the flip side, a portion of Breadcrumb's existing customers in the restaurant industry have never run Groupon deals and could be convinced to do so.

"We've got merchants already working with Groupon on the core business in terms of deals," Shah said. "(There's) great leverage in terms of that distribution to help us get penetration for Breadcrumb."

Groupon's push into credit card processing puts it into competition with Square, the San Francisco-based mobile payment technology startup created by Twitter co-founder Jack Dorsey. Square's credit card reader plugs into iPhones, iPads and Android mobile devices, and the company charges a 2.75 percent fee per swipe.

Groupon and Square are trying to convince local businesses to ditch their traditional cash registers and point-of-sale systems in favor of more streamlined technology.

Groupon said its Breadcrumb system is easy to set up, creates "real-time reports" on sales and customer purchases, and gives merchants deposits within 24 hours, as opposed to two to three business days. The company also offers a Breadcrumb Pro product for restaurants and bars that comes with additional features for check and table management.

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Source: (c) 2013 the Chicago Tribune. Distributed by MCT Information Services

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