Groupon Moving into Credit Card Processing ‘Breadcrumb’

Groupon Moving into Credit Card Processing- BreadcrumbBOSTON –  New Groupon (NASDAQ:GRPN) CEO, Eric Lefkofsky has continued his planned overhaul of the ‘Daily Deals’ company by announcing that the company will begin to offer card-processing options through their payment system, known as Breadcrumb.  The announcement builds on the strategy of offering merchants card-swiping hardware that allows android and iOS users to accept credit cards and moves Groupon into competition with PayPal (NASDAQ:EBAY) and Square, which is partially owned by Visa (NYSE:V).

Mr. Lefkofsky took over leadership of the company earlier this year after CEO and Founder Andrew Mason was removed amidst earnings misses and accounting scandals.  In his short time as CEO, Mr. Lefkofsky has overseen a transformation of the company’s sales, by moving away from deals.  This includes a willingness to become more involved with brick and mortar stores in a move that could eventually position Groupon as a competitor to online retail giant Amazon (NASDAQ:AMZN).

In recent years,  the novelty of the ‘Daily Deals’ business has worn off as Groupon’s early success spawned dozens of competitors.  For this reason, the company began branching out last year, moving into online retail and restaurant reservations.

The hardware is a being produced by VeriFone Systems, Inc. (NYSE:PAY) and will be offered to merchants for $ 150 outright or $ 15 a month for one year.  Additionally the company will charge retailers a 1.8 percent commission on all transactions and a $ 0.15 fee per card swipe.  These fees are lower than American Express (NYSE:AXP), Discover (NYSE:DFS), MasterCard (NYSE:MA), and Visa and comes at a time when Google (NASDAQ:GOOG) is shutting down its merchant service, Google Checkout – scheduled to close on November 30.  According to Sean Harper, Director of Product Development, the objective lure merchant towards the company’s interconnected services, such as loyalty, redemption, and analytics.

Groupon also announced on Wednesday that they agreed to acquire San Francisco start-up Plumfare earlier this week.  Plumfare has developed a crowdsourcing application that allows users to share what they are eating with friends.  In return, their friends might gift part of the meals cost – with Plumfare making a small commission per gift.  The terms of the deal were not announced, but the acquisition is considered part of Groupon’s interest in diversifying their revenue stream by becoming the online platform of choice for local retailers.

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About the author

Audrey is a senior editor for the business and finance sections.