More and more “daily deals” companies are aggressively taking action to give vendors the tools they need to sell directly. Groupon has been in the process this year of releasing a number of payment processing tools in hopes of turning around its falling stock shares, expanding its base service of finding great deals near and in big cities in the Middle East and Africa region. While many businesses have found success with rebranding in an attempt to boost sales, not everyone is sure Groupon will survive.
Two most recent Groupon releases, Payments and Breadcrumb, may give certain small businesses some helpful and cost-efficient tools for processing payments and keeping track of data, according to some hopefuls. Others predict that Groupon’s new attempt to branch out could stabilize its stock shares. However, not everyone is so sure of Groupon’s new offerings and a long-term improvement of shares, predicting that Groupon’s stocks will remain at an all-time low.
On September 19th, Groupon released a new tool for vendors that claims to make credit card transactions easier than ever to process at some of the lowest rates, a direct attempt to compete with Square, a leading company in the payment processing industry, and Paypal. This new tool, Groupon Payments, allows businesses to take credit card payments using their iPhone or iPad.
Groupon’s fee structure for Payments is certainly competitive: Visa, Discover, and MasterCard are 1.8% + $.15 per transaction while American Express is 3% + $.15. PayPal charges 2.7%, as a comparison. Groupon announced they will allow vendors who don’t use their services to accept payments, but their fee structure will be slightly higher: 2.2% + $.15. Of note, though, is that these fees are still competitively lower than many leading payment providers.
However, some have been a bit skeptic as to whether or not businesses would actually use this service and if it would save Groupon’s erratic stocks. After all, the lowest payment rates are only for Groupon Merchants. Others have wondered if Groupon would actually honor the low fees or if it would eventually raise the cost once the promotion expires.
In it’s most recent stage of new payment processing apps, Groupon acquired Breadcrumb to provide restaurants with an iPad app that will hopefully replace current point-of-sale products. Started by Seth Harris in 2012, Breadcrumb is a company that provides services to businesses in the hospitality industry to better manage their data and cut costs.
The system that Breadcrumb is offering with Groupon is very intuitive, some say much more so than Square’s current system. This latest service could become Groupon’s saving grace, as it has the potential to help hospitality businesses see how to better run their company more efficiently.
As expected, Groupon experienced a spike in shares immediately after the release of its iPhone Payments. After the buzz died down, however, shares were down again. The same has occurred with its release of iPad Breadcrumbs on October 10th – immediately the company experienced a jump in shares. Overall, though, the company’ shares are still down 70% from the beginning of 2012.
And analysts are predicting shares to remain at a measly $4.50 per share for the next few weeks. So what does this mean for small business owners? For now, business owners may want to keep an eye on Groupon shares instead of investing in them. As far as the new Groupon services go, small businesses need to do their research before investing.
Do your research, ask other small business owners who have used the services, research reviews on Google, and ultimately decide for yourself if you should get involved with Groupon. The new services have the potential to be an excellent help to SMBs, but know that this early in the game you will need to be aware of all the risks before jumping in to the Groupon boat.
