San Francisco: Groupon Inc., the largest daily coupon website, is testing a credit card-reader for merchants that could vie with similar devices offered by Square Inc. and EBay's PayPal Inc., a person with knowledge of the matter said.
The reader, manufactured by Infinite Peripherals Inc., is designed for the businesses that rely on Groupon to market their wares, said the person. The device plugs into the headphone jack of a smartphone, and it's being tested by dozens of merchants in the San Francisco Bay area, this person said.
Groupon collects a fee of less than 3 per cent on each transaction through the readers. The device is part of the company's efforts to increase revenue from the local shops and restaurants that use its online coupons. The company last year introduced Groupon Now, a service that lets users download coupons instantly to mobile phones.
"Groupon has a number of trials in markets that are designed to help merchants and small businesses," said Paul Taaffe, a spokesman for Chicago-based Groupon.
By entering the mobile-payment processing market, Groupon pits itself against Square, Intuit Inc., VeriFone Systems Inc. and PayPal, which introduced a credit-card reader in March.
Groupon hasn't made a final decision on the fee it will charge merchants, the person said. Readers offered by Square Inc. charge 2.75 per cent per transaction, while PayPal recently introduced a tool that carries a 2.7 per cent fee.
The readers tested by Groupon work with Apple's iPhones and iPod Touches and connect to software partly designed by FeeFighters, acquired by Groupon this year.