The struggling online company, Groupon, has just announced promotion that will allow them to stay afloat. It is a combination of hardware and software that will allow businesses to accept credit cards at rate far lower than what most merchants are currently paying. Instead of the usual credit card processing fee of between 2% and 4% on every transaction, Groupon Payments only asks 1.8% plus 15 cents for each swiped transaction. However, to get this rate, merchants must run a daily deal with Groupon.
1. According to the article, will Groupon be profitable with this scheme?
2. What are the costs and benefits to Groupon with this scheme?
3. What are the costs and benefits for businesses using this scheme?
4. Research the company – Square. How do they compare with Groupon?
Mims, C. (2012). Can a Credit Card Scheme Save Groupon? (Probably Not). The Atlantic, Sep. 21 (Retrievable online at http://www.theatlantic.com/business/archive/2012/09/can-a-credit-card-scheme-save-groupon-probably-not/262667/)