Groupon Adding Point-of-Sale Technology to Its Merchant Offerings

Aiming to create an even deeper connection with its merchants, Groupon is offering restaurants, bars and cafes a point-of-sale solution that it is calling Breadcrumb.

Groupon’s entrance in the point-of-sale business was expected. In May, it acquired New York-based Breadcrumb, which developed the core of what the product is today.

The national rollout this week closely follows the unveiling of Groupon Payments, which enables merchants to accept credit cards using an iPhone or iPod touch. Breadcrumb is complementary, in that it works on an iPad.

Groupon’s goal for both Breadcrumb and Groupon Payments is to cut costs for merchants that are used to paying high prices for low-tech, antiquated systems. In return, Groupon hopes to create a closer bond with merchants that will encourage them — or potentially require them — to run coupons in the future.

“We are not focused on these businesses boosting the bottom line; they don’t need to be wildly profitable on their own,” said Groupon CEO Andrew Mason, in an interview with CNBC about Groupon Payments. “What we are really focused on is using additional services to strengthen the value proposition that we have for our merchants.”

Since profit is not the main motivator, Breadcrumb’s rates start off fairly low. For one terminal, it costs $99 a month; 10 terminals cost $399 a month. Merchants will have to buy iPads, cash drawers, receipt printers and Internet access separately (although Groupon promises that adds up to hundreds of dollars, compared to the thousands of dollars for other point-of-sale systems).

The software also will work closely with Groupon Payments, which guarantees the cheapest rates, or else Groupon will beat it. To qualify for 1.8 percent plus 15 cents per swipe, merchants will have to be existing Groupon users. But, that’s the case with Breadcrumb, likely because it already had hundreds of customers before it was acquired.

Last month, Wall Street reacted positively to Groupon’s entrance into the payments industry. Since then, Groupon has been able to hang on to those gains, with the stock closing yesterday at $5.27 a share. With its second big bet in the payments space being unveiled today, we’ll have to see if investors are equally pleased. It still has a long way to go, and it will have to stay ahead of many other competitors, including  Square, PayPal, LevelUp and VeriFone.


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