Groupon adds Apple gadget payment service

Online daily deals pioneer Groupon expanded into the payments arena, weighing in against the likes of PayPal and Square

Online daily deals pioneer Groupon on Wednesday expanded into the payments arena, weighing in against the likes of PayPal and Square.

The Chicago-based firm made Groupon Payments available across the United States after what it said was a successful test of the service in San Francisco.

"In the past, our merchant partners have often told us that their traditional payment systems are expensive and cumbersome so we stepped up to the plate and developed our own payments service," Groupon's Mihir Shah said in a blog post.

The service was programmed into the latest version of the Groupon application for iPhone and iPod touch devices, according to Shah.

Groupon provides a small credit-card reader that plugs into the Apple gadgets to take payments in the same way that Square and PayPal Here provide "dongles" for swiping cards.

Groupon, which rejected a $6 billion takeover offer from Google a year ago, has enjoyed phenomenal growth since its founding in 2008 but has been dogged by questions about its business model and accounting methods.

Groupon makes its money by selling members deals for discounts on activities, items, or services and then splitting the money with the businesses involved.

Groupon in August posted a sound quarterly profit but saw its stock tumble due to a disappointing forecast for the months ahead.

The company made its stock market debut at $20 per share in November and peaked above $31 dollars a share. Groupon shares rose nearly 10 percent to $5.13 after the announcement Wednesday.

Online commerce titan eBay saw its profit more than double in the second-quarter of this year due to strong showings by its Marketplaces and PayPal services.

"We delivered a great second quarter," said eBay chief executive John Donahoe.

"Mobile continues to be a game-changer," eBay chief executive John Donahoe said during an earnings call, referring to how people are increasingly relying on smartphones for shopping, banking and other personal business.

Square, the tech startup which allows small businesses to take payments through smartphones, said this week that it has raised $200 million as it gears up for global expansion.

Square said that it is processing over $8 billion in payments on an annualized basis.

The company is the brainchild of Twitter co-founder Jack Dorsey and was named after the small, square magnetic-strip readers plugged into smartphones or iPads to allow people to swipe credit cards.

The mobile payment services avoid the need to rent or buy credit card processing equipment.