Groupon Shares Rally Following New Mobile Payments Offering
Wednesday afternoon, Groupon (NASDAQ: GRPN) shares got a boost following a CNBC interview with its Chief Executive Officer Andrew Mason. In the interview, he spoke about the company's release of a mobile payments system earlier this morning, and of its recent financial performance. Expecting a Mark Zuckerberg-esque boost from his interview, investors were licking their chops at a shot to jump in on the next Groupon rally Wednesday.
Earlier in the morning, Groupon revealed that it would be entering the mobile payments space with a service called Groupon Payments. The service will available immediately and will be built into the company's iPhone and iOS apps.
The service will cost merchants 15 cents per swipe plus an additional fee depending on what type of card is used. If the customer uses Mastercard (NYSE: MA), Visa (NYSE: V), or Discover, the additional fee is 1.8 percent. If they use American Express(NYSE: AXP), the fee goes up to three percent.
In an interview with CNBC, Groupon CEO Andrew Mason said Groupon Payments follows directly in-line with the company's efforts to serve merchants as best as possible. Mason also said that not only would the payments system make it easier for merchants to use groupon daily deals, but that they will save merchants thousands per year.
Mason stated that the payment service will also allow the company to facilitate “seamless closed loop redemption [of deals],” allowing them to further control the funnel that their customers operate in. He went on to say that “The payment system will funnel companies in to do more [daily] deals”, and thus help drive Groupon's revenue beyond the commissions the service will generate.
When asked about the company's direction in general, Mason commented that he “is not happy we've been misunderstood." Mason said that the company's “growth is slowing, but still up 50 percent year over year."
Unsurprisingly, Mason was also asked about the horror stories many have heard about Groupon offers, usually revolving around smaller business that get swamped with discount orders that causes issues with regular business. Mason said that while this happens, “there are a lot more safe landings than plane crashes with the Groupon experience."
Whether its wise to enter the mobile payments space currently is a matter of contention. With Google's (NASDAQ: GOOG) Wallet offering, Square, and the offering coming from Best Buy (NYSE: BBY), Walmart (NYSE: WMT) and Target (NYSE: TGT), the mobile payments space is getting incredibly crowded. Not only is it crowded, it is intensely competitive and the players are each titans in their own space. There is no doubt it will be a rocky road at the very least for Groupon to gain traction for its service.
Groupon shares have taken a beating since the company's IPO in November 2011. Following its public offering, share prices have steadily fallen from their opening price of $26.11 down to below $5 dollars per share, losing over 80 percent of their value.
Shares of Groupon traded up 11.19 percent Wednesday around $5.22.
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