NEW YORK -- Groupon launched a new payment service Wednesday that allows businesses to run credit cards using an iPhone or iPod Touch, the latest company to seek a portion of that growing market.

The announcement sent shares of the Chicago company soaring nearly 7 percent in early trading.

Groupon Payments is aimed mainly at businesses that offer deals through the company. A test program allows other merchants to use the service, but at higher rates.

The technology has been tested in the San Francisco Bay Area and will go up against EBay Inc.'s PayPal unit and Twitter co-founder Jack Dorsey's Square. Those services also allow merchants swipe credit cards on their phones using a small card-reader attachment.

Groupon is charging MasterCard, Visa and Discover swipes at a 1.8 percent rate plus 15 cents for each transaction done by a Groupon merchant. American Express will be 3 percent plus 15 cents.

In comparison, Square charges 2.75 percent per swipe, or $275 per month. PayPal charges 2.7 percent.

The online deals company has seen a sharp decline in its stock price since going public late last year. With Groupon Payments, the company is trying to broaden the array of services it offers to merchants.

Groupon says merchants can use its payments service to add tips, taxes and email receipts.

Groupon's stock climbed 31 cents to $5 in early trading.


This undated image provided by Groupon shows the company's new payment service launched Wednesday, Sept. 19, 2012, that allows businesses to run credit cards using an iPhone or iPod Touch. The announcement sent shares of the Chicago company 7 percent higher in morning trading on Wednesday. (AP Photo/Groupon)

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