05/25/2012 02:30 pm ET

Groupon Tests A Cash Register, PayPal Eyes An ATM To Provide Alternatives To Banks' Services

Groupon is making cash registers and PayPal has a new ATM? It's just another week in the growing market for mobile payments and alt-banking services, which are challenging banks on their own turf.

First is Groupon, which is making its first foray into financial services. The daily deal site has had a tough time finding its big-boy pants since its initial public offering last November. With the daily deal market flooded, it seems the company might be trying a different tactic to make revenue and is reportedly testing a mobile payments system, or a widget that can plugged into a smartphone to capture card payments on the spot.

The Groupon payment system could undercut Square, according to VentureBeat, which first reported the news:

The pricing is extremely aggressive, with a 1.8% transaction fee and a 15 cent per transaction charge for transactions processed through the terminal. Square charges 2.75% with no per transaction fee. PayPal Here and Verifone Sail charge 2.7%, also with no transaction fee. Groupon is charging 2.3% for AmEx transactions [update: a groupon insider tells me the AmEx pricing is 2.7, not 2.3]. Square and PayPal don’t charge extra, and Sail charges 3.7% for AmEx.

Meanwhile, PayPal's reach into banks' turf is getting deeper by the week. This week the mobile-pay company announced it made deals with 15 retailers including Toys R Us, JC Penney and Barnes and Noble. Earlier this year Home Depot began accepting PayPal in stores, and customers could log into their PayPal accounts from a payment terminal -- no plastic or cash required -- to pay for goods.

PayPal is also testing a new kind of ATM. It has partnered with Coinstar -- the self-service coin-counting kiosk available in many grocery stores -- to create ATM-like services. PayPal users can add money to their accounts with spare change and paper money and get vouchers redeemable for cash at a cash register.

More competitive pricing for retailers mean they have more incentive to lower prices elsewhere for shoppers -- and it also means simply more payment and transaction options from which consumers can choose. Customers using mobile payment platforms and PayPal -- and that includes small businesses and customers who keep lower balances in their spending accounts -- are growing less attractive to the biggest banks, who appear to have a love-hate relationship with customers who are not six-figure depositors.

Meanwhile, that could be an opportunity for another alternative financial service provider: check cashiers. As the end of the paper check grows closer, check cashing companies must get creative about where to make revenue in the future. At the Financial Service Centers of New York conference on Thursday, an annual event for check cashiers, attendees were urged to consider marketing their services to small businesses that use mobile payment systems, like Square, with the pitch that check cashiers can turn electronic payments into liquid assets faster than a traditional bank.