Groupon Inc (GRPN.O) launched a credit card payment business on Wednesday, entering a crowded field to compete with eBay Inc's (EBAY.O> PayPal and start-up Square Inc.
Groupon said the new service lets restaurants, salons and spas, retailers and other local businesses accept credit card payments at a lower rate than other providers.
Any merchant that runs a daily deal with Groupon in the United States can sign up for the payments service, the company added.
Groupon will charge 1.8 percent for MasterCard, Visa and Discover cards, on top of a 15 cent fee per swipe. For American Express cards, it charges 3 percent plus the 15 cent fee.
Groupon is the world's largest daily deal company, offering discounts on local services. But the company is branching out into other businesses, such as discounted product sales, and now payments.
Groupon shares rose 7.5 percent to $5.04 on Wednesday. The stock has lost about three quarters of its value since the company went public last year.
The payments business has become crowded in recent years. Square, a start-up backed by Twitter co-founder Jack Dorsey, has won small merchants as customers by offering easy credit card acceptance through a small swipe device that plugs into smartphones.
PayPal launched a rival service earlier this year called PayPal Here.
PayPal's service charges a fee of 2.7 percent of the purchase price for all types of credit and debit cards - including those issued by American Express. Transaction fees for processing AmEx cards are often higher. Square charges 2.75 percent per swipe.
(Reporting Alistair Barr in San Francisco and Nivedita Bhattacharjee in Chicago; Editing by Jeffrey Benkoe and Sofina Mirza-Reid)