Groupon has been suffering as of late as its stock prices have tumbled into penny stock territory. Credit-card payments may be a saving grace for the company, though, as it looks to convert merchants to the smartphone-based payment systems that we’ve already seen from other start-ups.

Groupon Payments’ competitive advantage lies in offering merchants the lowest rates available for every swipe or keyed transaction, a pretty attractive proposition. For all Visa, Mastercard, and Discover cards swiped, Groupon will take 1.8 percent, and 2.3 percent for keyed transactions. Customers that use American Express, on the other hand, are subjecting merchants to a higher fee of 3 percent per swipe and 3.25 percent per keyed transaction. To compensate for the taxes, Groupon charges $0.15 per transaction.

Merchants can monitor the purchases through the existing Groupon Merchants app that has been updated to reflect the inclusion of Groupon Payments. They can also call Groupon for over the phone or online live support.

Typically, the average rate middlemen services charge for credit card processing fees at card-present retail businesses (meaning that a card must be present to swipe) is between 2 percent and 5 percent. Card companies themselves typically charge between 1.95 and 2 percent.

But there’s a catch: When we called in to speak with Groupon, we learned from a representative that the prices listed on the Website are in fact only for “Groupon Merchants.” The Groupon representative explained to me that “Groupon Merchants” were any merchants that have in the past worked with Groupon by signing up with an account to run daily deals. The rates collected by Groupon per swipe for non-Groupon Merchants run at a higher percentage of 2.2 percent for Visa, Mastercard, and Discover card users in addition to the $0.15 per transaction. The American Express rate wasn’t disclosed but is costlier than the other cards. What this essentially means is that you should sign up and become a Groupon Merchant and run a deal before your start using the Payments service — or else you’ll be subjected to higher fees. It isn’t a huge stretch to imagine that Groupon would want to loop retailers into partnering with its daily deals service in order to use Payments, but it’s an important detail to note. 

The motivation here, the rep explained, by offering different rates is to incentivize merchants to open up “Groupon Merchants” accounts, which then opens the doors to push its promotional services including Groupon’s daily deals and an unannounced product called Groupon Lite! In fact, the representative offered me a Groupon Merchant account on the spot, making me eligible for the coveted 1.8 percent rate, emphasizing that the entire process would take just 10 minutes to set-up. The moral of the story here being that it if you are considering using Groupon Payments, sign up to be a Merchant first. 

Then there’s the cost of a typical credit card processing terminal equipment that can run between $300 and $800. But when we spoke to Groupon we learned that the transaction tool is a free iPhone add-on that connects to the audio jack and is only available on iOS devices for now. If merchants don’t have access to an iPhone, they can use a laptop transactional tool add-on that also connects through the audio jack. We also learned that Groupon is launching a brick-and-mortar transaction terminal (similar to the credit card swipers you find in your mom and pop shops) that is going to be announced and available in the next two months for those businesses that are wary of new gadgets.

Groupon isn’t neglecting its roots in offering daily deals, but rather the company’s launch of Groupon Payments in fact doubles as a strategy to pair up and incentivize merchants to sign up as a Groupon Merchant and take advantage of Groupon’s product line of other marketing tools.