By Larry Magid, CBS Radio News Technology Analyst
iphone 129223342 Groupon Testing Smartphone Payment Processing

(credit: Justin Sullivan/Getty Images)

(CBS RADIO) – There could soon be another way to take advantage of those Groupon deals.

Groupon is testing a payment service that will allow merchants to accept credit card payments from an iPhone, iPad or iPod Touch. And according to they company is offering merchants a rock bottom price on the service, as well as free hardware.

The Groupon payment system will compete with one from PayPal, as well as another from a company called Square. PayPal and Square charge merchants roughly 2.7-percent per transaction – with no processing fee.

But Groupon is said to be offering service at 1.8-percent, with a 15-cent per transaction fee. The company is reportedly planning to offer merchants a free iPod Touch to accept the payments.

With this type of technology even the smallest of merchants can now accept credit cards using their smartphone.

While the Groupon payment service is reportedly still in the testing phase, Square is open for business at

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