By Larry Magid, CBS Radio News Technology Analyst

(credit: Justin Sullivan/Getty Images)

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

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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 VentureBeat.com 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.

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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.

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