This morning American Express is launching a new deals platform in partnership with Facebook that should make big waves in the payments and offers space.

Winners: Facebook, American Express, small businesses
Losers: Groupon, LivingSocial, Google, foursquare, VISA, MasterCard

With the new platform, merchants will be able to target deals at American Express cardholders on the Facebook platform. Initial launch partners include H&M, Sports Authority, Dunkin’ Donuts, Sheraton, Westin, Travelocity and Celebrity Cruises. Although the launch focus is on big national brands, the platform is self-serve and well suited to the needs of small business. This presents a big and credible threat to Groupon, LivingSocial, Google Offers and other daily deal providers.

The platform covers both one-time and loyalty offers. Some examples of the offers that could be presented:

• Spend $30 and get a $10 statement credit.
• Spend $50 and get 10% back.
• Visit 3 times, spend $50 each time and get a $10 statement credit.

The offers work much like the recent foursquare and American Express deal: you link an American Express card to your Facebook account, select an offer to load it on your card and then pay using your AMEX. If you meet the offer criteria, you get the discount as a statement credit. This offers a significant benefit to retailers: no staff training required. Training has long been the bane of promotions and is often executed poorly. I recently spent 30 minutes at Radio Shack trying to redeem a foursquare offer. That’s a terrible experience for the consumer and the merchant.

For merchants, it also provides additional benefits over Groupon, Google Offers and LivingSocial. Ironically, the daily deals model is currently about as targeted as media that were available when AMEX was founded more than 160 years ago. For the most part, it’s at the region level (although it is moving towards a more geographically targeted approach). AMEX can do much better. This allows merchants to reach just the customers who are within their trade area, instead of offering deep discounts to deal seekers who come from 45 miles away and would never return at full price.

Merchants also benefit from analytics that AMEX can provide. Because it processes all of the transactions through its network, it can report on that data. AMEX captures important metrics like total spend. Tracking beyond initial sales of offers is another significant area where Groupon, Google Offers, and LivingSocial fall down.

In the future, I would look for AMEX to integrate this platform with transaction history data and its popular Membership Rewards program. With transaction history, merchants could better target cardmembers. Instead of sending out an offer to anyone in the city who wants a cheap massage, the offer could be sent to people within 5 miles who have shown a history of buying spa services and spend a lot of money each year. Membership Rewards integration could allow consumers to redeem points at any merchant on the American Express network, similar to the way in which consumers can redeem points for Amazon purchases.

The AMEX platform illustrates a big difference in business model. Groupon and other daily deal providers need to make their money on a one time deal with the merchant. As a result, in my opinion they’re doing a lot of deals that are bad for businesses. AMEX is forgoing that upfront revenue to build a long term relationship with the merchant that pays off over time. AMEX wins in three ways: driving traffic onto its network for existing merchants over VISA and Mastercard, providing a clear differentiator to encourage new merchant accounts and encouraging new cardholders.  And the biggest difference of all: AmEx doesn’t take a 50 percent cut of each deal like Groupon does.  It takes zero percent of the actual deal, and makes money instead through normal payment transaction fees.

The biggest question in my mind is how much marketing effort AMEX and Facebook will put behind this. The platform itself has the potential to become a serious Groupon competitor. But it needs marketing muscle behind it.  If they don’t, it’s just another product announcement by a big company.

The AMEX/Facebook announcement also reinforces the folly that is Google’s bet on NFC. For some reason, Google is enamored with that technology. NFC is a solution in need of a problem. In the best case scenario, that investment will pay off in 3 to 5 years for Google. AMEX and Facebook are launching a product that works today.

The other big loser in this is foursquare. The announcement is pretty much the same thing that foursquare did with American Express. Except that in this case, it has the potential to reach more than 750 million unique users.

Article courtesy of TechCrunch

I hope you’re not getting tired of daily deals, because I’ve got more daily deal news for you, dear reader. Among the latest trends in the evolving daily deal model is the so-called “deal wallet” and “deal resale marketplace”, which quite a few startups have begun implementing, like City Pockets and DealsGoRound, to name a few.

Another area of the deal model that seems to be going through a redux is the consumer driven deals (CDD) approach, in which sites are letting consumers determine what deals they want to see offered by their favorite local merchants. Ringleadr recently launched a service to put consumers in the cockpit, as did Loopt with its new “U-Deals”.

The consumer driven deal (or reverse deal, if you prefer) has been poked at by startups before, without prodigious success, but that is not to say that there isn’t room left for iteration and disruption, as the space on a whole is still relatively young. While Ringleadr and Loopt are both offering great services, one of the potential drawbacks to the structure of their models is that consumers have to wait for 15 days (in the case of Ringleadr) for the merchant to approve the deal. This is after the consumer has gotten a crowd of friends excited about the deal, enough so to get past the tipping point, and then has to wait over two weeks for the merchant to maybe decide to approve.

SoBiz10, a Colorado-based startup, is attempting to turn the CDD screw even further by shortening the time it takes for merchants to approve a deal. The startup is taking a “consumers get the deals they want, at the price they want, when they want” approach, not to mention it’s all completely automated. Of course, this immediacy may sound like tyranny of the consumer, but SoBiz wants to offset this potential by giving businesses the ability to generate and retain new customers for a smaller revenue share (25 percent) than is typical among group coupon sites. (The average is about 50 percent.)

But, before going any further, here’s how SoBiz works: Users get 10 of their friends together to decide on a deal they want and the merchant they want to patronize. A user then posts that deal on SoBiz, at which point the merchant receives an email, text, and voicemail, alerting them of the deal. The merchant has 48 hours to accept, deny, or counteroffer. If the deal is accepted, the 10 users are immediately sent their coupons in an email and can pay for them using the startup’s secure payment system.

From there, merchants have the ability to display the deal more broadly in the SoBiz marketplace, with the option to control the availability, and SoBiz in turn alerts members of the community that the deal is more broadly available.

Another selling point for the SoBiz take is that 25-cents per coupon is donated to a charity of the deal-creator’s choice, adding a non-profit and feel-good element to the service, a la CauseOn.

The other interesting part of the SoBiz platform comes from the fact that Founder and CEO Marion Mariathasan and team had originally built the service to be a social network, with a daily deal component as an add-on. As you can see from the image above, users and merchants can create profiles, just as one would on Facebook, write reviews of prior deals, connect with friends and merchants, and so on.

Merchants also can take advantage of a dashboard the startup provides, where they can easily manage their pending deals, approve, reject, etc. In addition, the service includes search functionality as well as deal categorization, so that consumers can request deals by category. If a user doen’t know who the best merchant is for, say, a new pair of reading glasses, they can go into the “Vision Category” to search for eyewear merchants. Categorization is an added bonus in comparison to Groupon and other deal sites — it adds a much-needed level of organization to the frantic world of coupons.

Mariathasan compares the service to a kind of reverse Priceline.com, except in the case of Priceline, consumers are just reacting to the deals that Priceline has already negotiated, whereas automated consumer-driven deals puts the customer in the driver’s seat.

SoBiz10 has been testing its model in Denver and Kansas City, with more than 17,000 consumers and 2,000 merchants participating. The startup recently forged its first big partnership with a national coupon-ing company, but is not yet sharing the terms, or the name of company, though two more are in talks with SoBiz. More to come on that. SoBiz is currently bootstrapped and seeking venture-backing to help bring its service to other cities.

Lastly, the startup is providing TechCrunch readers with 100 free keys to the private beta, which you can take advantage of by emailing the team at contact@SoBiz10.com. Mariathasan said that SoBiz plans to launch its public beta later this summer.

More on SoBiz in the video below:

Article courtesy of TechCrunch

Editor’s note: We’ve run a lot of guest posts lately poking holes into the daily deals industry.  With this one, we hear another side.  Arash Pirzad-Allaei is a co-founder of KASA Capital, where heads the internet technology development of KASA’s network of websites, including daily deals site Crowd Cut.

There’s a lot of hate out there these days from the press when it comes to the daily deals industry. I’m looking at you, TechCrunch.

Sure, Groupon has become the whale in this industry, but that doesn’t mean Groupon constitutes the entire industry. Sure, while Groupon may sometimes structure lousy deals for merchants, it doesn’t mean the entire daily deal business model isn’t sustainable or beneficial for small businesses. When done right, the daily deal can actually be very lucrative for everyone involved: Merchants, customers and the daily deal sites themselves.

So why should you take my word for it? It’s true, I’ve got my biases.  But so many people have quickly elevated themselves to “experts” on this space that it’s hard to filter truth from the noise. My company, KASA Capital, started Crowd Cut in May 2010. We are now a top player in our markets, generating eight figures of profitable revenues. So, when I talk about the daily deal space, I do so with direct experience. I talk to merchants and customers every day. I have numbers to back my claims. I’m a player in this game, not a self-proclaimed expert who sits on the sidelines.

Let’s start by clearing up some common misconceptions:

• The average back-end split is 70/30 (merchant receiving 70%); not 50/50. Over the past year, merchants have become far more savvy, they no longer accept 50/50 splits.
• Most daily deal sites will pay credit card processing fees (2.8% – 3.5%). If a merchant fails to negotiate credit card processing fees, they have not done their homework.
• Immediate payment. Many daily deal services from Google Offers on down are paying merchants faster.  Crowd Cut pays all merchants in full within 5 business days of run-date; others typically have similar payment schedules (Groupon has the longest, three payments over sixty days)
• Non redemption rates vary from 10 – 35%: there is an inverse correlation between voucher price and non-redemption rates.  The bigger the voucher, the fewer that never get redeemed.
• Generally, a minimum of 60% of purchasers are new customers, at least for us: Yes, we measure this!

Most merchants participating in daily deals do not have much deal experience. This leaves them at a disadvantage to the daily deal sites when it comes to negotiating the terms of running a daily deal, and can lead to stories like “Groupon Was ‘The Single Worst Decision I Have Ever Made As A Business Owner” (also on TechCrunch). Interestingly, I find that most of the daily deal horror stories come from merchants that a) negotiate terrible deal structure/terms b) do not accurately track redemption or customer spend and c) do not clearly understand the true economics of running a daily deal. This particular post references a story about a coffee shop that signed a 50/50 deal to sell $13 value vouchers (an atrocious 2.5-times their average ticket) for $6 and claimed to have lost $10,000 after selling 890 vouchers.

But, let’s take a look at the real economics:

Total Voucher Value = (890 vouchers) X $13 = $11,570.00
Total Food Cost = $11,570 X (85% redemption rate) X (30% food cost) = $2,950.35
Income From Groupon = (890 vouchers) X ($6 voucher price) X (50% split) = $2,670.00
Cost of Deal After Food Cost = ($2,950.35 food cost) – ($2,670.00 income) = $280.35

Even if we factor in additional variable costs (such as labor, etc.) and amortize fixed costs, a $10,000 seems unrealistically high. Unfortunately, it appears that the poor deal terms and lack of preparation crippled the merchant’s ability to convert new customers into regulars, leaving a bad taste towards the quality of the daily deal model—and daily deal users. Sadly, at times this manifests into merchants and their staff treating daily deal customers like 2nd class citizens. Then they wonder why they don’t come back.

Let’s take a moment to analyze a properly-structured restaurant deal:

A restaurant sells 1,000 vouchers that are $20 for $40 worth of food with a 70/30 revenue split.

• At 1,000 vouchers, the restaurant receives $14,000 for $40,000 worth of food ($14/voucher sold given the 70/30 revenue split).
• Average restaurant non-redemption is 18%, thus numbers adjust to income of $14,000 for $32,800 worth of food when you subtract the no-shows.
• Food cost = $9,840 (30% average food cost multiplied by $32,800)
• Income after food cost = $4,160 ($14,000 – $9,840)
• We could take this further by taking into account three additional points: a) the merchant does not pay ~2.2% credit card processing on the voucher value b) a percentage of customers spend less than the voucher amount and c) a percentage of customers spend more than the voucher amount, however, that goes beyond the scope of this article.

If reservations are required (per deal terms) and proper sales limits are set, the restaurant merchant can fulfill the vouchers with minimal increases in variable costs. The economics further improve for other merchants in different market segments (rock climbing, golf, laser hair removal, and so on—i.e. merchants with lower costs of goods). In the example above, even if the restaurant merchant simply breaks even on the economic side, a minimum of 600 new customers will be walking through their doors at no cost. What other advertising options could possibly beat that?

Groupon may be the figurehead of the daily deal, but they are not a true reflection of the market as a whole. It is critical for daily deal sites to understand that a positive merchant experience is extremely important, and that more sites should work towards avoiding deals that will result in a negative experience for merchants. It’s not so difficult to reset priorities with this goal in mind and, if we do, we are likely to find that the majority of merchants will continue to reward our industry with repeat business. It’s worked for Crowd Cut.

Now, you may still be asking yourself, is it really possible to make money averaging 30% revenue splits, paying merchants within 5 days, covering credit card processing fees, and providing higher levels of customer service? Yes! For all you haters out there, remember: Hate the player, not the game. The daily deal is here to stay.

Article courtesy of TechCrunch

Andrew Mason has been visiting Beijing and Groupon HQ has finally realized there are some problems in China.

On the Forbes website, Rebecca Fannin reports:

CEO Andrew Mason just arrived in China and hasn’t wasted time shaking things up. Four expatriate executives at Groupon who were recruited from rival site Ftuan just a few months ago will be leaving Groupon China.

This seems to be a belated response to the very obvious problems at Groupon China that seasoned observers have been noting since the group buy website first opened up shop in Beijing and Shanghai:

Groupon China was started and has been managed by a bunch of trendy-looking but ineffectual foreigners who can’t speak Chinese and are completely clueless about China.

Firing four unnamed foreigners is not evidence that anything has changed.

Meanwhile, Bloomberg has this report (which I’d wager a PR company helped put together) talking up Groupon’s Chinese partner Tencent:

“Tencent’s scale and user base gives Groupon an advantage, and China’s group-buying market is still at an early stage and has a lot of upside,” said April Su, an analyst at iResearch in Beijing.…

“We think we’ve found an excellent partner in Tencent and we’ve been very pleased with the progress we’ve made,” Mason told reporters in Beijing today, before leaving Ouyang to field queries on Gaopeng…

Gaopeng is seeking an edge in China with “world-class brands,” like Apple Inc., Ouyang said today.

“Our strategy is very strict selection of the merchant deals,” Ouyang said. “It’s not only about discount service but it’s also about being a city guide, a lifestyle.”

A few problems:

1. Tencent will end up shafting Groupon
If the Groupon model works in China, Tencent has nothing to gain by partnering with Groupon. Tencent has its own Groupon style offerings, and there is no need to make Groupon work for them to profit by the model.

2. Apple and “lifestyle”: Ha ha ha ha ha ha ha

This is too rich:

Gaopeng is seeking an edge in China with “world-class brands,” like Apple Inc., Ouyang said today.

“Our strategy is very strict selection of the merchant deals,” Ouyang said. “It’s not only about discount service but it’s also about being a city guide, a lifestyle.”

So, Apple is going to sell discounted iPads in China?

Yeah right, why would Apple do this when there are already Chinese people willing to sell their kidneys to get an iPad, or get into fistfights at the Apple store just to get hold of one.

Apple and Groupon China? Simply ridiculous. Even more ridiculous is the “city guide / lifestyle” nonsense.

I first worked on city guide / lifestyle print magazines in the late 1990s in China:

There is a small amount of money to be made in city guides and lifestyle guide products in big Chinese cities. There is quite a bit more money to be made in Internet and media products that help position brands as desirable for the new rich and emerging middle classes (e.g. Cosmopolitan China magazine and Vogue China , possibly the P1 social network and the Financial Times‘ FT Rui magazine).

There is also money to be made and a huge user demand for Dianping, which is like the Yelp of China that offers real, honest user reviews of restaurants.

But, based on my personal experience since 1997, every foreign-funded company I have ever encountered in China talking about making money from local vendors based on a “lifestyle” proposition has about a year or so before bankrupting itself or being run out of town.

3. iResearch

A final note: I don’t know if Groupon is paying iResearch, but iResearch has a reputation in China for doing “research” for companies who pay them. Somehow, the companies always end up looking very good in their research reports.

It’s all pre-IPO spin. Groupon China is simply a way to bleed cash.

Article courtesy of TechCrunch

Editor’s note:This guest post was written by Rocky Agrawal is an entrepreneur who has worked on local products since 1995.  He blogs at reDesignand Tweets@rakeshlobster. His previous post was Why Daily Deals Are Becoming A Raw Deal.

Google’s recently released Offers product is showing mixed success in Portland, its first market. In this post I will try to look at both the good and the bad of Google Offers. As I point out below, they get an A- for effort, but a C for originality.

Since launch, the offers have included discounted coffee, pool table time, a Lebanese restaurant, tanning services and a pedicab brewery tour. The coffee and restaurant deals did very well, while the pool table time and tanning services didn’t come close to their sales caps. The pedicab sold 26 out of 700. The contestants on The Apprentice generated more revenue from pedicab tours—$1,270 vs. $1,170.

Perhaps not coincidentally, the successful deals provided the most generous and obvious discounts on everyday needs (70% off and 50% off.) The tanning deal was a 75% discount off a fake price. (The same salon offers promotions that are lower than Google’s listed regular price. Some tanning salons give away free tans to new customers.)

Google in Portland

For the past six months, Google has been aggressively marketing its local services in Portland. It’s easily the largest Google consumer marketing campaign I’ve seen. By my estimates, they’ve spent at least $1 million promoting Google Places. Street teams have been out encouraging businesses to claim their business on Google Places and giving them NFC stickers for their store windows.

Google has sponsored events including a bus tour to four Portland microbreweries, three private concerts with tickets given out at local businesses, as well as numerous cocktail parties. They’ve also given out a lot of Google gear. (See this slideshow of Google’s marketing activities.)

Although I would have done a few small things differently, it’s been a really solid effort. I would rate it an A-. They’ve created awareness of Google’s local and mobile offerings and highlighted local businesses. It’s very much along the lines of what Yelp did in its early stages to foster community, only with a much bigger budget.

What I really like is that they’ve promoted quality and differentiated experiences.

Google Offers vs. Groupon

The structure of Google Offers are very similar to Groupon. There are some differences around the edges:

• Google has a 60-day return policy. Groupon’s is indefinite.
• Google explicitly puts the risk of merchant bankruptcy on the deal purchaser. Groupon doesn’t address this, but the Groupon Promise is broad enough that it should cover this.
• Google provides 360-degree interior views of some businesses. These are mildly interesting, but I’d rather see a slideshow with various elements that illustrate various dishes and ambiance.
• Google doesn’t have a tipping point. If only 1 person buys the deal, it’s active.
• Google doesn’t offer its customer service number on its Web site; you have to enter your phone number and wait for a call back. Groupon has a toll-free number listed.
• Google’s payment terms for merchants are more generous, with merchants receiving 80% of their share in about four days. Groupon pays out 1/3 in 5 days, 1/3 in 30 days and 1/3 in 60 days. If Groupon is forced to match this, this could be a real issue for Groupon as their S-1 warns that “We use the operating cash flow provided by our merchant payment terms and revenue growth to fund our working capital needs.”

The biggest potential difference that we can’t see is the cut that Google takes of each deal and how it compares with the cut that Groupon takes. Neither company is transparent about this and the ranges are wide. In some cases, the deal company pays the merchant more than the revenue generated; in other cases, they want all of the revenue and the merchant gets nothing.

Despite all of Google’s recent talk about Google Wallet and Offers with NFC payment, that’s not available yet. Nor is a mobile app. Groupon has long had a mobile app that allows you to redeem offers without a printout.

Not Googley

Google has long been a leader and an innovator in local and mapping. I remember when I first saw Google Maps, it was a wow experience that was way ahead of Mapquest. That gap has steadily grown over time.

That’s why it’s so disappointing to see a product that is essentially a knock off with no meaningful improvements over what’s out there.

Google’s products have typically revolved around solving hard problems with innovative technology. Even failed products like Google Wave and Google TV have tackled really difficult problems. Offers does not. It’s just a ploy for revenue.

One area where I expected Google to excel—given their bias toward data—was in collecting data. In order to truly determine if an offer works for a business, you need to track a number of metrics: percent of deals sold to existing customers, unredeemed offers, fraudulently redeemed offers, repeat visits from offer purchasers, sales above voucher face value, sales below voucher face value, average ticket size and more. Data on redemption patterns could be used for capacity planning.

With the high margins built into the daily deals business, it would be possible to equip merchants with a $200 Android tablet that could do all of this.

This is also important for fraud prevention. For the offer that I redeemed at Floyd’s Coffee, for instance, the cashier manually copied the coupon number onto a piece of paper. It would be easy for someone to print out dozens and redeem them because they are not validated in real time. This is an even bigger issue at merchants like Floyd’s, which have multiple locations. While Google does offer online validation via PC or mobile device (as does Groupon), some businesses don’t have the infrastructure in place. Even adding the ability to validate by SMS would significantly improve validation and tracking.

These data are also critical to understanding behavior and designing future local products. The tablets could also be used for future offer management purposes.

All in, it’s a weak first effort and I hope it fails. I’ll talk about why in the next post.

Article courtesy of TechCrunch

While 66% of small businesses have used Facebook for marketing, only 22% have used Facebook ads, according to MerchantCircle, the largest online network of local business owners. The company released its quarterly Merchant Confidence Index survey of 5,000 local business owners today, and other findings include the following: two thirds of those who’ve used Facebook ads would do so again, location-based marketing is declining, and interest is on the rise for group deals, especially those published by familiar entities including Facebook and Google.

The survey’s results indicate that Facebook’s self-serve advertising business, which account for a very significant portion of its total revenue, has plenty of room to grow. If Facebook can convince more local marketers on the site to advertise, it could fuel big total revenue gains that might improve its standing in the event of a long-anticipated IPO.

While the sample size is relatively low compared to the amount of marketers and advertisers on Facebook, MerchantCircle doesn’t overtly tout an Facebook-related services, so the data shouldn’t be biased.

Here are the core findings of the study:

Facebook Ads

• 66% of local businesses use Facebook for marketing
• 94% of local businesses are aware of Facebook Ads, though only 22% use them
• Of those 22%, 65% said they would use Facebook Ads again
• Reasons cited for repeat use of Facebook Ads were: ease of use (66.5%), ability to pause (64.8%), quality of targeting (53.7%), opportunities for acquiring new customers (49.3%)
• Reasons cited for not using Facebook Ads again included: not acquiring new customers (69%), cost (34.5%), low click-through rate (28.5%)

The high awareness of Facebook Ads, coupled with the 44% difference between marketers and advertisers shows that there’s great potential for the self-serve ad product to grow. Facebook could increase the percentage of repeat advertisers and counter the biggest reason for not repeating by improving its education efforts and providing advertisers with best practices for targeting, creative, and bid management.

Daily Deals

• Only 9.4% of local businesses have offered a daily deal, with 8.4% saying they haven’t but plan to in the next six months
• 77% of those who’ve run deals say they’d do so again, up from 50% last quarter
• Citing familiarity with these big platforms, 52% of of local businesses would choose to run Facebook Deals or Google Offers instead of deals through Groupon, LivingSocial or other deals providers
• Other reasons for preferring Facebook included bigger audience size (26%), and better local targeting (21%)
• Other reasons for preferring Google included bigger audience size (42%), and brand reputation (34%)

Facebook’s daily deals service Facebook Deals is off to a shaky start, with anecdotal evidence suggesting few purchases due to weak value and low quality of available deals. However, MerchantCircle’s data indicates businesses are interested in using the service. Facebook needs to consider subsidizing Deals so it can hook users with huge discounts, and should consider improving copy-writing and design to make Deals more compelling.

Location-Based and Mobile Marketing

• 22% of businesses are using Facebook Places for marketing, down from 32% last quarter
• Only 7% are using Foursquare for marketing, down from 9% last quarter
• 18% of local businesses have used mobile marketing or advertising, with 71% citing a lack of understanding as their primary barrier to use.

Facebook’s location-based deals service Checkin Deals that builds on Places hasn’t seen much adoption despite it being a free way to inspire users to promote a business to their friends through checkins. Again, Facebook needs to provide better educational resources, perhaps in the form of webinars or live seminars in key markets to jumpstart business adoption of Checkin Deals.

Overall, the data tells a story of how Facebook holds significant marketing and advertising potential for small and local businesses. However, without large dedicated ads or marketing teams they can’t get a good enough understanding of social to dedicate spend there. While Facebook has purposefully tried to keep its number of employees low to maintain the startup feel, the strategy may be inhibiting it from conducting the education and outreach efforts that could accelerate growth of its business.

Article courtesy of Inside Facebook

Mobile payments startup Square is announcing big numbers today—500,000 Square card readers shipped, 1 million Square transactions in May, and the startup is now processing $3 million in mobile payments per day. Clearly the company is on a roll in terms of traction and usage. And CEO Jack Dorsey is also revealing the next generation of Square. And Square is about to get a whole lot more disruptive.

Today, Dorsey is revealing Square Register, a high-powered point of sale replacement for cash registers and point of sale terminals. And the company is taking it one step further for consumers by launching the Square Card Case, a way for purchasers to access a local merchants’ goods, prices, location, loyalty card and more.

For background, Square offers an iPhone, Android and iPad app which allows merchants to process and manage credit card transactions with a handy little credit card swiping device that plugs into the headset/microphone jack. The device and service is the brainchild of Twitter co-founder and recently appointed product lead Jack Dorsey and Jim McKelvey. And Square recently raised $27.5 million in new funding, and announced a strategic investment from credit card company Visa. In Q1, Square did $66 million in payment volume (the company expected $40 million) and is now in track to process $1 billion in payment volume within a year.

Square Register For The iPad

Square’s COO Keith Rabois tells us that as the startup has created a payments product for small businesses, they’ve learned that many businesses have more needs than simply having a credit card processor. One of these needs is being able to not only accept cards, but also communicate with customers more efficiently. So today, Square is launching this brand new version of its iPad app, Square Register.

Rabois says the iPad app makes these expensive and cumbersome terminals obsolete for merchants. Not only is the reader and app free (and beautifully designed), but the register is designed to help create and maintain meaningful relationships with customers. Historically, Square’s readers always stored every purchaser’s receipt for merchants and allowed merchant’s to send a copy of the receipt to the purchaser via SMS and email. It was fairly simple.

Now, with the upgrade, merchants can send customers a link to download an app on their mobile phone called a Square Card Case. And this gives merchants a whole new level of engagement with their customers. And data is another big component of Square’s announcement—Dorsey says merchants will have Google Analytics style data that merchants can access, such as how many muffins were sold, and to which types of customers, and more.

The Square Card Case For Consumers

As you can see from the image, the Card Case looks like a wallet-like case you would store your loyalty cards or credit cards in. Here’s how it works: when you go to a merchant who is a participating Square users, the merchant will send you a link to download the app on your mobile phone. It’s important to note that the app is not available in the App Store publicly, and at launch will only support iPhones; Android support will be rolled out soon.

Once you’ve downloaded your mobile Card Case, you can fill your case with ‘cards’ of all the merchants you visit and buy from who accept Square. When you click on an individual merchant’s card, you’ll be able to see a map of where the merchant is located, contact information, your own order and purchase history, and receipts with the merchant and a daily live menu of items or services from the merchant. You’ll also be able to see what other customers are buying at the store, and merchants can serve customized offers to specific customers based on their purchase history.

So here’s where things get interesting. In a merchant’s card within the case, you can press a “use tab” button which allows the frequent customer to essentially put a purchase on their virtual tab with Square at the merchant. So once you press that button within two blocks of the merchant, you’ll be able to tell the cashier your name and your card will be charged on the merchant’s backend Square register. Because you are a repeat customer, Square already has your payment information. The purchaser will then receive a push notification when the merchant processes the payment.

Another feature of the newly designed Square is the ability for the payments company to show other merchants nearby who also accept Square payments. As Rabois puts it, “it’s like a curated app store for local businesses.”

At launch, Square’s new register and digital wallet service is being used by 50 merchants across the U.S., in San Francisco, Washington D.C., St. Louis, LA, and New York. In fact, there are merchants in the hall at TechCrunch Disrupt here in New York who will be showing attendees how to use the new version of the service. We’re told that the service will the “thoughtfully” rolled out to merchants in the coming weeks. Participating merchants range from coffee shops to bakeries to flower shops to restaurants to salons.

Square believes that this next generation of the service will become the default way to run a business and a payments platform. Not only does Square give you analytics and insight into how well your business is doing, but it allows local businesses to connect to customers in a way they couldn’t with traditional point of sale systems and cash registers.

In terms of financial terms, nothing has changed. Square will continue to charge the 2.75 percent per transaction fee (the startup dropped the $0.15 per transaction charge for businesses a few months ago). And interestingly, Square chose to refurbish its iPad app into the suped-up register, keeping its Android and iPhone apps as simple payment processors. Rabois tells us this decision was made after seeing the iPad’s succes as a device in retail environments.

In the end, their strategy is based around how they take friction away from payments for local businesses, Rabois tells me. There’s no doubt that this new version of the service will be able to connect local merchants to customers in a way that no payments processer has been able to thus far. We know PayPal is trying to get into local, but Square just beat the payments giant to it with this offering. Not only does it offer personalization for each customer, but Square is now tapping into location, and there is still much more to come, Rabois notes.

One piece of advice to PayPal, Visa, or any other payments giant who wants to be a part of the future of payments: buy Square. Like yesterday.

Article courtesy of TechCrunch

Online marketing network for small business owners MerchantCircle is launching an iPhone app today that allows small businesses to manage and update their listings on the site and other social media pages, upload photos, answer new customer inquiries and stay on top of their reviews on the go.

Merchant Circle provides a business directory for merchants in smaller towns and currently lists over a million small businesses. MerchantCircle has long targeted merchants in small locales versus catering towards the consumers, as sites like Yelp and CitySearch do. MerchantCircle has local business members in 95% of the 24,600 U.S. cities and towns with populations over 200.

The free iPhone app allows users to create and publish daily deals, photos, status updates and more across multiple social networks, including MerchantCircle, Facebook and Twitter. Users can also use the app to respond to customer inquiries, manage their business listing, reply to messages, and monitor reviews. For example, a hairstylist on MerchantCircle could snap before-and-after photos of clients and immediately post them to her page. Or an IT specialist could respond to inbound customer inquiries as they come in.

A mobile app seems like a natural extension of the network for small businesses (similar to the usefulness of mobile apps for networks like Facebook or LinkedIn). I’m actually surprised that MerchantCircle didn’t already offer small businesses a mobile app.

Article courtesy of TechCrunch

Google’s much-rumored acquisition of Groupon is off, we’ve confirmed with a source with knowledge of the deal. The news was reported earlier by Chicago Breaking Business, and we’ve verified that the deal is indeed off.

The two companies have been in serious negotiations for at least the last week, with reports stating that Google was bidding as much as $6 billion for the red-hot local deals company.

Our source has also verified that Groupon’s annual revenues are now at a $2 billion run rate, which is much higher than the figures that had previously been circulating (this number was reported by AllThingsD a few minutes ago). The $2B figure is the total value of Groupons sold — half of the cost of the Groupon goes back to the merchant, but all the revenue passes through Groupon in much the same way that Google collects all AdSense dollars and counts them as revenues before passing along a portion to publishers.

The CBB report says that Groupon may be eying a possible IPO, though it won’t be making a decision about going public until next year.

We’ll update as we hear more.

Article courtesy of TechCrunch

The saga continues. After informing us in September that the IAC-owned Bloglines was to be shut down permanently, Ask.com (the IAC property that operates Bloglines) has resurrected the troubled RSS feeder, the company tells TechCrunch exclusively. IAC has sold the property off to an unlikely new patron: MerchantCircle, an online marketing network for small business owners. Financial terms of the deal were not disclosed but we do know that the deal was sort of in the family—IAC invested in MerchantCircle back in 2007. We are told Ask.com will maintain the current Bloglines service until December 1 of this year, after which the service will be transitioned to MerchantCircle.

IAC and Ask.com put Bloglines out of its misery after a tumultuous history. Bought by IAC’s Ask.com in February 2005 for around $10 million, the site has been in trouble, facing competition from Google Reader and a shift away RSS to realtime news streams.

While we heard IAC was looking for ways to either refurbish, or sell Bloglines, it looks like they finally got around to the latter. But MerchantCircle is a surprising candidate considering that it is not a media property.

MerchantCircle, which has been quietly snapping up companies, provides a business directory for merchants in smaller towns and currently lists 1.4 million small businesses. The startup has long targeted merchants in small locales versus catering towards the consumers, as sites like Yelp and CitySearch do. MerchantCircle has local business members in 95% of the 24,600 U.S. cities and towns with populations over 200. And the company could be eyeing an IPO in the coming year.

Ben Smith, co-founder of MerchantCircle, says he has big plans for Bloglines. The technology will be integrated into MerchantCircle to allow business owners to create RSS feeds on local news around their town, or city as well as their specific trade (i.e. feeds around plumbing, law, or construction). Smith says the platform will also be able to bring in feeds of local daily deals and coupons.

For all you loyal Bloglines users (the site has 2.7 million users), don’t fret. MerchantCircle will be keeping the former standalone service in place for non-MerchantCircle users, at the RSS platform’s present URL and Smith assures the the transition will be seamless for previous users (i.e. same log-ins and UI). One notable feature that will be missing is the Clippings feature, and users won’t be able to merge their saved clippings to the new platform. MerchantCircle will also offer Bloglines users customized local RSS feeds that users can opt into for hyper local news and deals. Smith adds that Bloglines has been tweaked slightly for a “richer, faster experience.”

Doug Leeds ,President of Ask.com says Ask was approached by a number of companies who were interested in giving new life to Bloglines but in the end MerchantCircle makes sense a new parent because they are “corporate cousins.”

Here’s the full email IAC will be sending to Bloglines users tomorrow:

As you may have heard, Ask.com has entered into an agreement with MerchantCircle who has agreed to keep Bloglines up and running. Stay tuned over the coming months as MerchantCircle works to improve the Bloglines service by creating a richer and more local user experience.

In the near term, your news feeds and access to the service (with your same password) are still available. You can read more detail about MerchantCircle and its plans for the service at the MerchantCircle blog.

For now, here’s what we want you to know:

Timing: Ask.com will maintain the current Bloglines service as is until December 1, 2010. After December 1, 2010, the service will transition wholly to MerchantCircle. During the month of December, you will be able to easily port your feeds over to the MerchantCircle-powered service. It’s an easy process, and we’ll provide you with complete instructions well in advance.

Logging-In: You will keep your same password as before.

Current Bloglines features: Your Bloglines subscriptions will seamlessly transition to the MerchantCircle service, however, the Clippings Tab will no longer be available and you will not be able to transport saved articles to the new service. We’re very sorry for any inconvenience this will cause – the infrastructure requirements and costs are simply too great to justify maintaining

Article courtesy of TechCrunch