Rocky Agrawal for VentureBeat:

The pricing is extremely aggressive, with a 1.8% transaction fee and a 15 cent per transaction charge for transactions processed through the terminal. Square charges 2.75% with no per transaction fee. PayPal Here and Verifone Sail charge 2.7%, also with no transaction fee. Groupon is charging 2.3% for AmEx transactions [update: a groupon insider tells me the AmEx pricing is 2.7, not 2.3]. Square and PayPal don’t charge extra, and Sail charges 3.7% for AmEx. Unlike the other players, Groupon is offering an iPod Touch and card reader to merchants free of charge. (The others provide only the readers for free […].)

It’s still in testing phase apparently and it has not been confirmed by Groupon yet. If it is, this will be an aggressive move.

Square is being attacked by a lot of companies. I guess, it should stay focused on its product and make sure it is the easiest to use.

The start-up seems to be ahead of the competition for the moment, because it is also focused on the customer, not only on the merchant by providing low transaction fees. Pay With Square, an iOS and Android app, lets the customer pay just by saying its name and offers other great perks. The user experience is awesome.

The combination of both apps is much stronger for a merchant than just a lower transaction fee. Satisfied users are more likely to only shop at Square-compatible locations and therefore to be more loyal. This will result in more revenues for a merchant, in the long run, than the few cents saved on transaction fees.

Groupon won’t win the race if it does not propose something more compelling.