Groupon is being threatened by Google Wallet and Google Offers, services that combine coupons and discounts and payments at the time people buy things through their phone.
Google attempted to buy daily deals site Groupon last December for $6 billion, which could have been its largest acquisition ever, but was given the royal snub by Groupon cofounders Brad Keywell and Eric Lefkofsky.
Undaunted, five months later, Google unveiled Google Wallet and Google Offers at an event in New York City, with the latter service deemed a direct threat to Groupon.
Google Wallet and Google Offers services promise to revolutionize the way people shop
Google Wallet, on the other hand, is a mobile payment system that allows users to simply wave the phone over the payment terminal at the cashier. Waving the phone will not only automatically charge the card but also allow you to keep tabs on the loyalty points of the user with that merchant. Receipts for the purchases made will also be delivered directly to the phone.
Google Wallet service is based on near-field communication (NFC) chip technology which, when placed in two different devices, allows small amount of data, including credit card information and coupon bar code, to be transmitted over short distances between them
Among the first participating retailers are Macy's, Subway, Walgreens, Toys R Us, Bloomingdale's, Guess, and Noah's Bagels. Sprint, MasterCard, Citi, and FirstData have partnered with Google for the payment services.
Google Wallet will support multiple credit cards, multiple store loyalty cards, and uses passwords, encryption, physical proximity, and a lot of other special sauce to ensure that the process is actually safer and more secure than any other digital payment system.
Ultimately, boarding passes, concert tickets and even driver's licenses can go in the Google Wallet, the company said at the press conference.
Google Offers, like Groupon, delivers coupons and offers of items that users generally shop for on the user's phone or email, allowing the user to buy the item online.
Like Google Wallet, Google Offers allow users to redeem coupons by showing it at the cashier for scanning the bar code or tapping their phone.
Android-based Nexus S, will be the first phone to offer Google Wallet and Google Offers. It uses near-field communication (NFC) technology that will allow it to make payments via MasterCard's PayPass system.
So should Groupon be worried? It's too early to tell.
For the moment Groupon founders don't seem worried. On Thursday, LightBank, technology investment vehicle founded by Groupon founders invested $1.5 million in financial news provider Benzinga.