Groupon Acquires FeeFighters, The BillShrink For Business Services
FeeFighters, a three-year old comparison shopping site for credit card processors , is announcing today it has been acquired by Groupon. The Chicago-based startup, which provides businesses with a way to find …
Context & Ripple Effects
The FeeFighters deal lands four days after the beta launch of Groupon Scheduler, which the company framed explicitly as part of an effort to be seen as a technology platform for local merchants rather than a deals vendor — a repositioning Groupon says is necessary because its core product has proven easy to copy for Google, Amazon, and LivingSocial. It is also the fourth acquisition in roughly three months, following the quiet talent buy of Campfire Labs in December 2011 and the Kima Labs and Uptake deals in February 2012.
That acquisition cadence is funded by scale: Groupon disclosed its $500 million financing at the end of 2010, and the capital is now being spent on exactly this pivot. FeeFighters is the most strategically pointed pick yet — a Chicago-based comparison shopping service for credit card processors puts Groupon inside the economics of how merchants accept payments.
First-order effects
- FeeFighters' team joins Groupon's Chicago operation, and small businesses that use the tool to shop for credit card processing rates now do so under Groupon ownership.
- Groupon gains in-house expertise on merchant payment costs — the fee structures processors charge — without having built any of it itself, consistent with its recent pattern of buying teams (Kima Labs for mobile payments, Uptake for travel research) rather than building organically.
Second-order effects
- Merchant payment processing becomes a plausible next battleground for Groupon alongside Square and PayPal, since knowing processors' pricing is table stakes for undercutting them; LivingSocial and other deal clones competing on merchant relationships would need a comparable services story.
- FeeFighters' processor-comparison data effectively hands Groupon a pricing map of the acquiring market, shifting negotiating leverage toward whoever controls the referral layer between merchants and processors.
Third-order effects
- If the pattern holds, daily-deals companies consolidate into local-commerce platforms where the deal is the customer-acquisition hook and software — scheduling, payments, mobile — is the retention layer, with M&A rather than R&D as the build mechanism.
- A structural consequence is commoditization pressure flowing downstream to card processors, who face a gatekeeper aggregating merchant demand and shopping it on price — an eBay-style intermediary dynamic arriving in a market that has historically been opaque.
The trend: Daily-deal companies are using post-IPO-scale capital to acquire their way from discounted vouchers into merchant software and payments, because the deal itself has proven too easily replicated to anchor the business.