The announcement sent shares of the Chicago company up about 6 percent at midday.

Groupon Payments is aimed mainly at businesses that offer deals through the company. A test program allows other merchants to use the service, but at higher rates.

The technology has been tested in the San Francisco Bay Area and will go up against EBay's PayPal unit and Twitter co-founder Jack Dorsey's Square. Those services also allow merchants to swipe credit cards on their phones using a small card-reader attachment.

Groupon is charging MasterCard, Visa and Discover swipes at a 1.8 percent rate plus 15 cents for each transaction done by a Groupon merchant. American Express will be 3 percent plus 15 cents.

Square charges 2.75 percent per swipe, or $275 per month. PayPal charges 2.7 percent.

(Copyright 2012 The Associated Press. All rights reserved.)