The new service allows credit card transactions through the mobile app.
After a successful test in San Franscisco the app is currently available to merchants in the United States.
"In the past, our merchant partners have often told us that their traditional payment systems are expensive and cumbersome-so we stepped up to the plate and developed our own payments service guaranteed to be the simplest and lowest cost option for Groupon merchants to accept credit cards," said Groupon in a statement.
The new service is already built into the application so merchants should find it easy to register for the service.
The Groupon payments service for the iPod and iPad will also slash transaction fees and instead of waiting a few days to receive credit card payments, merchants will be able to receive payment overnight.
"With the online Groupon Payments Center, business owners can view a live transaction history, check daily sales reports, track deposits to an account and analyze revenue trends," said the company.
Users will also recive an audio jack card-swipe device from Groupon for free. Merchants also have the choice of opting for a high volume card reader if needed.
"We're confident Groupon Payments will make for a better experience between customers and employees, make merchants lives easier with the aggressively competitive rates and extensive features we're offering, and the operating system for local commerce is becoming an exciting reality," said Groupon.
In the first quarter of 2012, the company reported revenues of $559.3m (up 89% year on year) however the company reported a net loss of $3.6m. This was an improvement on its fourth-quarter 2011 loss of $9.8m.
The company has faced controversy recently after investors claimed its IPO filings were misleading and falsely stated its profits. The company was forced to reissue its numbers.
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