Today Groupon has joined the growing list of Square competitors and announced the rollout of its new mobile payment service.

The launch follows a successful pilot program in the San Francisco Bay area earlier this year. Groupon’s service enables businesses to accept credit and debit cards by swiping them through a card reader attached to an iPhone or iPod touch.

Groupon boasts the lowest rates, offering retailers 1.8 percent of all MasterCard, Visa, and Discover card sales (three percent for American Express) and a $0.15 per transaction fee. Industry darling Square charges a flat 2.75 percent rate on all transactions for all cards.

We should note that those rates only apply to swiped transactions; keyed-in transactions will see slightly higher rates. Although non-Groupon merchants can sign up for the service, it pays to become a member as you will be charged 2.2 percent plus 15 cents for MasterCard, Visa, and Discover otherwise.

The mobile payment service is built-in to the latest version of the Groupon Merchant app. Here you can view a live transaction history, check daily sales reports, track deposits, and review revenue trends. The company will provide a an audio jack card reader free of charge, or you can request a high-volume case-based reader if needed.

As a Groupon merchant, you might find it easier to experiment with mobile payments through a service that you’ve previously worked with instead of adopting a new one. It’s too early to tell if Groupon’s service will have any impact on Square or PayPal. We recommend shopping around to make sure mobile payments are a good fit for your business before locking yourself in with a provider.

[Disclaimer: Sprout Social has financial ties to Groupon.]

[Via: GigaOm, Image credit: Groupon]