Groupon launches credit card payment business

CHICAGO, Wed Sep 19, 2012 – Groupon Inc.launched a credit card payment business on Wednesday, entering a crowded field to compete with eBay Inc.’s PayPal and start-up Square Inc.

Groupon said the new service lets restaurants, salons and spas, retailers and other local businesses accept credit card payments at a lower rate than other providers.

Any merchant that runs a daily deal with Groupon in the United States can sign up for the payments service, the company added.

Groupon will charge 1.8 percent for MasterCard, Visa and Discover cards, on top of a 15 cent fee per swipe. For American Express cards, it charges 3 percent plus the 15 cent fee.

Groupon is the world’s largest daily deal company, offering discounts on local services. But the company is branching out into other businesses, such as discounted product sales, and now payments.

Groupon shares rose 7.5 percent to $5.04 on Wednesday. The stock has lost about three quarters of its value since the company went public last year.

The payments business has become crowded in recent years. Square, a start-up backed by Twitter co-founder Jack Dorsey, has won small merchants as customers by offering easy credit card acceptance through a small swipe device that plugs into smartphones.

PayPal launched a rival service earlier this year called PayPal Here.

PIMCO’s Gross cautions against inflation and credit ‘ocean’

NEW YORK, Tue May 1, 2012 – Central bank policies will induce growth in developed countries this year but will create inflationary risks down the road, Bill Gross, founder and co-chief investment officer of PIMCO, said in his regular monthly letter to investors.

In the outlook, entitled “Tuesday Never Comes,” Gross highlighted how stimulative central bank policies have created an “ocean” of credit and said that the credit acceleration will produce economic growth this year for developed countries while also creating structural risks and rising inflation.

Specifically, commenting on the Federal Reserve, Gross said central bankers in the United States appear to believe that markets will buy future Treasuries at low yields “because the private market’s ‘stock’ of Treasuries has been depleted.”

Overall, Gross’ investment outlook was little changed from prior monthly investor letters or comments he has made on numerous recent television appearances.

He reiterated that investors should target bonds “in the five-year range” and stocks that pay dividends around three to four percent. He also recommends real assets and commodities.

“In 2008, central bankers never really knew how much debt was out there, and to be honest, they don’t know now,” Gross said.

He likened the efforts of the Fed to stimulate demand for Treasuries to wine drinkers, who have been sipping “rare vintages,” and now the cellar is almost empty. The Fed’s hope, Gross said, is that other “wine lovers will now be forced to restock their cellars to get a historically comfortable inventory.”

But the manager of the world’s largest bond fund, the PIMCO Total Return Fund, said he personally favors beer to wine.

SEC finds failures at credit raters, including Standard & Poor’s, Moody’s, Fitch

WASHINGTON ― Securities and Exchange Commission staff found “apparent failures” at each of the 10 credit rating agencies they examined, including Standard & Poor’s, Moody’s, and Fitch, the agency said on Friday in its first annual report on credit raters.

The SEC sent letters outlining the staff’s concerns to each of the ratings firms and demanded a remediation plan with 30 days, an agency official said in a conference call with reporters.

The SEC staff said concerns include failures to follow ratings methodologies, failures in making timely and accurate disclosures and failures to manage conflicts of interest.

The SEC’s report was required by last year’s Dodd-Frank financial oversight law.

The staff report did not single out by name any credit-rating agency for questionable actions, but it did describe specific problems it found.

Two of the three largest firms, for example, did not have specific policies in place to manage conflicts of interest when rating an offering from an issuer who is also a large shareholder of the firm.

The industry is dominated by Moody’s Corp, McGraw-Hill Cos Inc’s Standard & Poor’s and Fimalac SA’s Fitch Ratings.

One of the large firms, the report said, did not have effective procedures in place to prevent leaks of ratings before they are published, the report said.

One of the three firms also failed to follow its methodology in rating certain asset-backed securities, was slow to discover, disclose and fix the errors, and may have let business interests influence its mistakes, the report said.

The report said the SEC has not determined that any of the findings constituted a “material regulatory deficiency” but said it might do so in the future.

“We expect the credit rating agencies to address the concerns we have raised in a timely and effective way, and we will be monitoring their progress as part of our ongoing annual examinations,” said Norm Champ, deputy director of the SEC’s Office of Compliance Inspections and Examinations.

Congress first empowered the SEC to closely regulate ratings firms in 2006, and the Dodd-Frank law gave the agency even greater powers over the industry.

Credit raters have been widely criticized for fueling the financial crisis by giving top ratings to subprime mortgage securities that collapsed in value as the housing market cooled.

On Monday, McGraw-Hill disclosed that the SEC might charge its S&P unit with breaking securities laws over ratings it gave a package of securitized mortgages in 2007.

SEC Enforcement Director Robert Khuzami told Reuters this week that the agency faces hurdles proving wrongdoing at credit-rating agencies, pointing to the complexity of the cases and the industry’s strong legal defenses. But he added that it would not stop the agency from probing possible misconduct.