Leading daily deals company Groupon is testing a card reader in the US that enables small businesses to accept credit card payments via a mobile device.  The reader could enable the company to make more revenue from local shops and restaurants that already use its online coupons.  

The reader plugs into an iPod Touch or iPhone so that businesses can use either to process payments. The move brings the company into competition with the likes of Square and PayPal.

Groupon is testing the reader in the San Francisco Bay Area. According to Venturebeat, it is offering the reader and an iPod Touch to select merchants free of charge.

The reader is manufactured by US firm Infinite Peripherals and work with software that is at least partly designed by a company called FeeFighters that was acquired by Groupon earlier this year.

Groupon had made several mobile moves recently including the acquisition of Kima Labs a firm which developed an app for making purchases via mobile handsets. The acquisition was also made earlier this year.

According to the story, the company is offering an aggressively priced deal to triallists that undercuts the likes of Square, PayPal and Verifone.