Home AOL’s Patch Takes on Groupon with Patch Deals

AOL’s Patch Takes on Groupon with Patch Deals

The recently launched digital payment and commerce platform from American Express known as Serve has just announced a new partnership with Patch, AOL’s big bet on hyperlocal news and content. Under the new partnership, Serve will power the Patch Deals platform, which will now offer Patch users deals and discounts, Groupon-style, with local merchants on the American Express network.

Patch Now Doing Local Deals

Patch Deals, like Groupon, Living Social and other similar coupon-sharing startups, is a group-buying deals program that targets local communities. Users sign up for free to receive email alerts from businesses and can then click on any deal that is of interest to them. As is typical with group-buying deals programs, businesses can set a certain number of deals they need before the deal is “on,” or “tipped,” in the discount shoppers’ lingo.

On Patch, merchants can list their deals for free, but will not have to share as high a percentage of revenue as with Groupon or Living Social, a strategic move that could spell trouble for its rivals.

While Patch is better known for its hyperlocal editorial content – i.e., local news reports on over 800 Patch.com sites – it also provides a platform for local business listings. At present, over 850,000 small businesses across the U.S. are featured on its network.

Where Serve Fits In

In the new partnership with Serve, Patch users may be offered co-branded American Express cards which would allow them to take part in a deal without having to print out physical coupons to show to the merchant. Instead, the card itself would function as the means for using the deal in the offline world. In effect, this turns the American Express Serve card into something more like a store loyalty card, but pre-loaded with coupons from local businesses all around town.

Serve, which launched in March, is aimed at attracting new market segments who don’t rely on credit cards. Serve accounts are pre-loaded with funds from a bank account, a credit or debit card, or money from another Serve account. Then, using these pre-funded cards, Serve customers can shop anywhere a merchant accepts American Express, both online and off. And through an existing partnership with a mobile payment startupPayfone, Serve users can also purchase digital and physical goods using their mobile phone. In addition, users can check on their accounts via Android and iPhone apps and through Facebook.

For AOL Huffington Post Media Group, which oversees the ever-expanding Patch operation, a local deals platform only makes sense, given its goal to be the de facto source of local and neighborhood news and information, as well as a place to connect with local businesses. With the new Serve partnership, it makes it that much easier for Patch to reach that goal.

Correction: An earlier version of this article implied that Patch Deals was different from Groupon because merchant listings were free. The key difference will be in revenue sharing, which is reportedly lower on Patch than on its rivals.

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