Wednesday, March 13, 2013
Developed by Scvngr, a Google Ventures-backed social location-based mobile gaming platform, Boston-based LevelUp debuted in March 2011 as a daily deals platform. Four months later it rebranded as a mobile payment platform. LevelUp founder Seth Priebatsch, who formed Scvngr back in 2008 at the age of 19, launched his latest venture with $20 million in capital funding.
The LevelUp platform enables users to pay at the POS with mobile phones by linking credit and debit cards to the app and scanning quick response codes at checkout. Merchants can either pay a flat 2 percent processing fee per transaction or 40 cents per dollar redeemed through LevelUp's loyalty reward and incentive-based marketing campaigns. According to LevelUp, about 70 percent of its merchant clients opt for the reward-based model rather than pay the flat fee.
Over the past year, LevelUp introduced a self-service hardware line to simplify merchant acceptance and a white-label program targeting large-scale franchise businesses. The company also dropped the $55 monthly fee originally charged to merchants in favor of its present flat fee and campaign-based Zero Interchange model.
"LevelUp is much more than a mobile payment app," stated Mark Fletcher, Director, Global Partnering & Application Development for Nokia. "Between the money it saves consumers, the analytics and the zero interchange fees it offers merchants; it has a great value proposition."
Like other players in the mobile arena, LevelUp has formed a number of strategic alliances. For one, when Boston-based ISO Merchant Warehouse unveiled its Genius platform in 2012, LevelUp was included in the platform.
Dan Dufault, Executive Vice President of Marketing and Solution Innovation at Merchant Warehouse, said, "The LevelUp integration with the Genius Customer Engagement Platform is designed to work seamlessly for merchants, giving them the ability to tie LevelUp directly into their payment acceptance environment.
"Genius is a unified platform, which allows merchants to quickly and easily gain access to valuable customer data and thus incorporate and deploy loyalty programs, such as unlocking rewards or discounts for being a loyal, repeat customer. Genius also allows the merchant to hand-pick different payment options that best suit their business needs, giving merchants the ability to maintain their competitive edge and support business growth."
LevelUp is enjoying upward momentum, but will it have long-term viability? Ben Goretsky, Chief Executive Officer at USAePay, noted that incorporating LevelUp requires a number of steps, including educating merchants. "You have to convince your customers to download the app, start using it, pay through your phone or pay through the loyalty program," he said. "Let's look at it realistically. Authorize.Net, the largest gateway in the United States for merchant processing, at their peak had about 250,000 merchants."
Goretsky believes the number of people who continue to use the application within the retail environment will be more important than the number of app downloads as a key determinant of success.
Priebatsch, however, expressed optimism, stating that "an interesting fact is that once a user uses LevelUp more than twice, it's a 90 percent guarantee they'll keep using it at least once every month thereafter; often many more times a month." 
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