The mobile wallet and POS solution space is choc-o-bloc with several players vying for space in the market. Though there are number of key players in the market including Google Wallet, Isis, Pay withSquare and Paypal, no one company has been able to become the outright leader. LevelUp seeks to change this scenario with its announcement today (17th April, 2014), that the company is reducing - yes actually reducing - the rate of transaction for merchants from 2% to 1.95%.
LevelUp, a subsidiary of SCVNGR, is a growing company in the mobile payment space with investment of $9 M in the second round of funding from T-Venture, the venture capital arm of Deutsche Telecom. Other investors included Google ventures, Highland capital and Balderton capital and LevelUp has raised a total of $48.5 M in capital so far. LevelUp offers a white label payment application, which allows the retailers, banks and processors a mobile wallet and payment platform.
- LevelUp app can be downloaded into any smart phone.
- A credit or a debit card can be linked to LevelUp to generate a unique code
- Payment can be made by scanning the unique code.
- The merchants do not have to replace their whole POS system, they can use it alongside the regular credit card systems.
- Its POS system is a standalone device with its own QR code scanner.
- The merchant’s POS is integrated with Levelup, so the 2D barcode scanner does not require a separate power source or an internet connection to work.
- Paying via LevelUp takes seven seconds and it is faster than utilizing a credit or debit card, according to a study by Sweetgreen, a salad chain that utilizes LevelUp.
“This is a permanent drop in our fees. And we plan to continue dropping fees as further processing efficiencies continue to lower our costs,” stated Seth Priebatsch, CEO of LevelUP, in a press release.
This lowering of fees could impact rivals such as Square – which charges a fee of 2.75% per transaction. Standard rates for MasterCard appear to be around 3-4%, which would make LevelUp the most economical option for merchants and businesses.
Another unique feature of Levelup is the Loyalty program using the rewards app. The rewards app lets customers quickly and easily pay while unlocking loyalty rewards. The more they pay the more loyalty rewards they accumulate and can be redeemed at the participating outlets.
LevelUp makes revenue when merchants run campaigns to attract prospective customers and reward the loyal ones. The company takes a 25% fee whenever a customer uses one of their promotions to pay the merchant. 10% of all its daily purchases comes via this redeemed credit, says LevelUp.
The company is essentially looking to makes its revenue through advertising, all the while slashing the per transaction fee until a – no profit no loss – margin is obtained. LevelUp thinks that it is not in the best interests of consumers or merchants to make money through payment processing fees. LevelUp is currently accepted at 8,000 merchants and has over 1.5 Mn users.