LevelUp, the 2D barcode-based mobile payments startup, is expanding its service into four new markets – Chicago, San Diego, Atlanta, and Seattle – on February 23rd. The service was originally launched six months ago in Boston and Philadelphia. Since then it had previously been introduced in both New York City and San Francisco.
The platform works by consumers attaching a credit or debit card to their account, which is then linked to a QR code. Consumers are provided discounts for their first transaction with a particular merchant, as well as when they have reached a set threshold of transaction values (e.g. receiving a $5 discount after spending $50 with a merchant).
LevelUp charges a 2 percent payment processing fee for participating merchants. Businesses can scan customers’ QR codes via an iPhone or Android application or via specialized Android-powered hardware provided by T-Mobile. LevelUp also provides analytics for merchants so they can track customer spending. The company’s data indicates that for every dollar of initial credit that a business offers, it gets $5.70 in return, [LevelUp founder Seth] Priebatsch said. In addition, 65 percent of customers that make an initial purchase via LevelUp come back at least once in the next 30 days.
LevelUp will encounter a significant amount of competition in Chicago, where incentive providers Groupon and Belly (a universal punch card provider) are already established. However, neither of these offers payment capabilities.