There are two primary means of paying with your phone at a brick-and-mortar store: scan to pay using a QR code, and tap to pay using Near-Field Communication, or NFC. As the market battle rages over which pay-by-phone technology will win out, LevelUp has decided to hedge its bets with a new piece of hardware that supports both.
LevelUp currently lets customers connect their credit or debit card, download an app, and show a QR code to pay. Businesses can then easily track repeat customers and offer discounts for loyalty; LevelUp estimates the average user saves $25 a month. The company is the second-coming of check-in game SCVNGR, once considered a Foursquare competitor, and recently raised $12 million from top-notch venture capitalists including Google Ventures. Today LevelUp announced a new piece of hardware that accepts payments via both QR and NFC, accommodating both pay-by-phone technologies.
For most of the country, paying with your phone still seems like a technology of the future
LevelUp's 3,500 merchants can get the new device for free — a nice perk to go along with the company's 0 percent interchange fees. LevelUp's network includes 250,000 users and merchants with 5,000 locations including branches of Quiznos, Domino's, Jamba Juice, and Auntie Anne's. Eventually, all the merchants will be upgraded to the new device.
For most of the country, paying with your phone still seems like a technology of the future. "It's that thing they do in Japan," said LevelUp founder Seth Priebatsch. "That's how my mom describes it."
In fact, mobile payments are already here. Starbucks, Walgreens, and Dunkin' Donuts are among the many merchants that already let you pay with your phone. But even though it's available in an increasing number of places, the phenomenon is still "super nascent," Priebatsch said.
Consumer awareness is the biggest challenge for LevelUp, Google Wallet, Pay with Square and other mobile payments providers, Priebatsch said. An Associated Press reporter this week showed that even employees at vendors that accept mobile payments sometimes lack a basic understanding. In addition to rampant cluelessness, these technologies are still glitchy, further discouraging customers from taking a chance on a new way to pay.
Given how confused consumers already feel, adding more ways to pay with your phone may not be the wisest strategy. But Priebatsch wants consumers to have options, at least until the market congeals around one mobile payment method. LevelUp will even send a physical card to users who don't have smartphones. "We need to be everywhere and in every way that the consumer chooses. We don't really care how you pay with LevelUp, we just care that you do pay with LevelUp," he said. He's hoping they will, even if the new iPhone doesn't support NFC.