Editor’s Note: This article is based on several tips we have received over the course of the last week.
If you are a user of LevelUp, Cambridge based SCVNGR’s foray into the daily deal space, last week you received an email from the company announcing it was working on “leveling-up LevelUp.” We have learned that the official announcement and launch for this is slated for tomorrow (Thursday) morning.
We have received a few tips around what this announcement is all about. From what we gather, SCVNGR is pivoting again with LevelUp — away from daily deals and toward more standard merchant loyalty programs. …And via some form of a mobile payments play.
On the consumer side of the offering, sources indicate you will receive discounts at participating merchants after spending certain dollar amounts with them. For example, you might receive something like a $5 discount for paying with LevelUp at Merchant X for the very first time. Then, you can earn different levels of discounts as you spend more with Merchant X over time using LevelUp (e.g., a $15 discount once you spend $100 at Merchant X).
On the merchant side, sources indicate LevelUp is promising lower card processing fees if they adopt the solution. However, we are missing information around how exactly the payment routing will work to enable these promised lower fees. And we are also scratching our heads about why a small merchant with extremely thin margins would be compelled to fork out money (read on) to LevelUp, a relatively small player in the grand scheme of things, to take part.
Sources tell us LevelUp is providing merchants with a barcode scanning device, one that likely has some point of sale (POS) software integration involved. That merchant will have to rent or pay a fee to LevelUp to use the device at a rumored cost of $55 per month. Scanners will likely be used to capture LevelUp QR Codes on a consumer’s phone (the QR code is likely the payment form factor here, vs. swiping your credit/debit card).
Again, sources on the merchant side of the announcement indicate that LevelUp is promising lower card processing fees, and we have not been able to gather enough information to understand the payment solution more precisely (we have calls in to a couple Boston merchants and are waiting to hear back). Typically these fees are set by payment networks and bank card issuers (and are barely even negotiated with big merchants like WalMart), so it seems ridiculous that LevelUp would have any sort of clout to do this. Perhaps instead the consumer deposits money in some form of a LevelUp prepaid account. However, that is a fairly clunky solution, and a big barrier to on-boarding consumers.
There has to be more technology involved on the payment side than we were able to gather, as SCVNGR/LevelUp has compelled a base set of small merchants to soft launch with them. However, on the consumer side, we can’t help but wonder with others who have been watching the company for well over a year if a “build it and they will come” approach will work with this latest pivot. There is much we don’t know to come to any solid conclusion at this point.
(Interestingly, LevelUp’s last big announcement was a partnership with AmEx that enabled couponless redemption. As the consumer, I didn’t have to present a LevelUp coupon at all — it was truly couponless upon Amex card swipe; I didn’t even have to pull my phone out.)
If you have more information around the anticipated announcement, please contact us or leave a note in the comments. And if not, look out for a press release tomorrow from SCVNGR/LevelUp to learn more.
