Today Boston-based startup LevelUp announced that it’s adding NFC (near field communication) support to its no-fees mobile payments solution, debuting new hardware for merchants and allowing them to accept payments from any NFC-enabled phone. LevelUp, which grew out of startup SCVNGR, launched in October 2011 and just added $9 million in add-on funding in August, bringing their funding total to $21 million from investors including Deutsche Telekom.
This addition to its technology is a clear move to compete with competitor Isis, which already uses NFC technology in its carrier-backed mobile payments solution. LevelUp CEO Seth Priebatsch said in an interview that NFC support is something they’ve been planning for a while, and even though it hasn’t been confirmed that the new iPhone 5 will support it (we’ll likely find out on September 12), they felt now was the time to add it in. “I’m not convinced NFC will be mainstream in six months, but I do think it will 3-5 years,” Priebatsch said in an interview. “NFC is a good technology, and it’s going to be around for a while. But if it doesn’t pick up momentum, something else will, so our new hardware can be easily upgraded to support other forms of payment.”
Even if the new iPhone doesn’t include NFC, anyone with an NFC-enabled Android will still be able to use the new hardware to pay, and Priebatsch said if another technology like Bluetooth 4.0 becomes popular, merchants can open up the new terminal and replace the chip. He said the ultimate goal is to integrate with whatever method consumers want to use to pay. “Our new NFC hardware is part of our approach to be able to integrate with whatever is out there and make LevelUp work for everyone,” he said. “That’s different than a lot of mobile payment players, who are all about controlling everything.”
For consumers, the LevelUp experience will remain much the same when the new app NFC-supported app is released (the update will coincide with merchants getting the new hardware). Consumers download the LevelUp app for Android or iPhone, link their credit or debit card to their account, and can get a QR code they can scan at any supported merchant, or pay via NFC by tapping their phone on the new counter-top hardware for merchants. In either case consumers are sent a digital receipt.
Part of LevelUp’s selling point is their loyalty and rewards component, which is where they make their money (they take $0.40 from each dollar that merchants make via a LevelUp campaign). Right now the company is being used by 3,500 merchants, who bring in $18 for every dollar spent on a loyalty campaign. LevelUp provides their hardware free to merchants, and will be upgrading their existing merchants to the latest hardware over the next few months.
LevelUp recently dropped its merchant fees in an effort to compete against mobile payments leaders Square and PayPal, and is currently working on building out their partnerships and expanding across the U.S., with international expansion planned down the line. Though they might not have big-name partnerships like Square’s recent Starbucks announcement, or an international presence like Kuapay, debuting this versatile new hardware is another indication that they’re willing to do whatever it takes to compete in the mobile payments arena. With 250,000 active users who are spending a total of $2 million a month, and one million transactions processed since launch, the company seems to be on the right track.