Friday, January 27, 2012

LevelUp launches T-Mobile-backed pay terminals

By Rodney H. Brown

LevelUp, the customer loyalty deals business spun out of Scvngr Inc., has moved further down the road of a mobile payments company by now offering a terminal for merchants – the first piece of hardware offered by LevelUp or its parent Scvngr.

According to a release from Cambridge-based LevelUp, the new hardware will allow a merchant to connect to the LevelUp payment network via a wireless connection through T-Mobile. In conjunction with the new hardware roll out, LevelUp is also dropping its $55 per month merchant fee, in favor of a hardware lease of $25 per month or $250 per year. The company is allowing merchants in Boston, San Francisco, New York City and Philadelphia to get the hardware for free if they maintain a pace of getting two new customers to pay with LevelUp per day, at which point LevelUp will credit the merchant the monthly lease cost.

The LevelUp terminal includes its own Android-based device that runs the LevelUp merchant app. The company started offering a mobile payments service in July 2011. The app creates a customer-specific QR code that each LevelUp user gets when signing up – and which is used to pay for items via their phone at a participating merchant.

“The mobile payment platform does all sorts of cool things,” said Seth Priebatsch, founder and chief ninja of both Scvngr and LevelUp. “You can download the merchant app to almost any iPhone or Android phone and scan a customer’s QR code, but if you have a counter like a restaurant, having a dedicated terminal will speed up the transactions.”

The hardware has been under development at LevelUp for awhile, Priebatsch said, with some challenging first efforts. “Admittedly, it was a kind of bush league version the first time around,” he said. The phone aspect of the terminal comes from partner T-Mobile, which keeps the cost to LevelUp very low. LevelUp itself developed the dock the T-Mobile phone sets in, and had it manufactured by partners in China.

One goal of launching the new hardware is to get enterprise-level retail customers, who might need a consistent piece of hardware to handle LevelUp payments right at the point of sale. Priebatsch said that LevelUp already has a couple of such clients, including Verizon, but the goals for adding more are very aggressive.

“The first couple are already live and the goal is to have 10 or so major national brands live by the end of Q1 of this year,” he said. “A lot of these are already in play.”

LevelUp launched out of Scvngr in March 2011, initially targeting merchants in Boston and Philadelphia. The company was designed to counter criticism that daily deal services – like Groupon, LivingSocial and Boston’s BuyWithMe – do not bring repeat customers, by ‘levelling up’ the amount of discount a customer gets from a merchant buy coming back repeatedly.