Back in March, SCVNGR launched a product to complement its mobile scavenger hunt called LevelUp that essentially took on Groupon and the daily deals industry with a mobile product that focused squarely on one of the biggest problems with that very industry: Customer retention and loyalty. LevelUp, and Founder Seth Priebatsch inked deals with American Express and a few others to enable users to redeem their deals by swiping their credit cards.
Fast forward to the last month of 2011 and LevelUp looks a bit different than it did at the outset. The context is simple: Mobile payment solutions stand to be a big business over the next five years, but as they stand right now, carriers and the makers of mobile OSes are finding it hard to come to terms (see Verizon's treatment of Google Wallet), and users suffer by being subjected to these obstacles.
So, the SCVGR spin-off is today launching a mobile payments web app to complement its existing native apps to allow anyone on a web-connected device to pay with their phone - using any credit card or any web-connected device with a simple QR code.
For now (or until we see a more widespread adoption), LevelUp allows users to bypass NFC or needing specific cards to link to a certain device and carrier on a particular version of Android. Priebatsch wants to do away with the limitations imposed on mobile payments solutions by niche requirements, allowing anyone with a web-connected device (and soon an offline, HTML5 version of the app) to show up at their favorite merchants and just pay.
Building on its previous functionality, LevelUp is now combining mobile payments and loyalty rewards - as users can visit any merchant that accepts LevelUp to pay with their smartphones and save money while doing it. LevelUp is designed so that users have instant credit waiting for them the first time they use the app, with the ability to unlock further credits toward their purchases when they revisit their favorite merchants.
Merchants are able to use the solution by through a LevelUp reader or by downloading the LevelUp Merchant app, which then provides local businesses with analytics, insight into the behavior of their customers, which are their most loyal customers, savings on interchange fees, etc.
LevelUp is currently available in San Francisco, New York, Boston, and Philadelphia, with more than 200 merchants accepting the payments solution in Boston and Philadelphia, for example. As the second product from SCVNGR, LevelUp has access to the 2 million users and 5,000 enterprises using SCVNGR (and the nearly $20 million it's raised in funding). SCVNGR is now at 104 employees, with 40 more joining in January to build out the LevelUp team, specifically the sales force, which will help speed up adoption among local businesses and push the product into further markets.
Priebatsch said that LevelUp has already been seeing some encouraging adoption stats, among them that 60 percent of all LevelUp customers return to merchants which they've already patronized, with the average LevelUp user saving $25 to $50 a month. LevelUp is currently at about 100K users a month, which the founder expects to increase as more SCVNGR users adopt and as the solution pushes into more cities.
LevelUp has partnered with T-Mobile to help it achieve national scale, and distribute the merchant-side payment solutions, which they've been offering at discounts - along with data plans to back the infrastructure of the LevelUp network.