There’s a lot going on in the world of mobile payments and e-wallets. However, there’s a huge shortcoming which also causes confusion among the users: fragmentation and a lack of integration of key developments within mobile payment platforms. Roughly there are 3 major developments regarding mobile payment:
- Apps which execute mobile transactions
- Customer loyalty programs
Boston-based LevelUp, once started as a daily deals platform, but now a full scale mobile payments platform, is aiming to combine all three developments in its platform. This is critical to be able to convince consumers to switch over to mobile payments. In today’s world, there’s simply too much complexity for consumers to stop using the good ol’ plastic cards.
In our recent article about e-wallets, we noted that the NFC (Narrow Field Communication) technology, which Apple Pay relies on, is not the only option. In fact, this technology is still far away from becoming the absolute standard in mobile payment. Samsung Pay proves that the magnetic stripe reader can survive in a mobile pay future. But also the QR Code is a technology which can be used for mobile payments. JP Morgan Chase announced that its Chase Pay app uses QR Code scans. LevelUp is also one of the players facilitating in-store transactions through QR Code. However, a problem is that merchants need to install additional hardware to be able to process LevelUp-payments. But with USD 50 for a scanner (or max USD 150 if an additional tablet is needed), these costs are negligible. By simply scanning a user’s QR code at the checkout, a transaction is made and an instant receipt is emailed together with a push notification with the purchase details. Many merchants also include saving and loyalty programs with LevelUp payments, which gives customers an incentive to use LevelUp. As a result, merchants get a lot of data from their customers which could prove very valuable in future promotions and product offerings. This means it is a system which offers clear incentives for both sides of the transaction which may give the mobile payment platform a significant edge.
LevelUp founder Seth Priebatsch points out that his company doesn’t stop at payment and loyalty programs, but instead wants to go the extra mile in order-and-pay. In a catch-up with the site PYMNTS, Priebatsch explained that consumers currently don’t fully realize the possibilities of mobile order-and-pay. The concept is simple: use an app on the mobile phone at home or on the road to order & pay in advance, and then skipping the waiting line to pick up the order (as featured on the Starbucks app). Once users realize this concept saves a lot of time and trouble, a switch is made and mobile momentum will soar, as proven by Starbucks and Dunkin’ Donuts, which saw usage jump with 100% respectively 456% in a two-year period. Also LevelUp customer Argo Tea saw ‘a major impact on the business – both from a sales and loyalty perspective”. LevelUp has a major advantage since it facilitates loyalty programs for a large number of merchants. At the moment, 14,000 businesses are connected and 1.5 million users are using LevelUp.
Nevertheless, large hurdles remain. Although a company such as LevelUp offers a complete package, the problem is a very fragmented payment market. Credit card companies are still in play since almost all mobile payment platforms (including LevelUp) are connected to credit/debit cards, to ensure customers are able to pay. A standard in technology, either NFC, QR Code or the ‘old’ magnetic reader, is still not set and leads to confusion among consumers. The many different payment platforms (this article didn’t even mention PayPal, Amazon Payments, Android Pay etc.) doesn’t help either. LevelUp’s dedication to offer the full package is promising. But in the current environment, it’s a tough call who will come up in front in mobile payments.