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Table of Contents

Lead Story

Tight credit markets lead to new ISO, MLS financing options


Industry Update

Major retailers reject proposed interchange settlement

LevelUp offers interchange-free mobile solution

Google Shopping to take on Amazon?

Trade Association News


GS Advisory Board:
New times, new strategies: What are you doing? - Part 2

Meet The Expert: Mark Cerminaro

The game in the name

Selling Prepaid

Prepaid in brief

Prepaid, mobile and money laundering

Understanding merchant needs is critical


The card company settlement: What's next?

Brandes Elitch
CrossCheck Inc.


Street SmartsSM:
The secrets to overcoming objections

Jeff Fortney
Clearent LLC

The best prospects are in your portfolio

Peggy Bekavac Olson
Strategic Marketing

Fifty little things I've learned

Jeff Broudy
Total Merchant Services

MFA: The acquirer's role in taxing online sales

Adam Atlas
Attorney at Law

Are you ready for mPOS?

John Biscevic

Company Profile

National Benefit Programs LLC

New Products

Rapid PCI compliance for merchants

PCI Rapid Comply
First Data Corp.

Cloud-based POS platform for SMBs

NCR Silver
NCR Corp.


A handshake with that cup of Joe



Resource Guide


A Bigger Thing

The Green Sheet Online Edition

August 13, 2012  •  Issue 12:08:01

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LevelUp offers interchange-free mobile solution

Boston-based mobile payment company LevelUp Inc. is challenging the traditional interchange fee model by no longer charging its merchants transaction fees. LevelUp said with its new Interchange Zero program, revenue will instead come from fees retailers pay to use LevelUp's platform for customer acquisition and loyalty campaigns.

Interchange fees are paid by a merchant's acquiring bank to the customer's issuing bank to cover the costs of transactions - nominally, back-end credit and debit card processing costs. LevelUp concedes that at the start of the credit card industry, moving money was costly with infrastructure costs and insuring against risk. But today, reliable infrastructure and security are in place, making transaction fees a "swindle," LevelUp said in its Interchange Zero launch release.

LevelUp Founder Seth Priebatsch explained, "The process of moving money is now becoming a commodity, a de facto service. We're entering an era in which merchants should get - and will eventually only pay for - value above and beyond the transaction. LevelUp is skipping this 'race to the bottom' happening between the major payments companies and leading the way by providing real value beyond the transaction."

LevelUp's "real value" revenue comes through its customer acquisition and loyalty campaigns for merchants, Priebatsch said. The company charges 35 cents for every dollar of credit redeemed through merchant campaigns run on its platform.

Mobile payment problems solved?

Priebatsch believes LevelUp solves two mobile payment problems: finding a secure way to bypass near field communication-based payments and the requirement that a specific bankcard is necessary to make a payment.

When LevelUp users register credit and debit cards on its platform, they receive unique quick response (QR) codes to use for payment with LevelUp merchants. Virtual receipts are automatically emailed to users at the end of payment transactions. LevelUp said it wants users to turn phones into debit cards while it brings merchants a host of customer information and targeted campaigns.

LevelUp launched in March 2011 as a daily deals platform but rebranded itself in July 2011 as a mobile payment platform. LevelUp transactions use QR code technology on both Apple Inc. iPhones and devices using Google Inc.'s Android platform. The company said it has more than 200,000 users who spend at least $2 million monthly, and it is working with over 3,000 merchants in several U.S. cities.

Based on Google's business model

The LevelUp payment platform was created by SCVNGR Inc., a social location-based gaming platform for mobile phones that Priebatsch founded in 2008 when he was 19 years old. Inc. magazine estimated SCVNGR was worth approximately $100 million. In June 2012, LevelUp raised $12 million in funding from Highland Capital, Google Ventures and others.

Priebatsch compared LevelUp's business model to that of Google, which gives free access to its search engine and makes money from advertisers that pay for every hit directed to their websites via Google.

"We're going to enable the frictionless flow of money and only make money when we add real value for merchants - in this case, by driving a new customer to a business with a transaction," Priebatsch said.

Regulatory concerns

LevelUp's Interchange Zero launch comes as the federal government focuses on mobile payments. At a June 29, 2012, House Committee on Financial Services subcommittee hearing, lawmakers learned that nontraditional payment companies like LevelUp represent a potential problem for regulators in ways that may not be fully understood.

In the hearing titled The Future of Money: Where Do Mobile Payments Fit in the Current Regulatory Structure?, Stephanie Martin, Associate General Counsel of the Board of Governors of the Federal Reserve, testified that alternative payment products such as mobile wallets generally do not "result in changes to the basic rights afforded to consumers under those systems or to a bank's responsibility to ensure the security of that communication channel."

However, she added, "Making payments through nontraditional arrangements may change the legal protections related to the purchase, depending on the details of the arrangement and the applicable federal or state statutes and rules."

For additional news stories, please visit and click on "Read the Entire Story" in the center column below the latest news story excerpt. This will take you to the full text of that story, followed by all other news stories posted online.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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Spotlight Innovators:

North American Bancard | Simpay | USAePay | Impact Paysystems | Board Studios