LevelUp Trims Transaction Fees to Woo More Merchants (April 24, 2014)
LevelUp is tinkering again with the transaction fees it charges merchants for participating in its mobile wallet, cutting the cost from 2 percent to 1.95 percent as the SCVNGR-owned company seeks an appropriate balance for its bottom line. LevelUp in 2012 rolled out interchange-free transaction processing for participating merchants, relying instead on fees merchants paid for LevelUp’s targeted marketing campaigns. But Boston-based LevelUp since then introduced transaction fees to offset its costs as it experimented with various merchant offerings. Now LevelUp is inching its transaction fee back down again to increase its appeal to new merchants, vowing it’s “on a mission” to drive merchant transaction fees to zero.
While its fee plan so far has looked a bit like a teeter-totter, LevelUp says it’s gaining traction with merchants. LevelUp until now has charged merchants a 2 percent transaction fee, keeping 25 percent of the payment when a consumer redeemed a LevelUp marketing offer. Consumers must link a credit or debit card to the LevelUp mobile wallet, and its app generates a QR code merchants scan at the POS. On its Website LevelUp explains that payment card processing costs require it pass those costs on to merchants for now. But LevelUp believes its data-driven marketing campaigns for individual merchants eventually can offset the cost of transaction fees.
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