When asked what they did on their summer vacation, the vast majority of people will usually talk about something relaxing—time by the pool, travel, BBQ’s—the sort of thing that suggests a slower pace of life.
But then, Seth Priebatsch isn’t most people.
In a digital payments industry full of CEOs, he is the lone Chief Ninja. He’s also probably the only person in America who skipped the beach this summer so that his company, LevelUp, could launch a bunch of new features to make LevelUp’s open payments network more robust. The latest feature, to be announced today (July 31) is to break into the gift card business. LevelUp’s ambition is to go where few gift card providers have gone before – and that is to bridge the physical-digital payments divide.
Priebatsch chatted with MPD CEO Karen Webster before the launch of LevelUp’s gift card feature, which marks one of the first times that it has stepped into a well-established and relatively crowded part of the payments business.
(Click here to listen)“Gift cards are an interesting feature for us because it’s one of the first where we’re entering a truly crowded space,” said Priebatsch. “People think about mobile payments as really crowded but it’s crowded in the sense that lots of people at trying to make it work. Gift cards are crowded in the sense that a lot of people have made it work. We are not the first to come with gift cards, we won’t be the last. So we really focus on making the experience a lot better for consumers and for users to give merchants a reason to launch for the first time gift cards with the LevelUp or in many cases switch their gift card provider to LevelUp.”
bridge the plastic-digital divide and giving consumers maximum choice when it comes to purchasing and then using their gift cards however they want to.
Users can buy physical cards at physical locations that come equipped with scannable QR codes. The recipients of the card can then either use it like any other physical card, or they can link the card to their LevelUp account and turn it into a digital funding source for their existing LevelUp account.
Businesses that enable LevelUp’s gift card feature can also sell them digitally in the LevelUp App (or a LevelUp powered app), and send them electronically in a “gorgeously giftwrapped email.”
While a move to plastic for a company that has thus far been entirely mobile/digital might, on the surface, seem to be a great leap backward, Priebatsch notes that it speaks clearly to LevelUp’s mission of providing lots of options for interaction for both merchants and users, and engaging in the space both creatively and pragmatically.
(Click here to listen)“Over time, do we really do think most gift cards will be gifted digitally and there’s real advantages to that…yes,” says Priebatsch. “So, why plastic in this case? As much as I always want LevelUp to be this revolutionary platform, sometimes you have to do what everyone else has been doing. Right now gift cards are purchased at the counter, they are an impulse purchase and if you try and convince a merchant that your new solution is better but it doesn’t do the core thing that has always been done, it is a much harder conversation. So we are zealous about mobile being the future, but we also try to be pragmatic.”
LevelUp will stick with its 1.95 percent processing rate that is its standard processing fee (that it remains committed to getting as close to zero as possible). Businesses that want to hop on to LevelUp’s gift card platform will also pay a monthly subscription fee of $50, mostly to account for the slight increase in handling and managerial costs that accompany managing this type of program for merchants.
Priebatsch believes that since most merchants offer gift cards – he estimates that 60 to 70 percent of merchants in the QSR space operate gift card programs – to be successful, LevelUp will have to unseat an existing provider.
(Click here to listen) Priebatsch explained: “You’ve got hundreds, thousands, tens of thousands of customers that are paying with LevelUp…and by offering the ability to buy gift cards digitally through that application [merchants] now have the ability to message out to a really large audience just as we are starting to get into the holiday season mentality…No plastic gift card provider can provide that information channel. “
Business looking to get ahead of the holiday shopping crunch can start signing up for LevelUp’s gift card program today (July 31).
Worth noting is that the ability to bridge the physical divide is exactly what Starbucks did with its gift card program to establish its own closed payments product. Is LevelUp laying the ground work for SMBs to do the same? I guess we’ll just have to wait and see.