How To Build A Mobile Payments Network

LevelUp Talks Mobile Payments

There are few things less challenging than building a mobile payments network from the ground up. Seth Priebatsch, Chief Ninja At LevelUp, is no stranger to accepting challenges and shared why it takes more than cost savings to get (and keep) merchants and consumers engaged in this week’s episode of The Matchmaker Is In series hosted by Karen Webster and “Matchmakers” author David Evans.


Wanna know the secret to launching a mobile payments network?

Don’t make its value proposition to either merchants or consumers about payments.

That’s the key insight from LevelUp Chief Ninja Seth Priebatsch, someone who has been beavering away at building a mobile payments network since 2011.

In this week’s installment of PYMNTS’ video/audio series The Matchmaker Is In, hosts Karen Webster and David Evans, economist, MPD Founder and co-author of the bestselling book “Matchmakers: The New Economics of Multisided Platforms,” sat down with Priebatsch to get an insider’s perspective on what it takes to solve one of the hardest problems in business: launching a brand new platform.  

First, the basics.

As many payments players know all too well, or should by now, it takes more than just giving consumers the ability to tap or scan a mobile device at the point of sale to get and keep end users’ attention.

LevelUp has sought to do that by providing a closed loop mobile payments solution that helps merchants know who their customers are – no easy feat in an offline world where there’s no easy way for merchants to acquire that information. At the core of that is LevelUp’s seamless integration of loyalty and payments that engages consumers around a value proposition that rewards them for visiting their favorite merchants, and gives merchants the chance to build long-standing consumer relationships. LevelUp’s platform also gives merchants the analytics and data they need to maximize the opportunity that Priebatsch says mobile and payments and loyalty can deliver to the consumer for the benefit of the merchants.

"What consumers want and what merchants want boils down to delivering a better payments experience, getting more data out of that payment experience and using that data to deliver intelligent offers, rewards and customer engagement promotions," Priebatsch emphasized.

When it comes to mobile payments, he asserts, there needs to be a very clear and distinctive set of value propositions – a key point that he and his team fine-tuned as LevelUp evolved.

A Change Of Perspective

“Interchange Zero” was one of the early LevelUp value propositions, which Priebatsch thought was a sure way for LevelUp to win the hearts and minds of the merchants he and his team wanted to sign up at the start.

What he quickly learned was that, at the end of the day, shaving a certain percentage off a merchant's payment processing wasn't material enough for a merchant to want to switch from their current payment processor to LevelUp.

“Savings never go out of style," Priebatsch explained, “but it wasn't enough to really matter.”

If not cost savings, then what mattered enough for merchants to make the switch?

Making more sales.

Through campaigns, rewards and leveraging the LevelUp network, merchants were able to boost their top line, which actually ended up meaning more than being able to save a certain amount on the bottom line.

Keeping both sides of the mobile payments platform engaged is key, but Priebatsch also noted the importance of proving value to merchants first and letting customers follow suit.

"My belief has always been that it isn't so much chicken-and-egg problem as it is the merchant problem. It's about merchant acceptance and merchant caring,” he said.

By finding a set of reasons that actually made merchants care about mobile payments enough – experience data, integrated advertising and loyalty, interchange savings – that notion of caring and adopting is then communicated to the consumers.

The Aggregation Conundrum

When it comes to the mobile payments landscape, we’ve seen the battle lines drawn between branded mobile application and network-based applications.

Aggregation is a challenge that merchants — and really every industry — faces over time, Priebatsch explained, which is why LevelUp aims to give its merchants the best of both worlds.

Enabling them to have their own branded application, which should showcase the best experience possible for their customers, but also opening themselves up to other network experiences.

“The total number of apps that consumers download each month is zero. At some point you have to accept the reality that not everyone is going have your app,” he said frankly.

It’s both difficult and expensive to get a branded app on a consumer’s device, but it’s worth it as long as a merchant does not silo themselves off in the process, Priebatsch added.

The “Better Experience” Evolution

Ultimately, the goal of any mobile payments solution is to reach the point where consumers are both excited and engaged to try and then continue to use the app. Making that better experience a reality very much depends, says Priebatsch, on two things: saving consumers time and money.

For LevelUp, this means focusing on integrating loyalty and mobile order ahead, both of which accomplish the two drivers of an improved mobile payments experience, he noted.

Priebatsch said that mobile order ahead in particular has seen a tremendous pick up in sales and that it’s a service consumers love, since saving time is saving money.

LevelUp’s data also shows a big benefit of mobile order to the merchant, something that Priebatsch said is actually more material than interchange savings. It can cost the average merchant anywhere from 15 to 20 percent less to fulfill an order ahead request because there's less staff time and a more efficient process in the restaurant to fulfill those orders.

Climbing The Highest Mountain

Though there’s an ever-evolving list of challenges facing payments players, there’s typically one that always sticks out a bit more than the others.

For Priebatsch, it’s focus and not losing sight on what the actual end user and merchant experience is.

“It's so easy to get distracted optimizing very specific parts because there are so many challenges to go after that you lose sight of the fact that at the end of the day it's very simple,” he said. “Consumers want to save time and money and you have to deliver on that, while merchants want to use payments to make more money and understand their customers better.”

Though it’s exciting, interesting and fascinating to optimize so many of the moving parts in payments, Priebatsch confessed that it’s really just a means to an end – bringing meaningful value to customers and merchants.

Priebatsch goes after challenges for fun — whether it's running 32 miles up a mountain or climbing a dormant volcano – but he admits the challenges of the payments industry are unlike any other.

So when David Evans asked Priebatsch how he’ll know when he’s made it, and truly ignited his mobile payments platform?

"If that day ever comes, you'll be the first to know,” he said jokingly.




Banks, corporates and even regulators now recognize the imperative to modernize — not just digitize —the infrastructures and workflows that move money and data between businesses domestically and cross-border.

Together with Visa, PYMNTS invites you to a month-long series of livestreamed programs on these issues as they reshape B2B payments. Masters of modernization share insights and answer questions during a mix of intimate fireside chats and vibrant virtual roundtables.

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