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Chase Pay And LevelUp Take On QSR Payments

“Build a better mousetrap,” the expression goes, “and the world will beat a path to your door.”

Everyone knows the quote, including Chase Pay and LevelUp, and while not everyone knows it is a paraphrase of a longer quote by Ralph Waldo Emerson — “If a man can write a better book, preach a better sermon, or make a better mousetrap than his neighbor, though he build his house in the woods, the world will make a beaten path to his door,” — they know what it means. If you can do it better than what’s out there — the whole world can be your market.

Innovators — particularly payments innovators — love this particular bon mot and spend a lot of time trying to build that new payments mousetrap, in the hopes that the world will beat a path to its door.

Unfortunately, the operative word in the quote is “better,” not “build.” The mousetrap has to be actually and demonstrably better.

The teams at Chase Pay and LevelUp, however, realized that though it is a bit counterintuitive on face, building that better mobile payments mousetrap actually isn’t, in the first instance, about the payments.

Instead, watching the market as it unfolded, the teams at both Chase and LevelUp came to realize that mobile payments had to be about providing something that was, indeed, a better mousetrap: a way to pay that would help people save time and money. And if they did that, that better mousetrap would drive incremental spending and boost customer loyalty.

Yesterday, they announced that they had launched that better mobile payments mousetrap — the ability for consumers using the Chase Pay app to order ahead at hundreds of thousands of QSRs across the country.

“If mobile payments is going to ignite, it’s going to have to do something consumers really care about. They’ve [the Chase Pay team] settled on the same things we’ve settled on, saving time and saving money — and have just gone full bore on making that happen — they’ve been great partners to work with,” LevelUp’s Chief Ninja Seth Priebatsch told Karen Webster in a conversation shortly after the news was announced.

Chase President of Strategic Alliance and Loyalty Jennifer Roberts noted that Chase has little appetite for building internally the kind of order ahead QSR capacity it is adding to its app with the LevelUp partnership.

“The LevelUp team has a great solution and so much knowledge of mobile payments and the consumer. We take the option to partner with experts, particularly when it aligns with our thinking on the consumer experience. Once we met Seth, we abandoned any thinking on our side to build it ourselves — why start from scratch when we had the opportunity to leverage their depth of market insight and innovation?

So what will the pair-up mean?

Starting today, Chase Pay customers will have the ability to order ahead and pay at hundreds of thousands of QSRs using their app. Customers can also elect to pay in-store using LevelUp and Chase Pay branded scanners at LevelUp merchants — and Chase Pay customers will be able to access LevelUp merchant offers though the app.

The new feature is already online at quick-service restaurants in Boston and will be rolled out across the country over the coming months.

So why the move into QSR from Chase?

That decision, Roberts noted, was pretty clear, since Chase Pay is dedicated to adding value to how and where consumers shop and pay — and a lot of that happens at QSRs.

“Our focus on QSR is primarily because our customers are spending a lot of money in that segment — 1 out of every 5 transactions is in that space,” Roberts noted. “That really gives us a chance to open a dialog with our customers on a more frequent basis. We’ve given them a very concrete reason to consistently use the app so they can interact with us more regularly.”

The incentives for customers include the ability to order ahead from thousands of restaurants directly through the Chase Pay app, automatically applied special offers, saving favorite orders and searching for local restaurants where order ahead is enabled.

And order ahead alone makes a big, big difference for customers, Priebatsch told Webster, because the ability to do it actually does change how people use those establishments on every dimension.

“We know from the customer and merchant data we can see through our million or so active members that once people order ahead, they almost never pay at the counter again.”

Priebatsch noted that it is still obviously too early to tell if Chase Pay customers will behave the same way that LevelUp customers have, but the proof is in the numbers, and the numbers indicate that when given the chance to skip a line, customers are pleased. If that opening benefit opens the door to even more benefits — like the occasional free lunch — all the better for keeping customers regularly engaged at a critical time — when they are hungry.

And that engagement at the right moment, Roberts told Webster, is the second part of what made the LevelUp partnership so attractive to Chase — it offers the opportunity for delivery on its central mobile mission:

Drawing merchants and customers closer together.

“We’ve had the chance to watch the market over the last several years,” Roberts told Webster, noting that one area where Chase wanted to be sure it added value was on the merchant side.

And the value delivered here is compelling: bigger ticket sizes and more visits during peak periods translating to greater loyalty as consumers get really habituated fairly quickly.

“Our data actually shows that customers will eat at the same restaurant, during the same fifteen minute window and order the same thing more than three times per week,” Priebatsch told Webster.

Obviously, being the restaurant which becomes that staple is in any QSR player’s best interest — and that value is now tied to the development of the app going forward. LevelUp (and thus, by extension, Chase Pay) is now working in “super-beta” on a push function that reminds consumers (within that 15 minute window) that their normal order exists and could be theirs in less than a half hour — and then asks them if they would like to order it.

The customer is convinced, the merchant has captured a conversion and ChasePay and LevelUp have married both parts of the equation more tightly to the value of using mobile payments.

Everyone wins.

And everyone wins at scale.

Chase has a lot of mobile customers, Roberts noted — about 24 million at last count. That’s a lot of potential eyeballs and activities, for the right mobile partner – and for the merchants they might target. That opportunity for scale was the undeniable advantage that the pair-up offered LevelUp, according to Priebatsch.

“This allows us to rapidly get to a scale that we just couldn’t have approached on our own.”

The goal now for both the Chase Pay and LevelUp teams is to move those 24 million customers to the Chase Pay app. Both teams think that giving those consumers that incentive isn’t about a mobile app that allows them to pay using their phone, but about giving them something even more valuable: saving them time and saving them money. Skipping the line at their favorite QSRs is the first step — and Chase Pay, with a big assist from LevelUp, is hoping that will finally crack some of the code that connects mobile payments to mobile payments value.

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Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

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