Banks and credit card companies are hoping that mobile payments help them build a deeper relationship with millenials and stave off disrupters such as Apple, PayPal, Samsung and Google. They definitely bring volume to the industry – Chase says that one million of its 24 million mobile customers have adopted ChasePay. But they generally haven’t given consumers a lot of reason to use them as their “wallet.”
Now, ChasePay is hoping to jumpstart its usage by integrating LevelUp into its platform, including features such as payments, loyalty points, rewards, promotions and pre-ordering. Chase is also plowing $10 million into the Boston-based, 80-employee outfit, which works with 14,000 companies serving 110,000 locations, including national players such as Chipotle and Steak ‘n Shake. The majority of its clients are local and regional quick service restaurant chains (QSRs) acquired via Independent Sales Organizations such as Cayan.
For LevelUp, the timing of the deal represents something of a lifeline. While LevelUp had initially attracted investments from big names, including Google Ventures, Highland Capital and Deutsche Telekom, it hasn’t announced new funding since 2013. There are also other hints of stagnancy (the last period of real activity on the company’s blog was 4Q 2014). Some of the company’s slow take rate has simply a reflection of technology adoption: wearable penetration — especially smart watches — has obviously been a lot lower and slower than anticipated.
Ultimately, it all works out for the new ChasePay tie-in. Chase seems especially intrigued by the potential that the tie-in has with QSRs and especially, their millenial customers. As an executive told Pymnts’ Karen Webster, QSRs are responsible for one of five transactions. “That really gives us a chance to open a dialog with our customers on a more frequent basis,” she said.
ChasePay also said it welcomed the opportunity to lower its exposure to the software development business, and integrate from the get-go with LevelUp’s advanced features – especially its pre-ordering capabilities, which allow consumers to avoid lines. Pre-ordering is proving to be surprisingly impactful. LevelUp CEO Seth Priebatsch told Pymnts that “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.”