No, it’s not a game. LevelUp is yet another payment system to compete with credit cards. The competition is more on the merchant side, since clients still need a credit card to pay, but the way it works is you link a credit card to your account, get a QR code, and then flash that at the camera phone next to the register to pay. It’s very fast, especially when compared to any transaction involving a rewards card. I like it a lot, even more so since I carry my phone more places than my wallet. (I think you could even just print out the QR code and carry it around on paper, but I haven’t tried that.)

The hook that gets customers to use it is rewards and special offers. At least for now, it seems the default deal merchants have signed up for is $2 off the first purchase and a $5 credit for every $50 spent. Basically 10% off. This is awesome for me. Whenever I’m out and try a new place for lunch, $2 off just sweetens the pot. And the builtin rewards means I don’t carry around ten little punchcards in my wallet.

On the merchant side, from what I’ve gathered, LevelUp doesn’t charge any transaction fee (LevelUp eats the credit card processing charge) and makes their money from the rewards and deals they entice merchants to offer. I wonder how this will play out. The $2 first time credit may entice some new customers in the door, but I haven’t gone back to a lot of the places I used it. Mostly because they’re not in my area, not because they’re bad, but the store hasn’t received much value in exchange for that $2. And the places I do frequent, my regular lunch spots, I was probably coming back even without LevelUp. So their effective processing fee went from the credit card 3% to the LevelUp rewards 10%.

I hope LevelUp succeeds. They promise that the reason they don’t charge processing fees, and make all their money from rewards, is because they are so good at bringing in more business. I hope that’s true, because as a regular consumer, the rewards system they’re offering is pretty great and I’d like to see more business accept it.

Everything I’ve written up to now I would have written even for free, but I do also have an affiliate link that offers a $5 for me, $5 for you type credit. And with that, flak is now officially monetized.