Approximately 500 local businesses in four cities across the country are using the LevelUp loyalty app to let customers pay via mobile and earn rewards.

LevelUp was launched in March as a pilot in Boston and Philadelphia and expanded recently to New York and San Francisco. The focus of the app has shifted from the initial proposition of unlocking progressive deals to more of a digital punch card tied to mobile payments.

“We’ve turned the deal space on its head with an inverted deal,” said John Valentine, vice president of the East Coast for LevelUp, Cambridge, MA. “Instead of giving them an offer to get them in the door, we want consumers to earn their loyalty.

“Why not pair the emergence of mobile payments with a digital loyalty program like a punch card that encourages consumers to earn their loyalty before getting an offer,” he said.

LevelUp is offered by Scvngr, the mobile gaming app for retail.

A culture of deals
Initially, LevelUp gave consumers a way to unlock progressive deals to encourage repeat traffic.

However, the company found that this was not what businesses are looking for.

“The first try, bringing them back with another offer did work,” Mr. Valentine said. “But, the early returns from the businesses indicated that they don’t want to create a culture of deals, which is currently dominant in the landscape.”

For the new version, users need to download the LevelUp app from Android’s or Apple’s app store. Then they put in their credit card information and are provided with a unique QR code that identifies them within the system.

When users visit a participating merchant, they take out their phone, open up the app and shine their QR code in front of the LevelUp docking station found at each participating business.

The merchant’s phone recognizes the user and prompts an employee to enter the amount of money.

Within three seconds, the customer receives a digital receipt. They also see how much they have earned toward their next visit.

There are three ways to earn rewards using LevelUp. One is to spend a certain amount of money over a specified amount of time and earn money off a next visit.

Additionally, users receive an amount off their bill the first time users pay with LevelUp at a new location.

Businesses can also send out messages to LevelUp users with special offers, such as the first 50 people who have lunch at a restaurant and use LevelUp to pay will get a discount.

Users can find participating merchants on the LevelUp Web site as well as inside the app.

A sticky app
Participating businesses in New York include KuKu Canteen and Dumpling Man. In San Francisco, Cupcake Cove and Oasis Café are participating.

LevelUp points to results from the latest version to show that it is working. These include that 45 percent of all customers return to LevelUp merchants to pay full price within 30 days and that the average LevelUp customer increases their spend by 38 percent on the transaction in which they unlock the next level of credit.

Additionally, the average LevelUp user is already using it about twice a week,

“It is sticky – people used it once and 40 percent came back to the same location within a month to use again,” Mr. Valentine said. “The largest base of our LevelUp usership is people who have used it three times or more since we launched.”

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York