After years of serving small merchants with a mobile payment and loyalty program, LevelUp's partnership with Chase Pay opens a whole new world, one with larger merchants and a broader consumer base.
Consumers using Chase Pay for mobile payments will soon add quick-service restaurants to their list of merchants accepting the QR-code based payments through the arrangement with loyalty and mobile payments provider LevelUp.
"It will be a huge coup for LevelUp if Chase is going to bring the LevelUp order-ahead capabilities to a broader audience of the Chase acquiring group," said Tim Sloane, director of emerging technologies advisory services for Boston-based Mercator Advisory Group. "LevelUp has some pretty good merchants on board already, so it is clear they have been executing their plans."
Expanding the order-ahead concept to other verticals is something Chase "has definitely considered," said Jennifer Roberts, president of Strategic Alliances and Loyalty Solutions for Chase.
"If you look at the principles around Chase Pay, it is about saving consumers time and money," Roberts added. "There are other merchant verticals in in which order-ahead is gaining traction, so as we observe what is happening in the QSR space, as well as what merchants are ready for, we are paying attention to those consumer trends and augmenting the Chase Pay product to meet those needs."
Still, LevelUp has been fairly quiet since bursting on the scene a few years ago. A national rollout of this concept will likely depend on how many LevelUp merchants are actually supporting order-ahead apps and how the companies' services will be integrated within Chase Pay.
"We've been busy, and maybe that's come off as us being quiet, but we've just been hard at work launching a great number of features for our merchants, partners and LevelUp app users," said LevelUp spokesman Alex Shuck. "Outside this landmark partnership, this year we launched custom apps and rewards programs for Tropical Smoothie Cafe & Steak ‘n Shake nationwide and brought order ahead to our own LevelUp app along with dozens of others"
LevelUp now has more than a million active users per quarter using LevelUp or LevelUp-powered apps across the nation, Shuck said.
"Our partnership with Chase opens the door to bring our technology to a much wider consumer audience than ever before," Shuck added. "We've got a lot on our hands, so we're just going to focus on executing what already do now — just doing it better and at wider scale."
In the arrangement with Chase Pay, users can pre-order from participating restaurants and pay ahead or in person at LevelUp scanners or soon-to-be available Chase Pay scanners. The technology behind LevelUp's order-ahead and loyalty services will be integrated into the Chase Pay app, Chase's Roberts said.
"Sometimes those merchants who have order-ahead specifically usually do not have loyalty integrated yet, so that makes it a first step to have conversations with merchants about how we can add loyalty as well," Roberts added.
The service is available now at participating restaurants in Boston and will be phased into Chase Pay nationally over the coming months. The list of restaurants will be available in the Chase Pay app.
The phased rollout is similar to Chase's national mobile wallet strategy, having launched the app officially late last month, but becoming available for download and use only at Starbucks and Best Buy stores heading into the holiday shopping season.
Use of Chase Pay will expand in the coming months, including at Walmart stores, an arrangement Chase made with the retail giant three weeks prior to the app's launch. Walmart will accept Chase Pay payments in Walmart stores and through in-app purchases.
Ultimately, Chase has been targeting retailers with major customer bases in eyeing Starbucks, Walmart and now quick-serve restaurants where mobile wallets more easily resonate.
"Our Starbucks and Best Buy solutions started nationally, but with this arrangement [with LevelUp] we wanted to start smaller because order-ahead in many cases is new to the merchants," Roberts said. "We wanted to make sure the customers had a great experience with the app."
In combining technologies and merchant databases, the companies are eyeing the potential of having a mobile ordering and payment system that will work at up to hundreds of thousands of quick-serve restaurants.
The partnership between Chase and LevelUp has plenty of potential, but right out of the gate the companies can help each other bolster some weak areas of their systems, said Thad Peterson, senior analyst with Boston-based Aite Group.
"LevelUp really needs distribution and a sales force behind them to move into a broader category," Peterson said. "And Chase Pay needs to have a reason to get companies to sign up with them, because at the moment they are just another mobile payment alternative, so that in itself is fairly limited."
Whether the Chase Pay lower fees message initially delivered to merchants when Chase first revealed its intentions to launch its own mobile pay app continues to resonate and would be effective at the quick-serve restaurant level remains to be seen.
"The two together could potentially succeed in the QSR space, but the question remains as to which QSRs would accept them," Peterson said. "Many of these are already working on their own payment schemes."
Major fast-food chains that have developed mobile payment and loyalty schemes include McDonald's, Burger King, Wendy's and Subway, but others are joining the fray at a fast clip.
Major payments providers like PayPal, Mastercard and Visa also have all upped their games with mobile pay and ordering services that target the fast-food industry.
LevelUp has traditionally targeted smaller, single-store operations with its own point-of-sale terminal and loyalty program services, Peterson said. "So who are they going after now and who is going to be interested?" he added.
Under the arrangement with LevelUp, consumers can order ahead through the Chase Pay app on iPhones and Android mobile phones, and also access special offers automatically applied at checkout.
The service includes the ability for a user to reorder favorites with a single tap, addressing those consumers who generally order the same items at favorite quick-serve restaurants.