Getting retailers to add mobile payments – or even ban credit cards in favor of mobile – is not impossible. But it just might be easier to get merchants on board with mobile if they haven't even accepted their first payment.

SCVNGR's LevelUp is offering a variety of discounted services designed to capture share among people who are starting their first business. "We want to be able to capture them and have them use LevelUp from day one," says Kate Reynolds, director of research and development for LevelUp.

Called the "LevelUp StartUp Program," the initiative offers free tools designed to support the merchant's launch. That includes three months of free payment processing through LevelUp, free hardware to accept mobile payments, one free email blast to LevelUp users near the startup to announce the launch, and 250 free promotional cards to market the new business to customers.

The initiative somewhat resembles PayPal's Startup Blueprint Program. That program, launched last year, waives $50,000 in processing fees for the first 18 months a startup works with the eBay unit. PayPal's program is open to privately held companies that are less than five years old and make less than $3 million in annual revenue.

LevelUp's program is available to any business that opened its doors within the past 24 months. After three months the business will be charged LevelUp's standard 1.95% processing rate and will have free access to merchant services such as analytics and customer relationship management.

LevelUp is interested in targeting startups because it can begin to accrue information and data at an earlier stage.

"You can perform the analytics on the merchant's transaction from day one, instead of after a few years," Reynolds says.

The program is available to all merchant categories, though quick serve restaurants are a particularly good fit, she says. "They have the customers that tend to come in every day as part of their daily routine and that fits in well with our model," Reynolds says.

LevelUp provides merchants with scanners that can read a QR code displayed on a consumer's phone. The consumer, who pays with a linked credit or debit card, is provided discounts for visiting new merchants and reaching certain spending thresholds on return visits.

LevelUp has made a series of tweaks to its offering in recent months. It is reducing fees for merchants by using transaction aggregation and analytics. The company also now supports smartwatches that run on Google's new Android Wear platform.  It's also added ordering technology to improve its appeal to restaurants.

The field of payment companies using mobile technology to target the restaurant space is extensive.  Other players include TabbedOut, Flypay, Dash, Moneris and Viableware. CardFree, which is run by several of the people behind the successful Starbucks mobile payment app, is focused on regional fast-food chains.

"The mobile payments space is very crowded … primarily because it's still evolving," says Nathalie Reinelt, an analyst for Aite Group. "The reason why quick service restaurants are emerging as a ripe target is because historically these merchants dealt with a high percentage of cash-based and therefore anonymous transactions. Mobile payments can provide quick service restaurants with a rich data set they never had before."

In attempt to enhance customer service, LevelUp has added interactive receipts and a help button that consumers can use to provide instant feedback.

"The fact that the space is so crowded will eventually wear on consumers, who will suffer from app fatigue and start to narrow down their mobile payment instruments to only those adding the most value and convenience to their lives," Reinelt says.

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