For the two-year-old LevelUp, the national expansion of a pilot the mobile-payment provider ran with the 16-year-old processor Heartland Payment Systems is nothing short of a godsend.

"We are at 5,000 [merchants] and they are at a quarter million merchants," says Chris Mahl, chief revenue and strategy officer for SCVNGR's LevelUp.

Heartland's 800-person sales force will market LevelUp's mobile payment and loyalty system to its 250,000 merchant locations. Since LevelUp makes money through an offer program that's based on bringing new customers to merchant, instead of by charging transaction fees, it's vital for the startup to add merchants.

"LevelUp and scores of other mobile wallets and mobile point of sale companies have a problem with scaling up," says Jordan McKee, an associate analyst at Yankee Group. The Heartland partnership is "a huge deal," he says.

Such a pairing is increasingly common in today's payments industry. For mobile wallet providers, building merchant scale is important because it increases customer adoption of mobile payments.

"Thus we see Square's recent deal with Angie's List," says Mary Monahan, a research director for Javelin Strategy & Research. The larger partner "brings access to a wider merchant base that the mobile wallet vendor needs to motivate the consumer to use the wallet. The wallet brings the mobile capabilities that merchants need to be competitive in this increasingly smartphone connected world."

Heartland also benefits from its partnership with LevelUp, since the startup helps the processor break free of an outdated way of doing business.

"Processors have traditionally expanded vertically to the front and back office to help merchants lower their cost and complexity of processing payments," Monahan says. "The newer phenomenon is that payment processors and mobile wallets are now connecting together in a synergistic relationship."

Heartland also works with the companies behind mobile-pay initiatives such as Isis and Google Wallet. Heartland worked with Isis on its mobile payment trials and is powering the Google Wallet for merchant acquirers, says Ian Drysdale, president of Heartland's network solutions group.

"We view payments as an ecosystem," Drysdale says. "The more entities that are the connected, the better we are. Our customers are not only looking for payments, but for a way to drive in more consumers, to run campaigns, to look for more business."

Heartland and LevelUp did not release financial results of their 2012 pilot, but did say the results led to the launch of a new white-label version of the Heartland/LevelUp bundle. "The white-label version allows our merchants to push their brands out," Drysdale says.

Heartland, which has operated its own mobile payments program for about two years, is also using its card program and partnerships with other payment companies to target merchants while staving off mobile payment startups.

Other companies meld mobile wallets with processing, Monahan says. Corduro, a Google-backed startup, offers a mobile wallet and mobile processing, as does GoPago, which is backed by Chase.

"But these wallets are building adoption from the ground up," she says.

Corduro's offerings include mobile payments, wireless payment terminals, back-office services and merchant processing.

"If you take the idea of Square, Braintree, Heartland, a mobile wallet and big data, that's us. We're a soup to nuts organization," says Robert Ziegler, founder and CEO of Corduro. "We have a platform that can lower cost of ownership around business processes and the payment itself by about 30 percent…and we tuck our margin inside those savings."

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