Looking to gain millions more users through traditional financial institutions, LevelUp announced a partnership with First Trade Union Bank to create a private-label mobile payment and loyalty app.

The app will allow users to pay with their mobile devices at participating merchants by scanning quick-response codes, while receiving monetary rewards and offers that can be used at the merchant on the next visit. The standalone app will be integrated with both the First Trade debit card and mobile app and First Trade will be deploying the app to its clients for use on both iPhone and Android devices during the next two months.

“The channel [our clients] choose to do banking business is shifting more and more to mobile devices,” says Michael Butler, president and CEO of First Trade. The LevelUp app “keeps our clients current and satisfied.”

The 7,000 First Trade clients might also receive bank specific rewards by using the app, says Butler. There’s more to come but the bank can’t comment on specific details yet, he says.

“We’re leveraging that same type of loyalty scenario that LevelUp has but instead how our customers do business with the bank in totality,” Butler says.

Linking a checking or savings account to LevelUp creates opportunities to expand rewards beyond the point of sale with merchants and could include promotions that use bank data to personalize the offers that consumers receive, said Seth Priebatsch, LevelUp’s chief executive.

Plus LevelUp is still warring with interchange.

“We want to sidestep interchange entirely,” Priebatsch says. “We think we can push the payment system forward as a general concept by eliminating our dependency on the current networks.”

The bank chose LevelUp because it is the most widely used mobile payments product available, says Christopher Tremont, First Trade vice president of marketing and client services. But the Boston-based bank is payment agnostic and believes LevelUp is willing to adjust its product suite as the payment industry evolves.

“We’re definitely more attached to the LevelUp culture, how they approach their clients and the environment,” Butler says.

LevelUp uses QR codes because the technology is the most popular today. But Priebatsch says the company is looking at integrating Near Field Communication, Bluetooth and a technology that transfers consumers’ payment tokens into sound waves that are emitted from a mobile device.

While LevelUp has been scrambling to partner with merchants and merchant providers over the past year, the partnership marks the first time the SCVNGR-created startup—which counts Google Ventures and Balderton Capital among its backers—has worked with a bank.

“The banks have an equally powerful play in terms of owning the consumer relationship and bringing them a valuable mobile-infused payment offering,” says Priebatsch.

Priebatsch says bank partners add three benefits that merchant partners can’t: credibility and trust; mainstream access and scale; and a mini-fiscal stimulus as a huge number of account holders receive marketing from the bank about LevelUp.

Banks have started working with mobile payments, some playing with Square-like methods, but these haven’t garnered much attention with consumers.

“The bank’s customers will instantly have access to every LevelUp merchant, 4,000 around the country which is the largest mobile payment-ready merchant network a bank has built to date,” Priebatsch says.

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